By Stanley Onyeka, Lagos
African Export-Import Bank (Afreximbank), and the Africa Petroleum Producers’ Organisation (APPO), have announced a historic signing of the Establishment Agreement and the Charter of the Africa Energy Bank (AEB).
The ceremony was held at Egypt’s Ministry of Petroleum and Mineral Resources and hosted by its Minister, Tarek El Molla.
President and Chairman, Board of Directors, Afreximbank, Benedict Oramah, and APPO’s Secretary-General, Omar Ibrahim, signed the Establishment Agreement and the Charter of the Africa Energy Bank on behalf of their respective institutions.
With the signing of the Establishment Documents by the two founding institutions, at least two Member Countries now need to sign and ratify it for the Bank to take off.
According to a joint statement today, the signing ceremony concludes two years of negotiations and preparations by the two parties having signed a Memorandum of Understanding in May 2022 towards the establishment of the AEB.
“The AEB was created to address the impending funding crisis in the African oil and gas industry, triggered by the global energy transition.
“Traditional financiers, on whom Africa has relied for decades, are withdrawing support, particularly in Africa, citing climate change concerns as the primary reason,”the statement reads.
Energy independence
Speaking, Mr. El Molla, who is also a Member of the APPO Ministerial Council, was quoted to have said: “This moment marks a significant milestone in our continent’s journey towards energy independence and sustainable development. By harnessing our collective resources and expertise, we are paving the way for a brighter, more prosperous future for all Africans.
“The collaboration between Afreximbank and APPO is a testament to our unwavering commitment to powering Africa’s growth and ensuring energy security for generations to come.”
For Prof. Oramah, “These are challenging times when we must strive to find the right balance between the imperatives of mitigating climate change and the urgency of averting social upheavals as a result of increasingly difficult economic and financial conditions in Africa.
“For us at Afreximbank, we are enormously proud to be co-investing in this new vehicle and for taking the lead role in advising on the management and implementation process with the operational launch set to commence in July.”
Traditional financiers, on whom Africa has relied for decades, are withdrawing support, particularly in Africa, citing climate change concerns as the primary reason.
On his part, Dr. Ibrahim posited that the AEB is Africa’s response to the imminent funding challenge that the global paradigm shift from fossil fuels to renewable energies – euphemistically called the energy transition – poses to the oil and gas industry in Africa:
“For too long Africa’s oil and gas industry has been dependent on extra-African funding. We came to take foreign financing of our oil and gas projects for granted, until the advent of energy transition made us realize that those on whom we have depended for many decades have decided to abandon us.”
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.
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 Africa to abandon these energies when it has the largest proportion of the world’s population living without access to modern energy.
While the AEB’s focus shall be funding oil and gas projects, it shall not close its doors to renewable energy projects.
AEB shall strive to harness all forms of energy to ensure that Africa’s energy poverty is eradicated. Although started by Africa, shareholding is open to all Investors who share the mission and vision of the Bank.
The AEB has been structured as an independent and supranational pan-African energy development bank with an initial $5 billion capital.
