The African Petroleum Producers’ Organisation (APPO) led by Nigeria’s Omar Farouk, has listed the conditions for the participation of foreign interests outside the African continent in the proposed African Energy Bank (AEB).
Farouk, while speaking at the just-concluded Nigeria International Energy Summit (NIES) in Abuja, explained that the drying investment in hydrocarbons posed a major challenge to the exploitation of fossil fuels on the continent, stressing that Africa has to take its destiny in its own hands.
With proven reserves of over 100 billion barrels and trillions of Standard Cubic Feet (SCF) of gas, Farouk maintained that the proposed bank, which will help fund the production of the commodity, will be highly regulated from interests outside Africa.
Noting that Africa has always depended on foreign technology and expertise to produce the resource, Farouk pointed out that any sovereign entity outside the continent that intends to take part, must have a shared vision of how the financial institution will work.
“Africa has not been able to develop a market for its resources as it is always relying on foreign markets. These challenges have been the focus of APPO in the last three years. We have come to the conclusion that the future of the African petroleum industry lies in the hands of Africans,” he stressed.
The APPO secretary general added that negotiations on the charter, establishment agreements and governance of the bank’s projects have already reached an advanced stage.
“Very soon a decision will be taken on where to locate the headquarters of the bank and set a date for its takeoff. It is important that I mention that given Africa’s experience with other institutions, we are making sure that APPO member countries’ interests are always protected.
“Shareholding shall be open to all African oil companies and their national companies as well as other investors.
“Their banks shall work out participation of entities outside Africa. But no sovereign outside of the African continent or any investor outside of Africa shall be allowed to participate who has no shared vision of the bank,” he said.
Farouk’s comments came as the global push for energy transition from fossil fuels gathered momentum and countries as well as activist investors mounted pressure on financial institutions abroad to cease the funding for petroleum-related projects.
Highlighting the need for the continent to develop the market for its oil and gas resources to address the prevalent energy poverty, Farouk pointed out that the future of the African petroleum industry lies in the hands of Africans who must develop its own market.
According to the APPO chief, the global paradigm shift away from fossil fuels to renewable energies must send a signal to member countries whose governments depend on crude oil on the current threats.
“On the challenge of markets, for our oil and gas, we believe that the coming into effect of the African Continental Free Trade Area (AfCFTA), provides an excellent opportunity to work on developing cross-border and interregional energy infrastructure.
“We believe that with the level of energy poverty in Africa. We can use up all the energy we can produce and still need more. We are promoting the development of cross-border, regional infrastructure. We see this as critical to making energy accessible to our people.
“We want to banish the mind-set that our people are too poor to buy energy. So we have to look for those with the purchasing power to buy our energy.
“That mind-set entrenches the poverty cycle in Africa. We have to break that cycle by empowering the people to have access to energy with which their productivity will increase manifold, and with it, the growth of the national economies of our continent,” he said.
Revealing that the organisation will soon launch the AEB, he pointed out that already, the organisation was partnering with the Afrexim bank to establish the financial institution.
He further posited that there were indications that international oil companies would do away with the continent’s oil and gas as soon as they find alternatives to Africa’s resources
“Those who have in the last 75 years or so provided the finance and technology in the market will dump us as soon as they can find alternatives. And they are working hard to find those alternatives.
“What is APPO doing about this? For the funding of oil and gas projects across the continent, we have gone into partnership with the AfricaExim bank (Afrexim) to establish the African Energy Bank. Its primary objective is to finance oil and gas projects in the continents,” he added.
According to him, for several decades that Africa has been producing petroleum it has relied essentially on external financing for its projects, highlighting that technology and expertise also remain major challenges.
Aside from the APPO, the federal government of Nigeria has been a strong proponent of the African bank to address the continent’s peculiar energy-related crisis.