The Independent Uganda: You get the Truth we Pay the Price
Cairo, Egypt | THE INDEPENDENT | The Africa Energy Bank is finally ready for implementation, following the signing of the Establishment Agreement between the Pan-African Bank, Afrexim, and the oil-producing countries of the continent.
The agreement between the Africa Petroleum Producers’ Organization (APPO) and the Africa Import and Export Bank (Afreximbank) has now declared the venture open for signature by the willing member states.
The AEB has been structured as an independent and supranational pan-African energy development bank with an initial 5 Billion dollar capital.
Prof. Benedict Oramah, President and Chairman of the Board of Directors, Afreximbank, and Dr. Omar Farouk Ibrahim, Secretary General of APPO signed the Establishment Agreement and the Charter of the Africa Energy Bank on behalf of the two institutions at an event in Cairo, Egypt.
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.
Over the last five years, for example, the development of Uganda’s oil and gas projects has been under uncertainty with the country’s major development partners and lenders like the World Bank, staying away or withdrawing their support.
While the upstream projects like exploration and drilling at the Tilenga and Kingfisher areas have progressed almost perfectly, there have been protracted efforts by environment crusaders against the East African Crude Oil Pipeline project, which they say is a threat to the environment and social welfare.
The step-back by the global lenders and the developed world sparked the idea of a bank that would answer these challenges.
Eng. Tarek El Molla, a Member of the APPO Ministerial Council noted that: “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 Afrexim President Prof. Oramah, noted the importance of a balance between mitigating climate change and the urgency of averting social crises as a result of increasingly difficult economic and financial conditions in Africa.
On his part, Dr Ibrahim said 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 Secretary-General argued that Africa cannot afford to abandon oil and gas in a hurry when it has the largest proportion of its population living without access to energy.
The AEB’s primary objective is to fill the imminent void that the withdrawal of funding for oil and gas projects in Africa by traditional financiers could cause to the industry.
With over 125 billion barrels of proven crude oil reserves, and over 600 trillion cubic feet of proven gas reserves, on top of ongoing discoveries, the continent has the largest population without access to modern energy, hence the need not to abandon these energies.
While the AEB’s focus shall be funding oil and gas projects, it shall not close its doors to renewable energy projects but 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.
With the signing of the Establishment Documents by the two founding institutions, at least two Member Countries now need to sign and ratify the Establishment Documents for the Bank to take off.
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