The African Energy Bank (AEB) has formally commenced operations to finance oil and gas projects across the continent.
With authorised capital of $5 billion (around R82 billion). the institution reaffirms African governments’ determination to secure their own energy future, the African Export–Import Bank (Afreximbank) said in a statement.
Established by Afreximbank and the African Petroleum Producers’ Organisation (APPO), the AEB will support projects across the energy value chain, with Egyptian banker Helmy Ghazi at the helm as inaugural president.
This includes exploration and production, transportation, processing, refining and distribution.
The move comes in a context where the energy investment needs of the continent are estimated to be $200 billion.
“Traditional short- and long-term financing providers in the African energy sector are moving out of fossil fuel financing, while oil and gas remain essential to the continent’s energy systems. The African Energy Bank aims to bridge this funding gap while supporting a just energy transition for African countries.”
The AEB will seek to attract investments from governments, national oil companies, financial institutions, and private investors to support energy development across the continent.
Nigeria was chosen as the headquarters of the new energy bank, after competing against Ghana, Benin, Algeria, South Africa, and Cote d’Ivoire, says Tribe Africa Advisory’s Rutendo Hwindingwi.
While this is a positive move for the continent, $5 billion is still a drop in the ocean in the light of its $200 billion energy investment needs, he remarks.
“The positive thing is that you’ve got the right players participating with African shareholders, you’ve got the right initiatives, Helmi Ghazi as president…”
The energy bank is going to be connected to about 700 banks on the African continent, Hwindingwi says.
“They’re looking at scale; they’re looking at making an impact. And one thing about Afreximbank is that they walk what they preach… A $200 billion deficit is big, but ultimately it’s a step in the right direction, I believe.”
The mandate described by the APPO also includes supporting the transition to cleaner energy sources and assisting projects in African countries that are not members of the organisation.
Source: ewn.co.za