The African Finance Corporation (AFC) and the African Export Import Bank (Afreximbank) are investing about $16 billion in oil and gas projects across Africa as part of their collaborative efforts to transform the industry into a sustainable growth source for the continent.
The Global Head, Client Relations of Afreximbank, Rene Awembeng, who gave this hint at the ongoing African Refiners and Distribution Association (ARDA) conference in Cape Town, South Africa said that while bank’s oil and gas portfolio exceeds $15 billion with a healthy pipeline across the entire continent, the AFC had deployed about $800 million towards supporting Africa’s refinery sector with an additional $210 million in its near-term pipeline.
According to him, the continent is in a critical situation where demand for energy continues to rise on the backdrop of surging population.
Noting that with the continent relying mainly on importation of petroleum products at a time when foreign exchange demand is hovering at $100 billion yearly and required energy investment annually stands at $190 billion, Awembeng said large infrastructure development, including, refineries that would meet demand on the continent must be prioritized and supported by governments and private investors.
This is even as he pointed out that the creation of Africa Energy Bank remained sacrosanct to fund fossil fuel and Africa energy transition agenda and end the wastages associated with petroleum products importation to the continent.
He expatiated: “Africa has not invested in its refineries or refining capacity. We’ve not invested in our storage facilities. We’ve not invested in our pipelines sufficiently to meet the demand. So with the COVID crisis, and now the Ukraine crisis we are now in a very difficult position.
“A lot of the international banks and some of the banks that were financing oil and gas transactions have retreated from Africa for a number of reasons; leaving the burden on African financial institutions and some of the development financiers like the African Export Import Bank to look into the problem.
“The challenge now is we have significant capacity to meet the demand of $190 billion every year to finance oil and gas requirements in Africa. Do we have capacity on the continent to support the $15 billion of rehabilitation of refining capacity required in North Africa, West Africa and East Africa. I don’t think we are.
“So we are going into a crisis where if you look at also what is happening with food security in terms of fertilizers and grain, we have to import plus the high costs of importation of refined products. We are in a very challenging situation as a continent to be able to finance oil and gas,” Awembeng added.
Speaking on the topic ‘Financing Infrastructure Projects to Accelerate Africa’s Energy Transition’, Senior Investment Associate (AFC), Sayo Olumide, maintained that AFC had disbursed $800 million towards supporting Africa’s refinery sector with an additional $210 million in its near-term pipeline.
He said priority for the environment, sustainability and governance was necessary for funding consideration by African leaders, private investors and other stakeholders in the drive towards achieving green growth in the continent.
