- Nigeria has won the right to host the $5 billion African Energy Bank
- The win follows Nigeria’s investment of $100 million, exceeding the $83.33 million commitment required for class A shares from APPO member countries
- The news has elicited excitement from Nigerians and operators in the oil and gas sector
Nigeria’s $100 million investment in the African Energy Bank (AEB) has paid off. Following a keen competition against countries like Ghana, Benin, Algeria, South Africa, and Cote d’Ivoire, Nigeria won the hosting rights for the $5 billion bank.
The decision to select Nigeria as the preferred host nation was reached during a virtual extraordinary meeting of the Council of Ministers of the African Petroleum Producers Organisation (APPO) on Thursday, July 4.
The AEB is a partnership between Afreximbank and APPO, the umbrella body of oil-producing nations in Africa. It is focused on investments in oil and gas projects across Africa, including energy transitions and 2060 net zero commitments.
To achieve the funding requirements of the bank, which will begin operations later this year, each African member-country will contribute a minimum of $83 million for a total of about $1.5 billion over three years to be matched by Afreximbank and APPO, who have already approved a $1.75 billion investment for the bank. Outstanding funds of up to $2 billion will be sourced from other investors in and outside the continent.
APPO members followed the energy bank route given the continent’s oil potential of over 125 billion barrels of crude oil reserves and over 600 trillion cubic feet of gas reserves, among others. Also, the bank will fill the funding gap in oil and gas investment in Africa even as there have been calls to move away from investments in dirty energy projects.
Minister of State Petroleum Resources (Oil), Senator Heineken Lokpobiri, while announcing the decision in Abuja, said the bank will provide finances that will revolutionise and drive investment in energy in the continent.
He said, “The bigger challenge we have in Africa as oil-producing countries is funding. And so, a short while ago, the Council of Ministers held a meeting and said that the time has come for Africa to find its own solutions to financing oil and gas investments. So, based on that, the idea of African Energy Bank was conceived.
“This is not going to be a bank for Nigeria alone; it is a bank for the entire African continent. And I want to assure Nigerians that this is one of the biggest achievements of this administration because funding has been a big challenge. And once we solve that problem, all this smear campaign of abandoning fossil fuel and all that will be completely eroded.”
A big win for President Tinubu’s commitment
The win comes on the heels of President Bola Tinubu’s commitment to revolutionise the oil and gas sector.
In May, the president approved a $100 million investment in the AEB for class A shares, which is $16.67 million higher than required of member countries, to favourably position Nigeria to win the bid to host the bank.
The Permanent Secretary, Federal Ministry of Petroleum Resources, Nichola Ella, had said, “President Bola Tinubu has approved a $100 million investment from four agencies of the Ministry of Petroleum Resources, exceeding the minimum equity requirement of $83.33 million for class A shares.
“The decision positions Nigeria favourably to win the bid, potentially reshaping the country’s oil and gas ecosystem.”
To get the buy-in of APPO members, Minister of Petroleum Resources (Oil), Lokpobiri, had on June 11, hosted envoys of members of APPO, where he lobbied that the bank be headquartered in Abuja, Nigeria.
Lokpobiri argued that hosting the bank in Nigeria will ensure proximity to key energy experts and technocrats as well as leverage Nigeria’s oil and gas reserves.
News excites Nigerians, oil and gas operators
Nigerians, including operators in the oil and gas sector, have expressed their opinions and excitement on the matter.
On X, (formerly Twitter), netizens, who reacted to the tweet by the Minister of Petroleum Resources, noted that the news is a big win for Nigeria. Others, however, questioned the country’s eligibility owing to oil theft, vandalism and the high cost of petroleum products.
A social media commentator, Opeoluwa @OpeBee tweeted, “The Bank is going to be capitalised to $5 billion. That is an easy inflow of $5 billion FDI into the economy. The more the assets grow, the better for the country as the highest shareholder and inflow of FDI. The forex inflows ($ billions) will be managed by CBN, improving forex liquidity to the economy. Nigeria will get a major chunk of the investments financed by the bank improving oil and gas infrastructure. Contagion effect to attract more international banks and investments because of the location and proximity to the African Energy Bank. Multiplier effects on employment and technical capacity is enormous. Increase in GDP. Taxation!!! (both for FCT and FIRS). The bank will be listed on our stock market, attracting more forex to our economy. Geopolitical leverage. The list goes on.”
@martinokorowu wrote, “Nigeria being selected to host the headquarters of the African Energy Bank is a clear recognition of its strategic leadership and commitment to the energy sector. This development is expected to position Nigeria as a central hub for energy financing in Africa, fostering regional cooperation and innovation. The presence of the bank in Nigeria will likely attract significant investment and drive sustainable economic growth.”
@ade_niyii said, “Considering the countries that wanted this, bagging it is a win. Looking forward to their operations here and the chance to be a part of it. Well done Honourable Minister.”
@kingkhone4real tweeted, “How does this reduce oil theft, petrol pump price, and corruption in the industry?”
@KayodeAbraham12 wrote, “On what grounds??? Have we fixed our refineries to production and optimum lvl (level)??? Do we have regular, steady, adequate and affordable supplies of fuel as we speak?? Where is d expenditure on the turn-around maintenance gone to??? Are we normal??”
@dapoadebayo said, “Be hosting headquarters up and down when your production output is at critical level. Sit up Mr minister.”
@Stateman1010 wrote, “Will that reduce the price of fuel in the country???”
Operators in the sector who spoke with THISDAY say the win will bolster the sector and make energy available to Nigerians.
Managing Director of Platform Petroleum, John Anim, said, “Energy bank is targeted at providing funding and financing for the development of energy-related projects. You know that one of the challenges facing the development of the resources we have as funding is drying up all over the world due this energy transition.
“The energy bank located in Nigeria will pool resources from different sectors to see how funds will be available to develop energy. That will make energy to be more affordable, reliable and available to us.”
A former Chairman of the Petroleum Technology Association of Nigeria (PETAN), Bank Anthony-Okoroafor, said, “It is a good thing for us to have the energy bank here in Nigeria and we hope we would be able to make use of the benefits. We hope they can provide finance for most of our companies that are looking for finance.
“But also, we need to understand the structure of the energy bank in terms of benefitting businesses in Nigeria. A lot of things need to be explained about how it is structured to make money available to companies for development of energy projects in Nigeria. But overall, it is a good one. It is a welcome development.”
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Mele Kyari, the Group Chief Executive Officer of NNPCL, stated this during his address at the 2024 Nigeria Oil and Gas Energy Week in Abuja on Tuesday, June 2.
