Energy developments in Africa require sustained investment with new projects in Mozambique, Tanzania, Uganda and Senegal



Energy developments in Africa require sustained investment with new projects in Mozambique, Tanzania, Uganda and Senegal

Over the past twelve months, Africa’s energy sector has seen several encouraging developments – in the form of both foreign direct investment (FDI) and strategic partnerships – which have advanced the sustainable development of its natural resources. In fact, despite a global slowdown in investment in 2020, FDI flows to developing economies accounted for 72% of global FDI, the highest share to date. Given the sheer scale of Africa’s oil and gas reserves – not to mention its abundant wealth of renewable resourcesthe continent remains a very attractive market for inbound investments, which is vital for its growth.

Take Uganda, for example, which is home to one of the largest land discoveries in sub-Saharan Africa. Following multiple discoveries of oil in Uganda’s Albertine Graben – estimated to contain 6.5 billion barrels of oil, of which 1.4 billion are considered recoverable – foreign investment in the country is expected to reach nearly $ 20 billion. dollars. Last April, Total E&P Uganda BV signed a sale and purchase agreement with Tullow Oil PC, whereby Total will acquire all of Tullow’s 33.34% stake in Uganda’s Lake Albert development project and pipeline. East African Crude Oil (EACOP). Five months later, the Ugandan government and Total signed a host government agreement for the EACOP, which represents an important step towards the final investment decision. The deal continues a protracted development process – slowed down by infrastructure issues, tax complications, and then COVID-19 – that not only promises to bring first oil by 2022, but also provides a path to monetization via the associated transport infrastructure.

In addition to the developments at Lake Albert, the Ugandan government has demonstrated its commitment to attracting FDI in its hydrocarbons sector through its second round of licenses held last year, as well as its invitation to local and foreign entities to forge partnerships. joint venture with the government. . By prioritizing the establishment of mutually beneficial partnerships, the emerging East African producer aims to facilitate the successful transfer of skills, knowledge and technology, initiating an influx of technical expertise and bearing in the country.

“Those who have been excluded from accessing opportunities want the same from the energy sector that energy sectors expect from governments. We must not forget about local content, local jobs, local opportunities especially for young people and women, ”said NJ Ayuk, Executive Chairman of the African Energy Chamber (http://EnergyChamber.org)

At the same time, in West Africa, Senegal has reaped the benefits of a long-standing partnership with Germany, which has resulted in funding of over € 1 billion, including significant support. small power plants and renewable energy projects. With significant potential for the development of solar and wind energy, Senegal is a regional leader in the deployment of renewable energies as a means of rural electrification. Indeed, energy is a central element of poverty reduction in Africa, access to electricity allowing greater independence, a clean kitchen and drinking water, as well as a spectacular improvement of the property. -being individuals, businesses and communities. Rural populations are aware of the challenges posed by the lack of stable electricity supply – increased urban migration, lack of access to basic services, low economic competitiveness, to name a few – and energies. distributed renewables may represent the fastest and cheapest route to electrification.

The European interest in Senegal has brought to light and served as a model for cooperation opportunities between African countries rich in renewable energies and developed partners, which offer cutting-edge technologies and technical expertise to transform raw resources into a viable off-grid and mini-grid. solutions.

Additionally, while the cost of deploying renewable technologies has never been lower, the availability of renewable energy capital has never been higher. Investment in commercial and industrial solar has demonstrated its resilience in the face of the pandemic, continuing to be viewed as a safe investment in light of rising utility costs and the growing distribution of solar and financial technologies. However, the resource potential and low equipment costs are not enough; Senegal and other resource-rich African countries need the interest of active investors and strong government support to unlock diverse energy mixes. In turn, a lack of investment poses a glaring threat to the achievement of long-term energy security.

“Young people and women have shown their great resilience, and we hope that we will make these agreements in the renewable energy sector, Africans can have some hope of being included in the contracts and opportunities of the industry. It is no longer correct for the African to be the last hired and the first to be dismissed, ”concludes Ayuk.

Moreover, without sustained levels of FDI continuing to advance oil, gas and renewables developments, energy export earnings risk being stalled and resources left underdeveloped. For emerging producers like Uganda – as well as Tanzania, Kenya, Mozambique, among others – that would mean forgoing critical government revenues that could contribute to a much needed economic recovery after COVID-19. FDI is vital for Africa’s growth, and while it can be difficult to raise capital in a lukewarm global economy, it is even more difficult do not at. Yes, COVID-19 has put emerging producers in a difficult position: further exploration is seen as risky and new producers lack existing assets or low-cost development of marginal fields to fall back on. However, this is not an option to slow down or postpone urgent developments that promise to harness the wealth of natural resources and bring lasting improvements in living standards across the continent. Africa needs a sustained flow of investment and has proven time and again that it offers the scale of projects and scale of resources worthy of foreign capital.

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