Africa to set up funding bank for oil, gas projects
Countries such as Uganda are struggling to fund development of the oil and gas resource as the West shifts to green energy financing. Photo / File
What you need to know:
- The Africa Energy Bank expected before the end of this year, will finance oil and gas activities in Africa without the need of external financing that comes with strings
The African Petroleum Producers’ Organisation (APPO) is finalising plans to set up the Africa Energy Bank.
The bank expected this year, will finance oil and gas activities on the continent without the need of external financing that comes with strings.
Dr Omar Farouk Ibrahim, the APPO general secretary, said, African countries subscribing to the Petroleum Producers’ Organisation will partner with the African Export-Import Bank to establish an energy bank slated before close of year.
“This going to focus essentially on funding oil and gas projects on the African continent, because the funds have dried,” Dr Ibrahim said, noting that the World Bank, and other international financing institutions that used to fund oil and gas projects are closing the financing channels in addition to having “stringent conditions, which doesn’t make a lot of sense” compared to 20 or 30 years ago.
The organisation plans to attract investment from countries such as Saudi Arabia, UAE, Qatar and Kuwait, which have a lot of stake, and history in the development of oil and gas.
The bank was mooted last year during the eighth African Petroleum Congress and Exhibition in Luanda, Angola.
Speaking at the event last year, Angola’s President Joâo Manuel Lourenço said the idea would resolve challenges faced national oil companies.
The move comes at a time when many international banks are facing pressure from climate activists to stop funding oil projects over high carbon emissions, and the shift to cleaner energy.
A number of major banks such as HSBC, Standard Chartered and Standard Bank announced how they are reviewing their lending for oil and gas projects in light of the net zero campaign.
Uganda has faced challenges in financing the 1,443 kilometre crude oil pipeline over diminishing financing for greenfield oil and gas projects, and the pressure from climate activists to halt construction of the pipeline.
Threats of funds withdrawal
EACOP, which will require a $4b investment has so far declared funding from Islamic Development Bank, and Afrexim Bank totaling to $300m (Shs1.1 trillion) but continues to face threats of commitment withdrawal by Europeans and American banks.
