By Lucy Adautin
The African Petroleum Producers Organization (APPO) and the African Export-Import Bank (Afreximbank) have finalized documents to create a $5 billion Africa Energy Bank (AEB).
This institution aims to support the development of Africa’s oil, gas, and condensate resources while aiding energy transition and net zero commitments by 2060.
The African Energy Chamber (AEC) announced the official establishment following a signing ceremony in Cairo, Egypt on Tuesday.
The AEC praised APPO and Afreximbank for their swift efforts in creating the bank.
The new institution seeks $83 million from each of APPO’s 18 members, totaling nearly $1.5 billion, with Afrexim Bank committing $1.25 billion.
The $5bn AEB is expected to grow its assets to over $120bn in seven years, thus becoming a source of sustainable FDI for Nigeria that supports the vision 2020 ambitions.
The AEC in its statement, expressed the belief that the African Energy Bank, will play a role in strengthening energy access and growth in Africa by providing the financing needed to get large-scale projects off the ground.
It stated that despite the role oil and gas has, and will continue to play in Africa, global efforts to transition to alternative sources of fuel, have created a significant investment gap worldwide.
AEC emphasized that Africa still faces an energy crisis, with more than 60 million lacking access to electricity, and over 900 million lacking access to clean cooking solutions.
It said, “This is happening amidst a rapid decline in fossil fuel funding, while IOCs divest their oil and gas assets, favouring more strategic investments.
“The International Energy Agency estimates that delivering modern energy to the entire continent will require up to $25bn in annual spending until 2030, highlighting a significant opportunity for financiers”.
The Africa Energy Bank is expected to directly address funding challenges by providing an African solution to financing energy projects.
“With $5 billion in the initial capital raised from African signatories, the institution aims to close the funding gap by providing capital to oil and gas projects across the continent”.
The proposed bank has attracted significant interest from African governments and development financial institutions.
APPO’s Secretary General, Omar Farouk, announced that member states have begun contributing funds to the bank.
AEC Executive Chairman NJ Ayuk added that the bank’s establishment will provide African countries with a new financing source, reducing their reliance on foreign capital.
Heritage Times HT recalls that the call for the establishment of the Africa Energy Bank was initiated by Engr Simbi Wabote, former Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), at the 3rd edition of the African Local Content Roundtable held in Abuja, Nigeria, in October last year.
