AfreximBank , APPO conclude inspection for establishment of African Energy Bank in Nigeria

 The African Petroleum Producers Organisation (APPO) and AfreximBank have completed their inspection to validate the preparation of Nigeria in the establishment of the African Energy Bank (AEB).

The Permanent Secretary at the Ministry of Petroleum Resources, Ambassador Nicholas Ellah made this known in a press release on Friday.

Ellah said four countries that bidded for the giant project were Nigeria, Ghana, Benin and Algeria, appreciating South Africa, Egypt and Ivory Coast dropped their bid.

According to Ellah, the AEB is a “SupraNational Multilateral $5billion African Energy Bank that will specialize and facilitate financing of Africa’s trapped hydrocarbon deposits of – oil, gas, condensates as well as support energy transition dynamics and net zero 2060 commitments.”

The statement read, “Today, the technical inspection team from the African Petroleum Producers Organization (APPO) headquartered in Brazzaville, and Afrexim Bank headquartered in Cairo – the joint promoters for the Establishment of the African Energy Bank – AEB, completed their inspection mission to validate Nigeria’s readiness to host the Headquarters of the proposed bank, which shall be established in July 2024.

“Members of the Press and fellow Nigerians who have been following the two year journey and bold progress towards the establishment of the Africa Energy Bank, which commenced with APPO Luanda 2022 Ministerial Resolutions 282, will please recall that the previous administration directed the Ministry of Petroleum Resources to submit Nigeria’s bid to host the headquarters of the proposed Africa Energy Bank Nigeria, along with six other members of APPO expressed interest. APPO was established in Lagos in 1987 with eight members and has since grown to eighteen members.

“After the first bidding round in early 2024, only four countries were pre-qualified as having met the minimum requirements to proceed to the final round of bidding, as at March 2024. The four APPO members prequalified were Nigeria, Ghana, Benin and Algeria, to proceed and contest for the final right to host the headquarters of the SupraNational Multilateral $5 billion Africa Energy Bank that will specialize and facilitate financing of Africa’s trapped hydroCarbon deposits of – Oil, Gas, Condensates as well as support Energy Transition dynamics and net zero 2060 commitments.

“Nigeria appreciates South Africa, Egypt and Ivory Coast for dropping their bids and enjoins other countries still in the bid to concede to Nigeria, on the basis of reciprocal fraternal relations. In our preparation for the bid, the Ministry of Petroleum Resources in January 2024 sought and obtained the Federal Ministry of Justice and consultant experts opinion in vetting, perusing and commenting on the Banks proposed Charter, The Establishment Agreement, “The Treaty” and Headquarters Host Agreement giving us the go ahead and impetus to proceed.

“We also sought the approval of the Federal Executive Council and for Parliamentary (National Assembly) Ratification – this process which gave approval which is ongoing, will provide the AEB with the required privileges and immunities needed by Treaty signatories to recognize and implement the Bank’s global vision and operations in line with its Charter.

“The Ministry of Petroleum Resources when approved and ratified, also identified and secured a befitting building in a prestigious location in Abuja that will serve as the temporary headquarters for the bank, the building has just been presented for inspections. Similarly, we opened a secured data room where all our bid matrix and institutional memory were stored for the technical team to review and validate. That process has just been completed.

“We have completed the key requirements of this national assignment and presidential mandate. Application forms for a Permanent headquarters location in the Central Business District of Abuja has been submitted to the Ministry of the Federal Capital Territory for consideration and Approval, and as soon as Nigeria emerges as winner, the MPR shall liaise with the MFCT for necessary approval.

“Regarding financing, which is a key bidding requirement, we are happy to announce that Nigeria’s share of the equity of the proposed AEB, was $83.33 million for class A shares. We are happy to inform the Public that President Bola Ahmed Tinubu has since approved $100 million upscale investment crowdfunding subscriptions from four Agencies of the Ministry of Petroleum Resources, as Nigeria’s subscription which is $16.7 million higher than the $83.33 million minimum requirement allotted to Nigeria; This presidential decision pivots Nigeria in a pole position to win this bid, that will reshape our oil and gas ecosystem and infrastructure investment for several years to come.

“President Tinubu, also directed and approved that the Honorable Minister of State for Petroleum Resources Oil, Senator Heineken Lokpobiri, to request for extra budgetary approvals and other support needed to ensure Nigeria wins the headquarters hosting rights. Accordingly, out of the approved sum of $100 million, more than $63 million has been secured and currently escrowed in a Joint APPO-AEB bank deposit account as at today.

“The Ministry of Petroleum Resources also confirms that Nigeria is working diligently with NNPCL, NUPRC, NMDPRA and NCDMB, whose support was key to us meeting all the qualitative and quantitative eligibility criteria for hosting the Africa Energy Bank Headquarters despite the constraints, are vigorously implementing the Presidential directives.”

A few days ago, AfreximBank signed an agreement with the APPO according to which both parties will collaborate on the establishment of an African Energy Transition Bank in support of an Africa-led energy transition strategy.

Speaking about the benefits of the agreement that will lead to the establishment of AEB, the statement further read, “The Bank is coming at a prime time when major policy banks and other western financial institutions are winding down or freezing oil and gas financing and investment, which decreased from $63 billion in 2014, to less than $24 billion in 2022.”

“A consequence of the COVID 19-pandemic and their several net zero carbon initiatives as well as the quest for energy security. International oil firms are pursuing investments in line with the home country imperatives and in favor and in pursuit of renewable energy investment, leaving the global South and sub Sahara Africa with over 450 billion proven reserves of crude oil and trillions of cubic feet of gas trapped. Financing for our energy infrastructure has become difficult and endangered while 600 million Africans suffer massive energy poverty and negative effects of climate change and environmental hazards.

“The World Bank estimate that sub Saharan Africa requires $75 billion in annual financing and project funding for  the next 10 years (2023-2037) totaling $750 billion to support and unlock huge energy diversification for gas, oil and condensates production excluding other infrastructure assets in power and related infrastructure that are needed to unbundle and compensate for on going depressed financing drawbacks.

“Thus, the $5 billion Africa Energy Bank, when headquartered in Nigeria, shall be the largest single foreign direct investment inflow into Nigeria in over two decades.

“The African Energy Bank ecosystem shall rank as the third largest Bank in Africa, and shall be the most prominent bank in Nigeria in terms of shareholders funds.

“It will significantly boost Nigeria’s Gross Domestic Product, employment, financial architecture and inclusion,  and propel our economic diversification while supporting foreign exchange management strategies.

“It will pivot the development exploration and investment initiatives by our Independent Petroleum Producers, Commercial service providers, Legal, Local content drivers and technology and skills development that will leverage the bank’s proximity to market and scale up production and capacity.

“Our financial services industry and capital markets will enjoy streamlined depths and flows for syndication, product development and asset liquefaction, factoring all relevant to hydro carbon markets, positioning Nigeria as the main financial hub for oil and gas downstream, midstream and upstream investment funding by mitigating the headwinds from climate change and energy transition optics with positive multipliers.

“The $5 billion AEB is expected to grow its assets to over $120 billion  in 7 years, thus becoming a source of sustainable impact FDI for Nigeria that supports our vision 2030 ambitions.

“The Ministry of Petroleum Resources will continue to count on the goodwill of Nigerian media, civil society and diplomatic community for the continuing support of Nigeria’s bid, especially against the background that in 1964, following the creation of the Organization of African Unity the precursor to the African Union, African technocrats with substantial inputs from Nigeria and the United Nations Economic Commission for Africa UNECA decided to establish the African Development Bank. At its inaugural meeting in Lagos in November 1964, the Board of Governors chaired by Nigeria in a brotherly overture conceded and lobbied for the Banks  Headquarters to be situated in Abidjan, Ivory Coast which opened operations in March 1965.

“Similarly in 1993, under the auspices of the AfDB, Afrexim Bank was launched at the first General Meeting held in Abuja in October 1993. Where Nigeria again conceded the hosting rights to Cairo Egypt, despite the fact that we are the largest shareholders of both AfDB and AfreximBank. Again, on the 27th of January 1987, in Lagos, Nigeria spearheaded the creation of the African Petroleum Producers Association APPA which transformed to APPO and provided facilities for its temporary headquarters for several years and again in the spirit of African brotherhood conceded the headquarters hosting right to the Republic of Congo.

“The Africa free Continental Trade Area which became operational in 2018, is the largest Trade Area bringing 1.3 billion Africans in a single market of which Nigeria is a signatory, maintains a permanent secretariat (headquarters) in Accra, Ghana. The Republic of Benin serves as the headquarters for African Energy Investment Corporation AIECORP as part of the general consensus agreement for effective implementation. Nigeria is therefore the natural fit to host the Africa Energy Bank on merit and equity and it is coming at a time of renewed hope, especially as our macroeconomic indicators are showing green shots from reforms, with all the major rating agencies including Fitch and Moody’s upgrading and revising our to credit rating from stable to positive. Unfortunately, our competitors have been downgraded to default and some bonds to junk status, due to the impact of Covid-19 on their balance sheets.

“The African Energy Bank upon take off is expected to attract additional $2 billion equity in classes B and C from African Sovereign wealth funds, National oil companies and other Institutional investors whose investment objectives are aligned with the vision and mission of the bank. AfreximBank board has committed to Invest $1.250 billion, as a major investor in class A shares alongside the APPO members club.”

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