Investment committee of the African Energy Chamber has prioritised capital mobilisation for investment in new energy projects on the continent.
The committee, which met virtually for the second time since its inception last year, resolved to make capital mobilisation a top agenda of the industry in the post-Covid era.
The committee also unanimously agreed that African energy projects are more profitable when handled with the “right investment structure.”
According to the World Economic Forum, “Africa’s urban population is expected to nearly triple by 2050, to 1.34 billion.”
Consequently, there is an important need for investment in energy to cater for their needs to facilitate the development of industry and the generation of much-needed revenue and jobs. The discussion focused on solutions to the current lack of investments in the oil and gas industry.
“The traditional way of investing is changing,” said the executive chairman and founder of Raise Africa Investments Nosizwe Nokwe-Macamo. “The African Energy Chamber must look to tap into non-traditional funding streams and look further afield than the usual geographical hotspots for investments.”
Similarly, the chief commercial officer at Mixta Africa Rolake Akinkugbe-Filani observed, “To begin with, we need to be able to articulate clearly what the need is for energy across the diverse African countries and what the different opportunities are.”
“Where possible and appropriate, we must tap into local sources of funding as well as other largely unexplored sources of funding, such as pension funds. There is appetite for African infrastructure projects but we must think of encouraging innovation to meet multiple objectives. Developing infrastructure and traditional energy sources, while also furthering transition to renewable energy. The Chamber, its partners, members and the wider network must connect opportunities to funding opportunities,” Akinkugbe-Filan.
Mahube Infrastructure chief executive Gontse Moseneke noted, “We must use this current situation to uncover where new opportunities arise. Our natural resources need to be translated into permanent capital and it takes bodies like the chamber to be bold enough to facilitate the provision of energy needed for that. On the energy transition he said this was an opportunity for Africans to restructure, with the understanding that localisation is key.”
In his view vice president of Africa at ION Folarin Lajumoke said African governments have a critical role to play in the quest to raise much needed capital to fund oil and gas projects.
“Recent events make for a very globally competitive landscape. In order to drive investors towards Africa, fiscal terms would need to be reviewed with a potential investor or explorer’s return on investment in mind. Many fiscal terms are no longer fit for the purpose in light of the emerging trend in energy transition. Funding for hydrocarbons in Africa will compete not only with similar opportunities in other continents but also with other sectors such as agriculture, technology and renewables,” Lajumoke said.
In a bearish market, he said, the fiscal terms and policies in place could swing an explorer or investor from one geological basin to another. Hard-line bureaucracy on exploration is another major challenge. Exploration helps de-risk geology thereby attracting investment, he pointed out.
He added, “Unattractive fiscal terms, coupled with bureaucratic excesses towards exploration, is toxic for capital raising. Furthermore, African national oil corporations have an important role to play by becoming full-cycle energy companies which seek opportunities outside their own countries. A diversified national oil corporation such as Qatar Petroleum or Petronas is better placed in raising capital for growth or expansion than one which isn’t. It is also politically strategic for the much-needed growth in intra-Africa trade.”
It is against this backdrop that the African Energy Chamber is considering to partner with investors and projects sponsors to approach the chamber and benefit from its network of partners and members to facilitate project implementation.
“We will continue to build partnerships with the private sector and governments worldwide to attract critical funding to energy projects,” said director of international relations at AEC Samantha Raoult.
As a first step, it is imperative to identify the energy requirements across different African countries and directly approach a range of potential investors throughout the continent and worldwide to keep up with market needs.
AEC is the voice of the sector and Raoult vowed that the organisation will continue to build bridges that connect governments and companies in involved in the energy industry to find a common ground.
The director said the year ahead is important to the sector as there are mega projects lined up from Senegal to Mozambique, via Equatorial Guinea.
While there is a global need for lower carbon energy projects, she said, it is important to put into context that combined, African countries account for just over three per cent of the world’s greenhouse-gas emissions despite being home to 14 per cent of people.
- A Tell report/jk