Funding for African oil and gas sector takes a step forward

APPO chooses Nigeria to host the Africa Energy Bank

The establishment of the African Energy Bank (AEB), which was announced in 2022, took another step forward this week when the African Petroleum Producers’ Organisation (APPO) announced that the institution would be headquartered in Abuja, Nigeria.

Announced during the 8th African Petroleum Congress and Exhibition in Luanda, Angola, the bank was initially due to be headquartered in Luanda

After considering recommendations, the APPO Council noted that several criteria including socio-economic factors, security and accessibility had been considered. Although it is not clear exactly when the AEB will become operational, some of the Member Countries have already started paying their subscriptions to the share capital of the Bank.

The initial funding was expected to come primarily from African countries, particularly members of APPO. Afreximbank was also anticipated to be a significant contributor. The initial capitalisation targe has been set at US$5 Billion.

The establishment of the AEB aims to address the funding challenges facing the African oil and gas industry as more international banks reduce their investments in fossil fuel projects due to climate change concerns.

The funding will be used to support exploration and production; refining, processing and energy infrastructure as well as energy accessibility initiatives. Renewable energy projects will also be considered.

When fully established the AEB will be similar to other specialised development finance institutions and will focus on providing funds for energy projects on the African continent.

The African Energy Council (AEC) has voiced its support for choice of the AEB headquarters noting the recent financial support from the World Bank which approved a $2.25 billion package to assist Nigeria in improving its oil revenue management, ensuring fiscal sustainability, cultivating economic growth and enhancing public services.

“The selection of Nigeria to host the AEB is a great milestone for the bank. This also challenges Nigeria to be able to live up to its true meaning in getting its own home-based energy industry to work. Massive energy reserves available in the country will only support the bank and help drive it. There is also an amazing amount of talent in- and outside of the country, which will be instrumental in driving a world-class institution that will be operated in the same way that every western and Asian financial institution is operated. We at the chamber welcome this milestone and hope that the robust initiatives that are being taken to drive this bank will only serve to benefit the continent,” states NJ Ayuk Executive Chairman of the AEC.