Africa needs pragmatic free market policies to attract capital to gas markets (By NJ Ayuk)



By NJ Ayuk

Speaking at International Petroleum Week (IP) on February 25, 2021, I commended Nigeria for its efforts to boost gas monetization, but we need to be clear that our industry and hardworking workers remain frustrated by delays and inability to pass and sign the Petroleum Industry Bill. There must be this fierce sense of the urgency of the moment, especially in the era of energy transition. The Petroleum Industry Bill (BIP) must be passed as it allows energy companies to focus on producing energy that boosts our economies.

This will allow politicians to focus on other pressing issues such as the African Continental Free Trade Area (AfCTA)and security issues.

Africa is well positioned to become a key global LNG supplier. Mozambique, Nigeria, Equatorial Guinea, Senegal and Tanzania are potential players. But we have to be honest, Africa is falling behind.

While capital investments in other regions have increased, they have declined considerably in Africa. The competition for capital investments in the global LNG industry is fierce and for countries that want their resources to be monetized locally and internationally, a number of factors need to be considered and must be done as quickly.

Rising (and sometimes reckless) public spending, onerous regulations, and a lack of infrastructure to get energy from Africa to growing markets all undermine investor confidence in many African countries. This negatively affects exploration projects and even our ability to attract the capital needed to create jobs, implement AfCTA and promote prosperity across Africa.

During my numerous meetings with African leaders, I have made it my duty to defend an environment conducive to the energy industry. Many of our government-proposed policy and regulatory initiatives, as well as governance issues, undermine investor confidence and undermine our ability to attract capital and remain competitive.

We must not forget that we are competing for investment, labor and capital in an increasingly globalized world.

I believe in Africa and our people, even in our dark times, that there is always a straight wind pushing us to a place where winning is real. We are hard working people and we have the courage within us to make it a pivotal point in our energy industry and in our history.

Amid the COVID-19 pandemic, some industries, businesses, and segments of the workforce have flourished. But, of course, it was also a very different story for others. Entire industries have been decimated because people are no longer able to travel, congregate, do business, or lead their lives as they once did.

For governments to recover, they must seek not to revert to excessive regulation or anti-business policies and even sometimes punitive taxes. The positive effects of regulatory easing and pro-business policies on many African economies have attracted investment and secured FID on many energy projects. Now is exactly the wrong time to further test the resilience of businesses by raising taxes or filling up with new regulations that are doing more harm than good to African and international investors.

For Africa to see a balanced and sustainable energy mix, it is important that we urgently address the challenges our industry faces today.

At the African Energy Chamber, we exist to build, educate and mobilize the largest network of Africans advocating the principles of smaller government, better fiscal conditions, lower taxes, less regulation, less paperwork, common sense, local content, free – market commerce, personal freedom and the rule of law. Through these positions, we offer solutions to create an economically viable industry and Africa that meet our environmental and competitiveness objectives.

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