OGRepublic August Edition

AFRICAN ENERGY STORIES
African Development Bank Develops New Financial
Instrument for Local Currency Loan
African Development Bank (AFDB),
Africa's premium financial
institution, has developed a new
financial instrument for local currency loan
to bridge the gap on high value exchange
rate and return of investment (ROI) to
boost investment on infrastructural
development in Africa's major industries.
Wale Shonibare, AFDB's Director for
Energy Financial Solutions, Policy &
Regulation, disclosed this in his keynote
speech at the Energy Advance Africa
Energy Series virtual event held on 16th -
18th June 2021.
Shonibare noted that African government
are reaching their sustainability limit as
they no longer have the capacities to
provide guarantees.
To bridge the gap, AFDB is investing a lot to
building regional connections with an
investment portfolio of $20 billion in the
energy sector.
He added, "In certain countries where they
have high currency volatility, if you take a
hard currency loan over 15-20 years. Every
five years the size of your loan will
effectively double because of currency deevaluation.
"We have developed new financial
instrument such as the Nigerian
Infrastructure Debt Fund. For the first
time, you can borrow up to 15 years in
local currency in Naira which hasn't
happened before to support investment
on infrastructural development.
"We are also investing on capacity building
for the power pools to equip them so that
they can be able to do regional trade.
"By the end of 2022, all the countries in the
West African Power pool will be linked by
the regional connections.
"We are also putting in place systems and
regulations to allow power trade across
the African countries.
"The South Africa power pool is the most
developed but we are working with the
East Africa and Central African power pool
as well. It is important to have regional
regulations."
Speaking on the energy transition in Africa,
Wale Shonibare, AFDB's Director for Energy
Financial Solutions, Policy & Regulation
he highlighted that Africa basically have three
sources of energy which are fossil fuel,
renewables and nuclear energy.
"Africa's energy transition is going to be slightly
different from the other part of the world
because in Africa, land use, agriculture and
forestry actually constitute about 57% of the
emission. While energy is only 35%.
“Also, There had been significant discoveries of
gas in Africa. Between 2011 and 2018, about
40% of the world's new discoveries for gas were
in six African countries.
By Ndubuisi Micheal Obineme
“Gas will play a very critical role in Africa's
energy transition because a lot of African
countries have very weak grids and as a result of
that, it will be very difficult to put renewables in
those grids. It needs gas as a transition fuel to
anchor the renewables.
"Gas is so good because it is flexible and you can
ramp it up and down even when the wind isn't
blowing and when the sun isn't shining.
"We need to use Africa's endownment on gas.
Gas represent that bridge and may become the
destination fuel.
"We now have examples where gas plants are
been retrofited to use hydrogen. You can have a
combination of hydrogen, green hydrogen, and
gas.
"Africa's transition may involve more emissions
before it start to ramp down. Africa will pick up
later than the developed countries.
'We need to look at new technologies that
hasn't been invented and allow the private
sector to innovate," he concluded.
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