African Export-Import Bank (Afreximbank) and the Africa Petroleum Producers’ Organisation (APPO) have signed the establishment document for the Africa Energy Bank (AEB) with an initial $5 billion.

The signing ceremony was held at the premises of the Egyptian Ministry of Petroleum and Mineral Resources in Cairo, marking the successful conclusion of two years of negotiations following the signing of a Memorandum of Understanding by the two entities in May 2022, Afreximbank said in a statement.

Benedict Oramah, President and Chairman of Board of Directors, Afreximbank, and Omar Farouk Ibrahim, Secretary General of APPO signed the Establishment Agreement and the Charter of the Africa Energy Bank on behalf of their respective institutions.

Tarek El Molla, Egyptian Minister of Petroleum and Mineral Resources and Member of the APPO Ministerial Council said the signing marks a significant milestone in Africa's journey towards energy independence and sustainable development.

Benedict Oramah said the Bank is "enormously proud" to be co-investing in AEB and for taking the lead role in advising on the management and implementation process. He said AEB's operational launch is set to commence in July.

With the signing of the Establishment Documents by the two founding institutions, at least two Member Countries now need to sign and ratify the Establishment Documents for the Bank to take off.

Omar Farouk Ibrahim said the AEB is Africa’s response to the imminent funding challenge that the global paradigm shift from fossil fuels to renewable energies or energy transition poses to the oil and gas industry in Africa.

“For too long Africa’s oil and gas industry has been dependent on extra-African funding. We came to take foreign financing of our oil and gas projects for granted, until the advent of energy transition made us realise that those on whom we have depended for many decades have decided to abandon us.”

Traditional financiers, on whom Africa has relied for decades, are withdrawing support, citing climate change concerns as the primary reason.

According to the Secretary General, with over 125 billion barrels of proven crude oil reserves, over 600 trillion cubic feet of proven gas reserves, and with more findings regularly being made, Africa cannot afford to abandon these energies when it has the largest proportion of world’s population living without access to modern energy.

While the AEB’s focus shall be funding oil and gas projects, it shall not close its doors to renewable energy projects, the statement noted.

In separate comments, NJ Ayuk, Executive Chairman of African Energy Chamber (AEC) noted that despite the pressure to relinquish fossil fuel financing and redirect capital towards renewables, Afreximbank and APPO are promoting a just transition in Africa, one that prioritises Africa’s development and recognises the role oil and gas plays.

"The Africa Energy Bank will play a catalysing role in expanding the energy industry in Africa while driving sustainable and equitable growth for the continent’s population,” he said.

(Editing by Anoop Menon) (anoop.menon@lseg.com)

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