* Industry operators laud continent's first oil financial institution
Emmanuel Addeh and Peter Uzoho in Abuja
After months of international politicking and massive lobbying, Nigeria yesterday finally won the right to host the $5 billion African Energy Bank (AEB), first of its kind on the continent.
Nigeria was granted the hosting rights for the bank at an extraordinary meeting of the Council of Ministers of the African Petroleum Producers Organisation (APPO), the umbrella body for oil-producing nations in Africa.
Described as a significant step for the continent's energy sector, the bank is expected to focus investment in oil and gas projects across the continent and is set to start operations later this year with an initial $5 billion authorised capital base.
The bank, a partnership between Afreximbank and APPO is meant to help plug a funding gap in Africa amid pressure on major banks from environmental groups to shift investment dollars away from climate-warming oil and gas projects.
Each African member country will contribute a minimum of $83 million for a total of around $1.5 billion, while Afreximbank and APPO as founder members are expected to match the amount. The outstanding $2 billion will potentially be sourced from other investors, including Middle Eastern sovereign wealth funds, THISDAY learnt.
Besides, the AEB's primary objective is to fill the imminent void that the withdrawal of funding for oil and gas projects in Africa by the traditional financiers could cause to the industry.
African leaders have argued that with over 125 billion barrels of proven crude oil reserves, over 600 trillion cubic feet of proven gas reserves, and with more findings regularly being made, it does not make sense for the continent to abandon fossil fuels when it has the largest proportion of world's population living without access to modern energy.
Minister of State Petroleum Resources (Oil), Senator Heineken Lokpobiri, who broke the news in Abuja said the decision reflected the collective ambition to create African solutions to African energy challenges.
He argued that the bank will be instrumental in providing the necessary financial backbone for energy projects that will drive growth and development across the continent.
Nigeria emerged as the preferred host nation amid stiff competition from Ghana, Benin, Algeria, South Africa, and Cote D'Ivoire, highlighting the nation's robust energy sector and its strategic vision for the continent's energy future.
Lokpobiri assured Nigerians and Africans at large that the establishment of the bank would mark a transformative era in meeting energy needs on the continent.
"I want to announce to Nigerians that the Council of Ministers of the African Petroleum Producers Organization (APPO) has just approved Nigeria to host the headquarters of the African Energy Bank.
" The bigger challenge we have in Africa, as oil producing in the countries is funding. And so, a short while ago, the Council of Ministers held a meeting and said that the time has come for Africa to find its own solutions to financing oil and gas investments.
"So based on that, the idea of African Energy Bank was conceived. And we've been talking with our counterparts from other countries, those who were competing with us. Six countries were competing with us, plus Nigeria, six.
"But today, I want to thank all of them, all the members of APPO. I want to thank Nigerians for their support. I want to specifically thank the president and Commander-in-Chief of the Armed Forces, who gave us the fullest of support in ensuring that we get to this point.
" This is not going to be a bank for Nigeria alone. It is a bank for the entire African continent. And I want to assure Nigerians that this is one of the biggest achievements of this administration because funding has been a big challenge.
"And once we solve that problem, all this smear campaign of abandoning fossil fuel and all that will be completely eroded. So I want to say to Nigerians that we've been formally given. Let all of us work together to ensure that this bank takes off on time," Lokpobiri stated.
Yesterday's breakthrough came after massive lobbying by Nigeria which met with envoys of members of APPO to convince them on why the facility should be located in Africa's biggest oil producer a few weeks ago.
Following Nigeria's victory in the race to host the headquarters of the bank, operators in the country's oil and gas industry yesterday expressed their excitement over the development.
Speaking exclusively to THISDAY last night, the Managing Director of Platform Petroleum, Mr. John Anim, said locating the bank in Nigeria would help close the funding gap in the nation's oil and gas industry.
Anim said: "It's a welcome development and we are excited about the news. It's a very good one for Nigeria because there were many countries on the continent contending for the opportunity to host the Africa Energy Bank. At least Nigeria is better positioned to do so.
"Of course, energy bank is targeted at providing funding and financing for the development of energy-related projects. Of course, you know that one of the challenges facing the development of the resources we have as funding is drying up all over the world due this energy transition.
"The energy bank located in Nigeria will pool resources from different sectors to see how funds will be available to develop energy. That will make energy to be more affordable, reliable and available to us. So kudos to Nigeria".
He maintained that the energy bank would now be another institution that would complement the efforts of Afreximbank in addressing the funding challenge confronting the continent's energy which has led to hobbled development of the energy resources in Africa.
He added that the energy bank would equally support the interventions of the African Development Bank (AfDB) located in Ivory Coast in making funds available to the industry.
On his part, a former Chairman of the Petroleum Technology Association of Nigeria (PETAN), Mr. Bank Anthony-Okoroafor, whose marginal field is currently under development, told THISDAY that Nigeria winning the contest to have the headquarters of the AEB in the country was a welcome development.
"It's a good thing for us to have the energy bank here in Nigeria and we hope we would be able to make use of the benefits. We hope the can provide finance for most of our companies that are looking for finance.
"But also, we need to understand the structure of the energy bank in terms of benefitting businesses in Nigeria. A lot of things need to be explained about how it is structured to make money available to companies for development of energy projects in Nigeria. But overall, it's a good one. It's a welcome development", Okoroafor said.
Also reacting to the development, the Nigerian Association of Petroleum Explorationists (NAPE) described it as a significant milestone that aligns perfectly with the association's longstanding advocacy for the establishment of an energy-focused financial institution.
In a statement issued last night, the President of NAPE, Mr. Abiodun Ogunjobi, said the association had been passionate about the continental energy bank initiative, noting that it holds immense potential to drive investments, facilitate access to capital, and accelerate growth in the oil, gas, and renewable energy industries.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
Ogunjobi posited that the African Energy Bank would be a game-changer that would be providing specialised financing solutions, risk management tools, and advisory services tailored to the unique needs of energy projects and enterprises.
He stated: "As the President of NAPE, I am thrilled to hear that Nigeria has been selected as the host country for the headquarters of the much-anticipated African Energy bank.
"This is a significant milestone that aligns perfectly with NAPE's longstanding advocacy for the establishment of an energy-focused financial institution. We have been passionate about this initiative, as it holds immense potential to drive investments, facilitate access to capital, and accelerate growth in the oil, gas, and renewable energy industries.
"The African Energy bank will be a game-changer, providing specialised financing solutions, risk management tools, and advisory services tailored to the unique needs of energy projects and enterprises.
"This will undoubtedly boost investor confidence, unlock new opportunities, and catalyse the transformation of Nigeria's energy landscape."
He said NAPE stands ready to fully support the endeavour and collaborate closely with the relevant stakeholders, including the government, regulatory bodies, and industry players.
According to him: "Together, we will work towards effective utilisation of the energy bank for the benefit of the entire nation. This is a proud moment for Nigeria, and we are excited to be part of this journey towards energy security, sustainable development, and economic prosperity. Let's seize this opportunity and make the most of it".
