Oil-focused African Energy Bank to choose host nation in March, launch by end-June

The African Energy Bank expects to launch by June 30 after selecting a host nation this month and aims to raise an initial $5bn from African signatories, international financiers and Middle Eastern states, its head told S&P Global Commodity Insights.

The first meeting to choose the new institution’s headquarters met virtually on March 10, chaired by Libya’s oil and gas minister, Mohamed Aoun, who was assigned by the African Petroleum Producers’ Organization (APPO) to chair the committee to select an African host country.

The new institution, formed out of a partnership between the APPO, which represents the continent’s petrostates, and the African Export-Import Bank (Afreximbank), aims to fund oil and gas projects on the continent amid a dearth of Western financing in recent years due to the global shift away from fossil fuels.

In an interview on the margins of an energy conference in Accra, Ghana, on March 12, APPO secretary-general Omar Farouk Ibrahim told S&P Global that “a number of investors and countries in the Middle East that believe that the oil and gas industry has a future” were “waiting in the wings” to supply financing.

“Afreximbank cannot continue the way it is, funding oil and gas projects. There is a lot of pressure on it from other investors in the bank who do not share the vision. By partnering with us they have excised everything about oil and gas from their portfolio,” Ibrahim, a former Nigerian OPEC governor, said in the interview. “Financers of Afreximbank are not just Africans or people who share our vision.”

Sources speaking on condition of anonymity told S&P Global that so far only Nigeria and Angola have supplied initial funds to the project, at around $20mn each. The African Energy Bank is seeking $83mn from each of the 18 signatories, or nearly $1.5bn.

Jostling for host status of the new institution are six member states, including Ghana, whose energy minister, Matthew Opuko Prempeh, told the publication that his West African country is among the few countries that have fulfilled all criteria to become host.

According to Nigerian publication ThisDay, six countries have “mounted a resistance against a decision in favour of Nigeria” hosting the new institution, namely Ghana, South Africa, Egypt, Benin, Ivory Coast, and Algeria.