The African energy sector has long been overlooked by international investors, leading to the continent lagging behind the rest of the world in exploration of new midstream and downstream projects. Thankfully, that reality is set to change in the coming years as Afreximbank has announced plans to launch a $500 million fund to finance African gas infrastructure, with Nigeria leading the charge for new investments. The world has increasingly turned its gaze towards Africa, leading to a wave of renewed interest in the region’s production capacity.
Nigeria’s Midstream and Downstream Gas Infrastructure Fund has signed an MoU with Afreximbank
Nigeria is aiming to expand its midstream and downstream capacity through the substantial funding that is set to be provided by the MoU signed by its Midstream and Downstream Gas Infrastructure Fund and Afreximbank. The hope will be to foster investment in Nigeria’s energy sector, enabling the nation to once again become a regional leader in energy generation.
The MoU establishes a funding program for a four-year debt and equity plan to boost Nigeria’s aging infrastructure. The pair of African energy institutions has released a joint statement regarding the new MoU that has set the international energy market into a frantic race to jump on board the African energy train.
“Afreximbank will consider providing direct financing and credit risk guarantees to support project finance transactions, working alongside local financial institutions. MDGIF will consider equity contributions to complement Afreximbank’s senior debt, enabling full capital structuring for eligible projects.” – statement by Afreximbank and Nigeria’s Midstream and Downstream Gas Infrastructure Fund
The partners have also laid their gaze on a potential “structured program to enhance MDGIF’s institutional capabilities in project structuring, risk management, and innovative financing”. Nigeria has long been the cornerstone of the African energy sector, vastly outproducing the rest of the continent in oil and gas production.
Nigeria is set to become the go-to destination for the African energy market
Nigeria has long been the envy of other African nations. Its vast oil fields, coupled with its extraordinary approach to fostering investment, have positioned the nation at the front of the African energy drive. With the international energy market in a spiral due to the newest round of sanctions on Russia, many nations are turning back to the continent with renewed interest.
“Through this partnership, we are unlocking the potential to mobilize up to $500 million over the next four years for Nigeria’s gas infrastructure. More importantly, we are creating a pipeline of bankable projects, supported by feasibility studies, project preparation and risk-sharing mechanisms, that will accelerate the pace of investment in pipelines and processing.” – Nigerian Petroleum Resources (Gas) Minister Ekperikpe Ekpo
With the astonishing funds provided by Afreximbank, Nigeria can invest in modernizing aging infrastructure and once again become the belle of the African energy ball. Africa’s energy market has been boosted by the planned investment in Nigeria’s infrastructure, along with news that Eni, one of Italy’s largest energy companies, has approved the deployment of a second floating LNG facility in Mozambique.
The Intra-African Trade Fair saw some serious investments in African energy
At the recent Intra-African Trade Fair, nearly $48 billion in trade deals were concluded between nations and companies keen on an African energy drive. This marks a new reality for the African energy market as the international interest in its sector grows beyond expectations. As the new sanctions on Russian energy resources take hold of the international energy markets, more nations outside of the purview of the usual suspects are set to increase oil and gas production over the coming years. Such as Mexico, which is expecting an increase in crude flow into the United States.
