To Develop Thriving Downstream Markets, Africa Needs Free Markets, Private Sector Participation
AEC Executive Chairman NJ Ayuk calls for Africa to cut the high energy taxes, create enabling environments for energy firms to thrive and reduce resource nationalization to drive oil and gas industry growth and make energy poverty history by 2030
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The African Energy Chamber (AEC), voice of the African energy sector – is committed to ensuring Africa maximizes the development and exploitation of its entire energy base for energy security and that infrastructure rollout and investments are optimized across the entire value chain.
The AEC’s participation at this year’s edition of the African Refiners & Distributors Association (ARDA) – which runs from 13-17 March in Cape Town – emphasized this very fact, with Executive Chairman NJ Ayuk driving the discussion on the need for improved private sector participation in downstream operations as well as the need to cut taxes and amend fiscal terms to achieve a robust energy industry capable of addressing energy poverty and ensuring affordability and access.
Ayuk spoke in a panel discussion titled, ‘OPEC-Africa Energy Dialogue Post-COP27: Ensuring a coordinated, robust intra-African oil & gas industry alongside implementation of energy transition aspirations,’ alongside Dr. Omar Farouk Ibrahim, Secretary General of APPO and Dr. Haris Aliefendic, Senior Research Analyst at the Energy Studies Department, OPEC. The panel was moderated by Anibor Kragha, ARDA Executive Secretary.
Commenting on best practices to drive Africa’s energy industry expansion, Ayuk, stated that, “We as Africans and industry need to be more solution driven. We need to look at how do we rally the finance required to make things happen. We need to create an enabling environment and look at what are we doing wrong to change things, we need to correct what is wrong. If renewables were the solution, South Africa would not be in darkness. Germany would not be importing coal from South Africa. We cannot be told that renewables are the way to go when we are receiving less than 2% of the global investments. We need to talk about how we can achieve intra-African free trade to boost energy access and ensure clean cooking. We don’t need to be ashamed of making money, because when we make money, we will be able to define our own energy road plan and fix the energy crisis problem.”
Expanding on how the continent can create an enabling environment for oil and gas market players, Ayuk stated that, “We need to be providing access to deals. Resource nationalization needs to stop. Uganda and Ghana made discoveries 16 years ago and to date, no development of the resources has materialized. We, as Africans need to look at private sector parties, create and sign deals. Mozambique is still suffering 12 years after the discovery of massive reserves. We should reduce the time being taken to approve and build oil and gas projects. We need to look at fiscals and how we can continue attracting firms. When we cut the bottlenecks currently restricting industry expansion, firms will start to come in. Africa should prioritize the use of African solutions, action and opportunities while governments must cut down taxes, they are too high.”
Kickstarting his discussion, Dr. Farouk stated that, “We believe Africa needs to do more when it comes to critical thinking around energy security and sustainability, especially when we go into global energy discussions. We all accept that the world is seeing a shift from fossils to renewables, yet in doing so, huge challenges for Africans around energy security and socioeconomic development are being brought on us. As we go to looking for solutions to address energy challenges associated with the energy transition, we are going back to the old system of seeking aid from western parties. Each African country is rich enough if they decide to prioritize energy over the past ten years.”
Asked about the progress of the African Energy Transition Bank project, Dr. Farouk added that, “We have made a lot of progress in establishing the transition bank. We are hoping that before the end of the year, the bank will be live. Most of the key issues have been addressed. Two days ago, we had discussions with Afreximbank around the bank.”
Meanwhile, commenting on the progress being made by the African downstream sector in addressing industry challenges, Dr. Aliefendic stated that “the continent, together with the Middle East and Asia Pacific, will account for over 90% of all infrastructure additions by 2045 as capacity migrates from developed countries to new markets where oil and gas demand will be high.”
These and more downstream discussions will be held at this year’s African Energy Week (AEW) conference and exhibition – Africa’s premier event for the energy sector – which will take place from 16-20 October 2023 in Cape Town. As key developments advance such as the establishment of the African Energy Transition Bank, downstream opportunities increase and global project developers turn to Africa, AEW 2023 represents the official platform for new deals to be signed that will advance the African downstream industry.
