The African Petroleum Producers Organisation (APPO) has finalised plans to establish the Africa Energy Bank before the end of this year according to reports. While reacting to the reports, Ali Ssekatawa, the PAU legal and corporate affairs director, said the bank was a welcome idea that could counter the global trend against financing oil and gas projects which has hindered Africa's progress.
The Uganda Petroleum Authority (PAU) says the Africa Energy Bank, expected before the year elapses, will make Africa, Uganda included, from expensive energy-related funding which feeds off a perceived increase in risk.
Africa rallies behind Energy Bank to cut off expensive foreign investment that comes with harsh terms/Courtesy
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According to the International Energy Agency, Ssekatawa revealed, funding energy projects in Africa is currently seven times more expensive than in Europe due to perceived higher risk by funders, which results in expensive energy infrastructure projects.
“European funders often impose onerous terms such as political insurance cover and the application of foreign law, as well as external dispute resolution mechanisms like international arbitration, which do not recognise African jurisdictions,” Ssekatawa said.
He also noted that the Africa Energy Bank could provide an equitable and fair alternative for African countries and companies in the overall scheme of energy transition.
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Deal for Africa Energy Bank/Courtesy
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There's declining investment in hydrocarbons because of the global emphasis on shifting to green energy which has left Africa untethered to explore fossil fuels. However, African leaders have stuck their feet in the mud saying they should be allowed to transition to green energy using their resources from oil.
The bank will be a partnership between African countries subscribing to APPO and the African Export-Import Bank. It will also attract investment from oil and gas expert countries such as Saudi Arabia, UAE, Qatar and Kuwait.
Uganda is yet to subscribe to APPO. However, Irene Bateebe, the permanent secretary of the Ministry of Energy said that apart from increasing its engagement with other oil-producing countries, Uganda is evaluating the process of joining APPO.
“As a country, we are not yet subscribers, but we are evaluating the process and criteria, and we will definitely join soon,” she said.
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The move to form the Africa Energy Bank comes at a time when many international funders such as HSBC, Standard Chartered and Standard Bank, among others, are facing a lot of pressure from climate activists to stop funding oil projects, many of them in Africa, over carbon emissions, and the need to shift to cleaner energy.
