By Sunday Etuka, Abuja
African Export-Import Bank (Afreximbank) and the Africa Petroleum Producers’ Organisation (APPO) have signed a historic agreement for the establishment of Africa Energy Bank (“AEB”).
A statement made available on Tuesday by the Afreximbank said, the agreement was signed
at a ceremony held at the Ministry of Petroleum and Mineral Resources of the Arab Republic of Egypt.
The event, according to the statement, was hosted by H.E. Eng. Tarek El Molla, Egyptian Minister of Petroleum and Mineral Resources who also witnessed the signing ceremony.
Prof. Benedict Oramah, President and Chairman of 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 their respective institutions.
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.
H.E. Eng. Tarek El Molla, who is also a Member of the APPO Ministerial Council noted that: “It is a great honour to witness the establishment of the Africa Energy Bank. 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. I am confident that this newborn Institution shall grow to serve the cause of Africa and Its people. I commend the negotiating team and on behalf of the APPO Ministerial Council, I congratulate the team.’’
Commenting on the event, Prof. Benedict Oramah, noted: “Today marks a historic day for our continent. We are honoured to have collaborated with APPO towards the establishment of the Africa Energy Bank. 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.”
Prof. Oramah added: “This has truly been a joint effort and we are immensely grateful to the members and leadership of APPO for their collaboration with Afreximbank as we look forward to continuing this endeavour to address the urgent needs of a continent and its people.”
On his part, Dr. Omar Farouk 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 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.
Dr. Farouk further commended Professor Oramah for his exemplary leadership and commitment to the cause of the African continent. He also noted that the idea of the AEB was conceived and incubated in Cairo when H.E. Eng El Molla hosted the two Institutions in December 2020.
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 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 USD 5 Billion capital.
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.
