Ghana: We Did Not Provide Guarantees To IPPs – World Bank
The World Bank says it has not provided any financing or guarantees to the Independent Power Producers (IPPs) that signed Power Purchase Agreements with Ghana or the Electricity Company of Ghana during the energy crisis in 2014-2016.
In a statement issued by the Bank to clarify media reports that it provided guarantee to the IPPs during the power crisis era, the World Bank said to secure Ghana’s energy future, the Bank supported the Energy Sector Recovery Plan (ESRP) of Ghana for affordable and reliable electricity supply and enhance the accountability in the energy sector.
The ESRP mandates the rationalisation of gas and power purchase costs in line with the demand and approves the procurement of energy supply and service contracts in a competitive manner.
The Bank said the implementation of this policy was necessary to ensure that new power generation capacity was procured competitively and transparently based on the most cost-effective basis.
The statement said this was to prevent a recurrence of over-supply of generation capacity in future.
“The World Bank Group provided financing and a guarantee to the Sankofa Gas Project, which since 2019 has increased the availability of natural gas for power generation by leveraging private capital investment and promoting a cleaner energy mix,” the Bank said.
The World Bank indicated that it was committed to supporting Ghana in its efforts to sustain economic growth, accelerate poverty reduction, and enhance shared prosperity in a sustainable manner.
Source:www.energynewsafrica.com
South Africa: ENGIE Acquires 100 MW Concentrated Solar Power Plant
ENGIE has reached an agreement to acquire from Abengoa a 40% equity stake in Xina Solar One, a 100 MW Concentrated Solar plant, as well as 46% of the Operations & Maintenance Company.
The plant is equipped with parabolic trough technology and a molten salt storage system that allows for 5.5 hours of energy storage to provide reliable electricity during peak demand.
Power is contracted through a 20 years Power Purchase Agreement with Eskom (South African Electricity Public Utility).
Xina Solar One is supplying clean energy to more than 95,000 South African households and prevents the emission into the atmosphere of approximately 348,000 tons of CO2 each year.
The plant is located in the Northern Cape of South Africa, which is also the location of ENGIE’s 100 MW Kathu CSP plant.
Xina Solar One increases ENGIE’s renewable footprint and is a further step to cementing its position as the leading Independent Power Producer in the country. Synergies between Xina and Kathu will be developed to further enhance the operational efficiency of both plants.
“With the acquisition of this project, ENGIE is pursuing its low carbon strategy. Xina augments the country’s installed peaking power and reduces its dependence on coal-fired electricity. The 100 MW CSP plant also contributes to ENGIE’s geographic rationalization by expanding its footprint in South Africa, where it is the leading Independent Power Producer with 1,320 MW of installed capacity.” says Sébastien Arbola, CEO of ENGIE MESCATA.
Mohamed Hoosen, CEO of ENGIE Southern Africa commented: “ENGIE is valued as a highly skilled IPP and a long-term player in the South African power industry. We are adding an innovative high-performing plant and are increasing our CSP capacity. This investment will create value over the longer term while accelerating impact on the energy transition of our customers.”
Co-shareholders on Xina Solar One include Public Investment Corporation, a pension fund manager and a shareholder on ENGIE’s Kathu project (20%); Industrial Development Corporation, a development finance institution wholly- owned by the South African Government (20%); and Xina Community Trust, funded by the IDC (20%). Xina Solar One, which started commercial operation in August 2017, was built by Abengoa.
Completion of the transaction is subject to the fulfillment of certain conditions including merger control clearance from relevant competition authorities.
In South Africa, ENGIE has interests in a CSP plant (100 MW Kathu), a wind farm (94 MW Aurora), 2 solar photovoltaic plants (21 MW) and 2 thermal power peaking plants (670 MW Avon and 335 MW Dedisa).
Source:www.energynewsafrica.com
Nigeria: Gov’t, Private Sector Team Up To Build 200MW Solar Power
The Nigerian government and some private firms have planned to build Ashama 200 megawatts (MW) solar power farm, which could be the largest in West Africa.
The West African nation’s Minister for Power, Mamman Sale, who revealed this in Lagos, said when it is completed, “It will serve as the biggest utility solar project not only in the country but the West African region.”
Mamman, who was represented by his policy adviser, Abba Aliyu, said the project would be developed in partnership with Singapore-based renewable energy firm, B&S Power and SunnyFred Global.
He said it would be located on about 304 hectares of land in Ashama village, Aniocha South of Delta State, as part of the government’s Sustainable Energy for All (SE4ALL) initiative.
India Named An Achiever In Solar Power Growth Among 80-Member CountriesThe Minister said solar was, in the past, believed to be too costly but noted that in the last decade, the development cost of solar technology has dropped by more than 80 per cent. “With that, installations at both a utility scale and consumer level have been increasing. “Energy storage technology is also becoming cheaper, and as a result could help consumers to access cost-effective, off-the-grid capabilities,” he said. He explained that the Federal Government had launched vision 30:30:30 to deliver 30 gigawatts (GW) of electricity with 30 percent renewable energy by 2030, adding, “This is a key focus of the Nation’s electrification strategy to avail Nigerians reliable, sustainable and affordable power.” Source: www.energynewsafrica.com
Nigeria: No Increase In Fuel Price In March-NNPC Assures
The Nigerian National Petroleum Corporation (NNPC) has ruled out any increment in the ex-depot price of petrol in March 2021.
NNPC in statement signed by the Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, stated that the Corporation was not contemplating any raise in the price of petrol in March in order not to jeopardize ongoing engagements with organized labour and other stakeholders on an acceptable framework that will not expose the ordinary Nigerian to any hardship.
Nigeria: Be Ready To Bear Pains Of High Petrol Cost-Sylva To ConsumersNNPC also cautioned petroleum products, marketers, not to engage in an arbitrary price increase or hoarding of petrol in order not to create artificial scarcity and unnecessary hardship for Nigerians. The Corporation further stated that it has enough stock of petrol to keep the nation well supplied for over 40 days and urged motorists to avoid panic buying. The statement called on relevant regulatory authorities to step up monitoring of the activities of marketers with a view to sanctioning those involved in products hoarding or arbitrary increase of pump price. Source: www.energynewsafrica.com
India: Oil Minister Gives ‘Two Main Reasons’ Behind Rising Fuel Prices
Union Petroleum and Natural Gas and Steel Minister Dharmendra Pradhan has stated that reduced fuel production and oil-rich nations seeking more profits are the primary reasons behind spiraling petrol and diesel prices in the country.
“There are two main reasons behind the fuel price rise. The international market has reduced fuel production and manufacturing countries are producing less fuel to gain more profit. This is making the consumer countries suffer,” Pradhan said during his visit to inspect the venue where Prime Minister Narendra Modi is scheduled to address a rally in Assam’s Dhemaji.
He further stated, “We have continuously been urging the Organisation of the Petroleum Exporting Countries (OPEC) and OPEC plus countries that it should not happen. We hope there will be a change.”
The prices of petrol and diesel are increasing continuously for more than 10 days and in some states, the price of petrol has even crossed the Rs 100-mark.
Justifying the taxes levied on petrol and diesel, he said that the Centre and the states are doing various developmental works in the wake of the Covid-19 pandemic, for which they collect taxes, adding that these development projects generate jobs.
“Another reason is Covid. We have to do various development work. For this, Centre and state governments collect the tax. Spending on development work will generate more jobs. The government has increased its investment and 34 per cent more capital spending will be done in this budget. State governments will also increase spending. This is why we need this tax but there is also the need for balance. I believe the finance minister and state governments can find a way,” stated the minister.
Amid an outcry over record petrol and diesel prices, Union finance minister Nirmala Sitharaman on Saturday said the Centre and state governments will together have to work out a mechanism to bring retail rates to reasonable levels.
Source:www.energynewsafrica.com
Ghana: Gas Supply Interruption Upstream Cause Of Power Outages-GRIDCo
Ghana’s power transmission company, GRIDCo, has blamed Saturday’s power outages experienced in some parts of the country on gas supply challenges at the country’s offshore field.
Many Ghanaians, who have been experiencing power cuts have taken to social media to express their frustration over the issue.
https://web.facebook.com/nana.diabene/posts/10224232556151701
However, the power transmitter noted in a statement that the development resulted in about 1000MW power loss.
“To prevent a total shutdown, power curtailment was carried out, which affected major parts of the country including Accra, Tema and Kumasi, ” the statement said.
“Gas supply has resumed upstream and power to the affected areas will be restored shortly, ” GRIDCo assured.
Ghana: Review Price Stabilisation & Recovery Levy To Push Fuel Prices Down-COPEC
A consumer advocacy group in the Republic of Ghana, Chamber of Petroleum Consumers (COPEC) is advocating for a review of the price stabilization and recovery levy to forestall further increases in petroleum products which in the past two months have been increased about four times.
According to COPEC, the increase in fuel prices is attributed to the Coronavirus pandemic and the current situation in Texas.
COPEC in a statement said, “Ghanaian pumps over the past 2 months have seen about 4 different spots of increases of about 9% cumulative variance and was our expectation that pump prices would ease downwards from the month of March.
“However, these price increases seem far from over due to the current situation in Texas and overwhelming heating requirements for crude and Gasoil across the globe as prices continue to surge by the day.”
COPEC stated that the review of price stabilization and recovery levy will cushion consumers from any further increases.
“It is our understanding following from consultations with a good number of Oil Marketing Companies (OMCs) that a downward review of the price stabilisation and recovery levy will most likely cushion the market and will forestall any further increases though it wouldn’t absorb everything as some market players have already started increasing pump prices due to the pressures the price escalation on the world market presents currently.”
Read below the full statement from COPEC:
CHAMBER OF PETROLEUM CONSUMERS GHANA
FUEL PRICES SET TO GO UP AGAIN BY BETWEEN 2-4%
REMOVE THE PRICE STABILISATION NOW TO CUSHION THE EFFECTS OF INTERNATIONAL MARKET PRICES AND THEIR IMPACT ON PUMP PRICES.
International Oil Prices for both crude and refined oil has surged by more than 12% from around $470/mt-$512/mt representing a difference of around $42/mt for both gasoline and gasoil
Whiles crude has moved from $59.57/barrel (Brent) as of 20th February to $67/barrel as of today 25th February 2021, due largely to the recovery of the global economy from the harsh effects of the Corona virus pandemic as well as the power crises in Texas which has seen a reduction in oil production by 4million barrels a day.
This knock off translates to about 40% of United States oil output along with the Organisation of Petroleum Exporting Countries’ (OPECs) continuous cuts of around 9.2 million barrels per day of oil supplies due to a projected decline in demand globally from the 2nd quarter. (Energy Information Administration, 2020; Oilprice.com; momr.opec.org).
These surges in oil prices (Brent) translates to about $41 variance or increase in prices of finished products ( both petrol and diesel) on the platt trading platform, thereby effectively increasing prices from the BDC or importers position which is taking a huge on the various oil marketing companies who are also likely to pass on these increases on at the local pump prices even before first pricing window of next month starting from Monday the 1st of March, 2021.
These increases on the international markets to translates to about 21p/litre at the local pumps and is likely to reflect on the Ghanaian petroleum consumer within the next few hours even before the start of the next pricing window in March.
The cedi within the period has however performed quite well, appreciating against the dollar though nominally. The Bank of Ghana as at 16th February pegged its interbank FX rate of Ghana Cedi to US dollar at Ghc 5.7597.
Analysis of the indicative prices of Gasoil and Gasoline on the market indicates, both gasoil and gasoline currently sell at an average of Ghc 5.11 per litre from earlier figures of around 4.70/litre as of December ending at some pumps though others also quote a bit higher than the market averages.
These current prices are likely to see between 12-24 pesewas increases even before the 1st of March due largely to the price escalations on the international market.
It is our estimation that the pending increases could be averted through the application or review downwards of the Price Stabilisation and Recovery Levy on the price build-up of between 12-16p/litre to cushion the market in order to potentially prevent these possible increases likely to reflect at our local pumps anytime soon.
Ghanaian pumps over the past 2 months have seen about 4 different spots of increases of about 9% cumulative variance, and was our expectation that pump prices would ease downwards from the month of March.
However, these price increases seem far from over due to the current situation in Texas and overwhelming heating requirements for crude and Gasoil across the globe as prices continue to surge by the day.
It is our understanding following from consultations with a good number of Oil Marketing Companies ( OMCs) that, a downward review of the price stabilisation and recovery levy will most likely cushion the market and will forestall any further increases though it wouldn’t absorb everything as some market players have already started increasing pump prices due to the pressures the price escalations on the world market presents currently.
We further call on the Government and the Ministry of Energy to ensure the local refinery in Tema is brought back to productivity as soon as possible to ensure petroleum security as geopolitical developments across the globe seem pretty turbulent and could get worse by the end of the 2nd quarter.
Signed.
Duncan Amoah
Executive Secretary
Nuclear Power Will Be Needed For Cleaner Energy- Bill Gates
Nuclear power generation is necessary for the world to have cleaner energy solutions, although nuclear has yet to convince naysayers who generally associate it with Chernobyl or nuclear weapons, according to Bill Gates.
In a recent interview with Andrew Ross Sorkin on CNBC’s “Squawk Box,” Gates – who has invested in nuclear power ventures – said that nuclear electricity generation would “absolutely” be politically palatable because it is safer than coal, natural gas, and oil.
“Nuclear has actually been safer than any other source of [power] generation,” Gates told CNBC. “You know, coal plants, coal particulate, natural gas pipelines blowing up. The deaths per unit of power on these other approaches are — are far higher,” Gates said.
The climate change advocate Mr. Gates wrote in his blog at the end of 2018 that the United States “needs to regain its leading role in nuclear power research.”
“Nuclear is ideal for dealing with climate change, because it is the only carbon-free, scalable energy source that’s available 24 hours a day. The problems with today’s reactors, such as the risk of accidents, can be solved through innovation,” Gates said back in 2018.
In 2006, Gates founded nuclear energy venture TerraPower with other visionaries.
Last year, the U.S. Department of Energy awarded TerraPower $80 million to demonstrate its small advanced nuclear power reactor Natrium and integrated energy system with its technology co-developer GE Hitachi Nuclear Energy and engineering and construction partner Bechtel.
TerraPower looks to build mini reactors to store electricity and thus supplement wind and solar power in the grids, TerraPower’s President and chief executive officer Chris Levesque told Reuters last year.
Gates, together with Jeff Bezos, is backing nuclear fusion, too. Commonwealth Fusion Systems, which was spun out of MIT, is working on fusion and is backed by the billionaires via the Breakthrough Energy fund that supports clean energy solutions.
Source: Oilprice.com
India Named An Achiever In Solar Power Growth Among 80-Member Countries
The International Solar Alliance (ISA) has ranked India as an “Achiever” among its 80 member countries along with Brazil, Saudi Arabia and the United Arab Emirates (UAE) in its latest Ease of Doing Solar (EoDS) report.
Achiever countries are those with most favourable technical and commercial conditions for solar and perceived as most attractive for investments in solar. The report groups the countries in four segments — Achiever, Influencer, Progressive and Potential.
“Owing to strong potential, robust sustainability targets, high solar irradiation and developing power infrastructure, India has emerged as a leading performer among the ISA member countries along with Brazil, Saudi Arabia and UAE,” the report said.
Ghana: CalBank, EU Set Up Green Energy Financing SchemeIt states that there has been growing lender interest in renewable energy (RE) in India and 60 RE projects drew financing of over $2.5 billion in 2017, around 60 per cent of which came from non-banking financial institutions. “India’s renewable energy financing structure may need further reforms to boost the flow of capital into the sector in order to achieve the ambitious 2022 and 2030 targets,” the report said. India is implementing the world’s largest RE expansion plan with a target of 450 Gigawatt (GW) of renewable power by 2030 with 175 GW deployment by 2022. The policy enablers that have worked for India include amendment in the National Tariff Policy prescribing solar-specific Renewable Purchase Obligations (RPOs); regulations around RE certificates and feed-in tariff and grid integration; and 100 per cent FDI allowed under the automatic route for RE projects. In terms of infrastructure, 42 solar parks of 23,499 MW have been approved in 17 states; 60 solar cities have been approved with $1.3 billion investment for setting up 50 solar parks of 40 GW capacity by 2020; and solar cells and modules manufacturing capacity of 3 GW and 10 GW annually. The country had 35 GW of installed solar power generation capacity at the end of April 2020, fifth largest in the world. This capacity has grown 13 times in the past 6 years.
Ghana: PDS Deal Was Fraudulent-Amewu insists
Ghana’s former Minister for Energy, John-Peter Amewu has insisted that Government’s decision to terminate the agreement between Electricity Company of Ghana (ECG) and Power Distribution Services (PDS) Limited was appropriate because the latter engaged in fraudulent act.
His strong position on the matter was premised on the failure of PDS to satisfy conditions precedent under the relevant transaction documents.
The former Minister who is now a Member of Parliament (MP) for Hohoe constituency was responding to a question on the subject matter posed to him by Samuel Okudzeto Ablakwa, MP for North Tongu, when the former took his turn before the Vetting Committee of Parliament last Wednesday.
Taking his turn to vet Mr. Amewu, who appeared before the Committee as Minister-designate for Railway Development, Mr. Okudzeto asked: “On October 19, 2019, the Millennium Challenge Authority (MCA) terminated the PDS agreement. Ghana lost US$19 million in effect. You had said earlier, on August 15, 2019, that you discovered fraud in the whole PDS agreement.
Ghana: We Need Collective Decision To Save TOR- Dr Opoku PrempehConsidering how Ghana had managed the Compact in the days of Presidents Kufuor, Mills and Mahama, will you say that there was some lack of due diligence on your part which led to Ghana incurring this loss?” But before he would respond to the statement on the matter as attributed to him by his colleague MP, Mr. Amewu said: “Yes, it is on record that the Government of Ghana (GoG) terminated the relationship between the PDS and ECG.” Then, in his explanation, the Hohoe MP said: “The relationship between the PDS and ECG, under the agreement, was that there were certain conditions called the Condition Precedent that were supposed to occur before the transfer of Ghana’s assets to PDS. It came out clear that one of the critical items which had to do with the security of the assets was not genuine and not valid. “I, therefore, described it as fraudulent because from the source where we were supposed to get the guarantee, they, themselves, described it as such, for they stated that they were not in the capacity to issue that high level of guarantee…the person who issued the guarantee did not have the capacity.” The termination of the agreement was reported to have resulted in Ghana losing US$190million and that, Mr. Amewu explained was money coming from the United States of America of the MCA Compact. He posited: “But, do we look at the opportunity cost or the money irrespective of what would happen? The government considered the value of the asset and its ownership over the US$190 million. On that basis, the ECG and the government thought that leaving an asset value of about US$3 billion to PDS where the security of that asset could not be guaranteed, would not be good. “If the ECG handed over the GoG’s asset, it could not go back for it in the event of default because the basis for the recovery would have been invalid. So, the best the government could do was to get out of the marriage. Indeed, the guarantee they had to issue needed to go through the national system, and all those were not done when we went for the verification exercises. It is on that basis that I described the deal as fraudulent and I do not think the GoG, in the long run, lost anything. So, the termination of the PDS agreement was triggered as a result of the occurrence of certain lack of material evidences which they (PDS) failed to provide. He said the ECG drew the attention of PDS to those concerns on guarantee precedent “but since the matter is in court, I beg not to go far.” John-Peter Amewu though accepted responsibility for the decision to terminate the agreement based on the advice by the Attorney General, he refused to go down alone so he sharply said: “It is a Cabinet decision I implemented.” Source:www.energynewsafrica.com
Nigeria, Equatorial Guinea Ministers For Mineral Resources Hold Bilateral Meeting
The Minister for Mines and Hydrocarbons of Equatorial Guinea H.E. Gabriel Mbaga Obiang Lima has met with H.E. Timipre Sylva, Minister of Petroleum Resources of Nigeria at the presidential palace in Malabo intending to strengthen bilateral relations between the two countries.
The meeting included a signing of a memorandum of understanding (MoU) which will consolidate new opportunities for the hydrocarbons sector for both countries and, allow the counterparts to collaborate on maritime piracy protection strategies as security remains a major concern for energy infrastructure, with attacks reaching record highs in the Gulf of Guinea.
The ministers also agreed to expedite joint cross-border cooperation for the supply of gas from Nigeria to Equatorial Guinea which will also be an opportunity for Equatorial Guinea’s energy sector to see an additional step to its local content development plans.
This agreement once again signals that energy cooperation between neighbours on the continent can unlock tremendous value for African nations, in particular, in the Gulf of Guinea where there is great potential for collaborations.
This trip comes after H.E. Sylva was appointed by the Joint Ministerial Monitoring Committee of the Organization of Petroleum Exporting Countries (OPEC) as a Special Envoy to some participating countries in the Declaration of Cooperation.
As part of his appointment, H.E. Sylva is tasked with communicating the principles of fairness, transparency and equity in Gabon, Congo Brazzaville and South Sudan, which are also key stops on the road trip.
Nigeria: Federal Gov’t Will Require $4bn To Provide Clean Energy Annually –Jedy-AgbaHe is also to carry the mission to ensure that countries continue to comply with oil prices in the international market as members of OPEC. In line with this, he also met with H.E. Obiang Nguema Mbasogo, Equatorial Guinea’s Head of state who reassured the country’s commitment to cooperating with OPEC, maintaining its production levels. Attending the meeting from the Equatorial Guinea delegation were Robustiano Eyugue, Director of Hydrocarbons; Oscar García Director of State Company; Jacinto Nguema Owono, Director of Local Content; Juan Antonio, Director of Sonagas and Serapio, Deputy Director of Sonagas. “The African Energy Chamber salutes the commitments made by the ministers,” said Leoncio Amada Nze, President of the Cemac region for the African Energy Chamber. “We believe it is only through regional collaboration will paramount issues such as OPEC compliance, piracy and the monetization of gas for domestic and international export, will meaningful growth become a reality,” he added. Source: www.energynewsafrica.com
OPEC Secretary General Urges Oil Producing Nations To Create Friendly Climate For Investors
The Secretary General of Organisation of Petroleum Exporting Countries (OPEC), H.E Mohammad Sanusi Barkindo, is urging oil producing countries to create investment friendly climate to encourage investors.
The oil industry, he noted, is faced with underinvestment and “this was exacerbated by the Covid-19 pandemic.
“Over the course of 2020, investments declined by 30 percent. We need to work towards creating an investment friendly climate,” he said.
He was speaking at the 11th IEA-IEF-OPEC Symposium on Energy Outlooks, via video conference.
The OPEC scribe said: “At the 14th edition of our OPEC World Oil Outlook, which was launched on October 8 of last year, stated global primary energy demand is forecast to continue growing in the medium and long term, rising by a hefty 25 percent by 2045.
“Oil will remain the largest contributor to the energy mix in 2045 at 28 percent,” he stated.
To meet this future demand in the global oil sector, he said would need cumulative investment of $12.6 trillion in the upstream, midstream and downstream through to 2045.
“These investments are essential for both producers and consumers,” he added.
While there are grounds for optimism that 2021 would be the year of recovery for the oil industry, Mr Barkinso indicated that there are many uncertainties ahead.
“As the IMF recently stated, much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens. There remains tremendous uncertainty and prospects vary greatly across countries.
“Furthermore, other factors can have a disruptive impact on the energy industry. As the extreme weather in Texas has shown, we cannot take energy security for granted, even in a country like the US.”
An Arctic blast has disrupted electricity supply and demand has surged to record heights.
Oil and gas production has plummeted by a third and five million people across the country face the freeze without heat or power.
Source: www.energynewsafrica.com
Nigeria: Gas Expansion Project To Lift 100M People Out Of Poverty—Minister
Nigeria’s Minister of State for Petroleum Resources, Chief Timipre Sylva has expressed the hope that the country’s National Gas Expansion Programme would lift over 100 million Nigerians out of poverty.
According to him, the gas programme was “a practical demonstration of President Muhammadu Buhari’s commitment to lifting 100 million Nigerians out of poverty by using gas value chain as catalyst for social and economic development in Nigeria.”
The Minister said, “The programme has its main objective to reinforce and expand gas supply as well as stimulate demand in Nigeria through effective and efficient mobilisation and utilisation of all available assets, resources and infrastructure in the country.
“The programme is geared towards the implementation of Mr President’s June 12, 2019, promise to take hundred million Nigerians out of poverty within the current decade by ensuring that locally produced, available, accessible and affordable fuel is sufficiently supplied across the country”.
Mr Sylva, who was speaking during the inauguration of the NGEP in Ekiti Southwest Nigeria, said the country is richly endowed with mineral resources, specifically, hydrocarbons, crude oil and natural gas with proven gas reserves of over 200 trillion cubic feet of natural gas, which, he said had presented the country with opportunity to use gas as a catalyst for social economy renaissance.
Ekiti State Governor, Dr Kayode Fayemi lauded Buhari’s dedication to implement programmes directed at improving the lives of the people through job creation, social security schemes, stimulating the economy and attending to security challenges in the nation.
Mr Fayemi said that his administration would continue to be key in life-lifting programmes of the Buhari-led administration to improve the standard of living of the people of the State.
He said, “While we are in full support of the Federal Government in the implementation of NGEP in the state, our ultimate goal is to connect the state directly with gas supply via either Ajaokuta in Kogi State or Ore in Ondo State; the two points that offer our state the best opportunity for connection. We, therefore, plead with private sector players and the ministry to assist us in this venture.”
Source:www.energynewsafrica.com
Angola’s 65 Years Of Oil History Has Been Good For Angola Despite Some Challenges (Opinion)
By Andres Vega, International Associate at Centurion Law Group.
Angolan lawmakers last week approved the revision of current legislation, allowing for oil and gas pre-exploration studies to be carried out in some areas previously designated as natural reserves.
The government however stressed, that this law was by no means a relaxation of the stringent environmental provisions required for oil exploration in Angola that already exist. According to H.E Diamantino Pedro Azevedo, Minister of Mineral Resources and Petroleum, less than 3% of the zones previously designated as protected are likely to be affected by this provision. Angola’s constitution and applicable presidential decrees all mandate that oil and gas exploration only be carried out in a manner that is environmentally friendly. The proposed new law secured a majority of over 70% in Angola’s parliament.
The adoption of the new law by such a strong majority, despite earlier concerns, is an acknowledgement of the role oil has played in bringing prosperity to Angola. It is also an endorsement of the sectors’ regulator, the Agência Nacional de Petróleo, Gás e Biocombustíveis (ANPG), which is charged with ensuring that the highest environmental standards are adhered to during oil and gas exploration and production.
Following the achievement of independence from Portugal in 1975, and a protracted civil war that went on for decades, Angola has been able to rebuilt its infrastructure, improve institutional capacity, governance, public financial management systems, human development indicators and living conditions of its 31.8 million population in record time. Coupled with a pragmatic and business friendly approach to governance under the administration of President João Lourenço, private sector-led oil growth is expected to continue playing a powerful role in fuelling long-term national development.
From first oil production at the Benfica-2 well in 1956 to the deep-water discovery of the Girassol field in Block 17 in 1996, Angola has risen to become sub-Saharan Africa’s second-largest crude producer, after Nigeria. Producing 1.4 million barrels per day pre-COVID-19, with a peak production of over two million barrels per day in 2010, oil accounts for close to 90% of domestic exports. Around one-third of Angola’s GDP is rooted in the oil industry, while crude oil, natural gas and refined oil account for almost all national exports, with the value of crude oil exports totalling USD 35.5 billion in 2018.
As a result, crude oil production has had a sizeable impact on GDP and per capita wealth. In fact, Angola is home to one of the fastest-growing economies in sub-Saharan Africa and has witnessed a meteoric rise in socioeconomic development aligned with the expansion of its energy industry. In the 20-year period between 1999 and 2019, Angola’s GDP grew by 1,344%, reaching a peak of $145 billion in 2014, in line with the global crude oil bull market. Per capita wealth has seen a similar trajectory over the same period, growing by 619% and reaching $2,791 in 2019 pre-COVID-19, as well as peaking at $5,408 in 2014.
Importantly, the rise in government revenue has enabled the provision of enhanced public services, including health care, education, critical infrastructure and utilities. Angola’s Ministry of Education, in partnership with UNESCO, developed a National Strategy on Literacy and School Recovery aimed at rebuilding the national education system following the end of the civil war and improving literacy rates across the country, which currently stands at 77% for adults, significantly higher than the sub-Saharan average of 65%. In recent years, with the help of oil revenue, the Government has opened five new universities, 45 health worker training schools and a myriad of health clinics. The establishment of private health services and facilities by International Oil Companies for their employees has also been a key factor in the improvement of healthcare, with many Angolans benefiting from these provisions.
Infrastructure expenditure was also prioritized, especially electricity provision. This led to the building of additional generation capacity such as the Laúca dam which is one of Africa’s largest. Upon completion and full commissioning, it is expected to provide affordable and reliable power for over 8 million Angolans and spur the creation of heavy industry and associated jobs.
Angola’s oil wealth has by no means spared it from criticism about the unfair distribution of wealth, inequality in society and, in some cases, the misappropriation of state funds. These concerns are legitimate and should be looked at by the state. Where people are found to have profited unduly, it is important that they be held accountable and that justice be unbiasedly served as per the law and in the name of the People of Angola. The sector’s ability to generate wealth for Angola in itself is not the problem. Neither is the oil sector’s ability to generate that wealth at all in question. Concerns are rather centered around the use of the revenues generated and its fair distribution. These concerns should be addressed adequately by the relevant authorities. However, all sections of Angolan society and Angola’s international partners should continue to support the country’s oil and gas sector, to ensure that it continues to generate revenues for the development of the country. This is ever more important, given growing competition globally from new frontiers like Guyana, shale in the USA, and a global transition discourse that is adversely affecting the financing of oil exploration projects in Africa.
A Reform-Driven Approach
In addition to key socioeconomic indicators, hydrocarbon development in Angola has set in motion a reformist approach to oil and non-oil sectors alike. Notably, in positioning its petroleum sector as an attractive investment destination for international operators, Angola has initiated greater transparency, environmental sustainability and decentralization across its economy, which has also bred diversification and growth of non-energy industries.
Following the general election of President Lourenço in 2017, the country’s administration embraced bullish reforms, in part driven by the oil sector, in a way that is perhaps best encapsulated by its National Development Plan 2018-2022 (PDN), which comprises 25 strategic policies and 85 action programs. The PDN is based on five main pillars:
• Sustainable, diversified and inclusive economic development
• Infrastructure needed for development
• Peace-building.
• Strengthening of the democratic state and governance.
• State reform and decentralization.
In addition to outlining the way in which oil production will reach an estimated production of 1.5 million barrels per day, it provides for the privatization and divestment of state-owned Sonangol through the sale of 195 non-core assets between 2019 and 2022. Along with raising capital for the State, the divestment program seeks to refocus Sonangol on its core activities on hydrocarbon exploration, production and marketing and make it more efficient.
This same privatization and efficiency drive was quickly extended to other sectors of the economy. This has led to reforms of public utilities, tariffs and subsidies, and to the privatization or liquidation of state-owned assets through the Angolan Institute for State Asset and Holdings Management – or IGAPE – an expenditure surveillance unit – in June 2018.
Angola has also taken several measures to encourage foreign investors to engage with economic diversification initiatives beyond its oil sector. Pre-COVID-19, the PDN forecast that Angola would achieve three percent economic growth by 2022, associated with the growth of other non-oil critical sectors such as agriculture, fisheries, manufacturing, construction, services and tourism. Two new laws have been approved and adopted to harness that growth. The private investment law and the antitrust law both aim to enhance private sector-led growth and the competitiveness of Angola’s industrial sector, in turn making substantial strides toward creating more inclusive development and stability.
The government also created the National Agency for Private Investment and Promotion of Exports (AIPEX) which serves to identify key products to stimulate exports, promote private investment and the internationalization of companies outside of the oil and gas sector. These vital new programs and institutions benefit from financing generated by the oil sector. AIPEX currently holds two flagship programs: one that focuses on attracting private investment and another that focuses on exports and the internationalization of companies, with a view toward providing a “one-stop shop” resource for private investment across sectors and for the export business. As the oil and gas sector continues to attract private sector players, an investor-friendly environment opens the door for multinationals to enter the market and establish other, non-energy businesses in their portfolio in Angola, as well.
In short, the impact of Angola’s oil boom on national development cannot be measured in dollars, nor limited to socioeconomic indicators. Instead, the continued growth of the petroleum industry has served to bring sustainability, transparency and improved governance to the country, as it rightfully assumes its position as one of the largest economies in sub-Saharan Africa. The oil industry is one of the most dynamic globally, constantly changing due to innovations and technology improvements. Angola and the ANPG under the leadership of H.E. Paulino Jerónimo must continue to respond in real time to these industry changes in order to stay competitive and attractive for investment. A competitive Angolan oil and gas sector will drive reforms in other sectors of Angola’s economy, and inevitably benefit the lives of all Angolans.
Andres Vega is an International Associate at Centurion Law Group and has extensive experience in the implementation, development and financing of oil and gas and energy projects in some of the most important energy markets in the world.