Investors to give billions to ‘Power Africa’ initiative - Dangote, Citibank, World Bank amongst others

Citibank has pledged to source US$2.5bn in incremental capital to improve access to electricity for millions of people across Africa as part of the ‘Power Africa’ initiative. Business Day, Nigeria reports that Power Africa is a multi-stakeholder partnership between the US government, governments of several African countries and other public and private sector entities, working to accelerate investment in Africa’s power sector over the next several years. 

The report says Citi will also leverage its financing expertise in renewable energy to encourage the adoption and implementation of the appropriate technologies for specific markets. The bank will work with key stakeholders in local capital markets to introduce innovative debt securities and to enhance financial infrastructure. According to the report, Citi operates in over 40 countries in Africa with offices in 16 countries, including key markets such as Nigeria, Ghana, Kenya, Tanzania and SA.

The World Bank Group has also announced it would commit US$5bn in new technical and financial support for the electricity project. THISDAY reports that the World Bank’s financial commitment was announced on the second day of the inaugural US-Africa Summit by the president of World Bank Group, Dr Jim Yong Kim.

Also from the on fringes of the US-Africa Summit:

The Boss of Nigerian industrial conglomerate Dangote Industries Aliko Dangote has announced a 50/50 partnership with New York private equity company Blackstone to invest US$5 billion in Africa’s energy infrastructure over the next five years.

Mr Dangote, who outlined the deal while at the Power Africa summit taking place in Washington, said there will be a particular emphasis on power, transmission and pipeline projects.

Dangote said: “For too long, inadequate energy infrastructure in Africa has been a major obstacle to the continent as it seeks to fulfill its economic potential. I am pleased to partner with Blackstone and the Black Rhino team, who have experience of successfully developing large-scale infrastructure projects, to address this issue in a socially conscious way.”

The two companies have agreed to jointly incorporate, own and operate a management company that would be responsible for the development and management of projects identified and agreed upon across the sub-Saharan African.

The investment is facilitated by Black Rhino, a portfolio company of Blackstone Energy Partners and affiliated funds managed by Blackstone, and Dangote Industries.

Oil and gas to boost Nigerian growth

Since the oil and gas sector is expected to grow by 2,3% per year at best, its success is still vital to the Nigerian economy, notes a report by McKinsey Global Institute. With the right reforms, Nigeria’s renewal: Delivering inclusive growth in Africa’s largest economy reports that liquids production could increase from 2.35 million barrels a day on average to a new high of 3.13 million barrels a day by 2030, adding US$22-billion dollars to GDP by 2030.

Natural gas output could grow by as much as 6% per year, adding US$13 billion dollars to GDP by 2030. In total, the report says that the oil and gas sector has the potential to contribute US$108 billion dollars per year by 2030, up from US$73 billion dollars in 2013. But, this assumes the sector overcomes obstacles such as security and can attract fresh investment.

CAMAC Energy strikes oil in Nigeria

CAMAC Energy’s report successful preliminary results at its Oyo field development well offshore Nigeria in OML 120. The Oyo-8 well started drilling on June 15 this year and has both a vertical and a horizontal section. The vertical section was designed to test for additional hydrocarbons in the previously undrilled Eastern fault block of the Oyo field.

Oyo-8 was drilled to a total depth of 1,847m, and successfully encountered four new oil and gas reservoirs with total gross hydrocarbon thickness of 3m based on results from the logging-while-drilling data, reservoir pressure measurement and reservoir fluid sampling.

The well will now be completed horizontally as a producing well in the Pliocene formation of the Central Oyo field. Oyo-7, which was successfully drilled in October 2013, will also be completed horizontally in the Pliocene formation of the Central Oyo field.

Nigeria, US Sign MoU To Build US$2.5bn Power Plant

At least 15,000 megawatts (MW) of electricity is expected to be added to the national grid following an agreement signed between Nigeria and Global Edison Corporation for the construction of a US$2.5 billion gas-powered plant.

The plant to be located in Anambra State is part a memorandum of understanding (MoU) signed between Nigeria and the United States (US) president’s, Power Africa Initiative.

The US president, Barack Obama, last year unveiled the Power Africa Initiative which aims to add at least 10,000MW of electricity to selected African countries. Nigeria is among the six countries selected to benefit from the initiative.

The MoU which would outline the roles to be played by Nigeria and the US was signed yesterday in Abuja by the US ambassador to Nigeria, James Entwistle, and the minister of power, Prof. Chinedu Nebo, on behalf of both countries.

Also to be achieved through the MoU is a 70MW solar manufacturing plant to be built in Nigeria.

During the signing ceremony, Entwistle explained that the initiative is about transforming the lives of Africans through increased job opportunities to be created from better electricity supply.

He further stated that the Power Africa “supports the strengthening of the energy sector through credit enhancement, grants, technical assistance and investment promotion efforts.

Africa trades billions in secret crude oil deals, experts warn

Sub-Saharan Africa’s top 10 oil-producing countries have sold more than US$254 billion in crude through state-owned oil companies over the past three years without publicly accounting for the money.

Governments in sub-Saharan Africa are selling crude petroleum in shadowy deals worth hundreds of billions of dollars, according to a new report.

The lack of transparency over staggering amounts of oil revenues is causing concern in countries that have weak budgetary oversight and long track records of corruption, Natural Resource Governance Institute said.

Its research found that sub-Saharan Africa’s top 10 oil-producing countries have sold more than US$254 billion  in crude through state-owned oil companies over the past three years without publicly accounting for the money. This is equivalent to 56 per cent of their combined government revenues, the institute said in its ‘Big Spenders’ report released on Monday.

Among the biggest purchasers were mega Swiss commodity traders, including Glencore, Arcadia and Trafigura, which snapped up one-quarter of the sales between 2011 and 2013, the institute said. It called for new regulations for nationally owned oil companies and big trading firms to disclose their deals.

The sales to Swiss traders were worth an estimated US$55 billion — more than twice as much money as these 10 countries — Angola, Cameroon, Chad, Côte d‘Ivoire, Republic of Congo, Equatorial Guinea, Gabon, Ghana, Nigeria and South Sudan — received in net foreign aid, it said.

“The payments made by Swiss companies generate a significant portion of public revenues in some of the world’s poorest countries, and are subject to governance risks as they take place in environments of weak institutions and widespread corruption,” it said.

Kenya is bracing for the launch of commercial oil production within the next few years. The Government has shown little interest in transparency with contracts signed with oil prospecting firms remaining shrouded in secrecy. There are fears this secrecy may continue into sales of oil and spending of resource wealth in coming years.

The push from Natural Resource Governance Institute is part of its efforts to expand the transparency rules for oil, gas and mining as it presses governments to account for how they spend their resource wealth. Currently, more than one billion people live in dire poverty in resource-rich countries.

So far global regulations for resource extraction payments have focused on publicly traded companies. They do not cover all aspects of agreements with a government, including oil provided to a national company for future sale.Switzerland is considering new regulations on extractives disclosure for natural resource companies, but the regulations are modeled after similar rules in the European Union and the United States and would not cover commodity trading firms and their deals with national oil companies.

“Switzerland should accept its responsibility as the world’s leading commodity trading hub and pass regulation that requires Swiss companies producing or trading in natural resources to disclose all payments made to government and state-owned companies, including payments associated with trading activities,” the report said.

The difficulty in compiling the data, which came from media reports, government and company publications and market intelligence, exemplifies the need for transparency, it said.

Among the report’s findings:

1.      Sales by national oil companies account for more than half of government revenues in the Republic of Congo, Angola, Nigeria and Equatorial Guinea.

2.      Glencore, a top global commodity trader, buys all of Chad’s oil, and its payments in 2013 were equal to 16 per cent of the government’s revenue, yet the terms of the oil sales are not publicly disclosed. It struck the deal for exclusive rights without a competitive tender after investing US$300 million in two oilfields there.

3.      In Nigeria, Swiss companies bought $37 billion over three years, equal to 18 per cent of government revenues and more than one-third of its oil. A former central bank governor for Nigeria has alleged that US$20 billion has gone missing in Nigerian oil revenues.

4.      Nigeria awards term contracts to a list of companies that are eligible to buy oil throughout the year, but the report says it is a politicised process “depending on their relationship with the officials in charge and influence of their local contacts or sponsors.”

Source: Reuters.

Nigeria: Experts advocate oil firms cordiality with host communities

As Nigeria continues to battle insecurity caused by Boko Haram insurgents, oil and gas experts have advocated a more cordial and harmonious relationship between multi-national oil companies operating in the country and the host communities in order to prevent induced violent crisis. They also urged the Federal government to enact laws to protect the rights and interest of the host communities and the need for oil companies to relocate their headquarters to the areas of operation.

These were part of the resolutions at a one day conference on ‘awareness of oil and gas development activities and its implication on communities’ organised by OPL 274 host communities in Delta North, in conjunction with Pan Ocean Oil Corporation, held yesterday at Owa Royal Palace, in Ika North East local Government of the State. A development activist and legal practitioner, Dr. Akpos Mudiaga Odje, in a 17-page presentation said there was urgent need for the enactment of ‘laws specifically to protect the interest and right of host communities’.

Odje said, “there is still no express or implied contract between oil companies and host communities”, saying, “at best what we have is usually a memorandum of understanding, as there is urgent need for insertion of dispute and crisis avoidance clause in the MoU to avoid the unnecessary frustration that follows litigation and violence between HOSTCOM and oil companies.” He said most of the violence and destruction witnessed at the areas of operation can be traceable to the neglect and failure by these oil companies to carry out their social responsibility, as “the communities are reduced to a state of pandemic poverty and arrested development, thus prompting violent uprising and shutting down of oil rigs and productions”.
He pointed out that the relocation of oil company head offices to their areas of operation would create development and employment to teeming youths in the region, as that would promote peaceful co-existence between the communities and the oil companies.