Possible ways of creating continuous financing for the downstream oil industry in Africa are being explored by The African Refiners and Distributors Association (ARDA) and top international financial experts.
To finance significant multi-billion-dollar refinery, warehousing & dispensing, and liquified petroleum gas (LPG) projects, ARDA and international investors has conveyed the 3rd annual online workshop on sustainable financing. The association also revealed that since the value chain of the petroleum downstream industry brings in 33% of oil and gas discharge, attempts to decarbonize the downstream operations through carbon reduction operations will bring the required funding.
At the yearly workshop, Anibor Kragha, the Executive Secretary of ARDA, said that carbon reduction initiatives are valid for acquiring funds. These funds will be used to implement long-term initiatives to enhance refining, enrich petrochemicals, structured warehousing & dispensing, and LPG clean cooking initiatives across the continent.
Kragha also stated that the first-ever Refinery Carbon Abatement Project in the continent has been commenced by ARDA. He also quoted that “An inclusive, equitable energy transition roadmap must be deployed that captures priorities, challenges, and perspectives of Africa’s low-emitting countries…the roadmap must not prioritize near-term emissions reductions (with relatively little climate benefits) over support for economic development and energy transformation.”
To make certain that the continent’s downstream Energy Transition Plan is complemented with a Funding Initiative, ARDA is synergizing with major investors on two funds.
The first will encompass refinery upgrades for neater, low-sulfur fuels and carbon emissions mitigations, organized warehousing & dispensation investments, and petrochemical operations for advancement and carbon framework abatement. The second is to be established together with the UN-supported International LPG Partnership, which will be a committed Africa LPG Sector Development Fund to finance the quick upgrade of clean cooking with LPG all over Africa through the national LPG sector community.
Bowale Odumade, who is the Senior Investment Professional in charge of Transportation and Logistics at Africa Finance Corporation, made cited the example of Uganda Fuel Transportation and Storage Projects. These projects aimed at discussing unacceptable road transportation of petrol from Kenya to Uganda and attendant issues encompassing huge costs, crowding in highways and high carbon dioxide emissions. Ms. Odumade expressed that the important deliberations for making available funding for the continent’s Downstream projects involve addressing administrative and commercial, supply, funding and framework, cash risk, sponsor ability, phased development and developmental impact and continuity matters.
Based on pundits, divestments of petroleum assets by global oil and gas firms might speed up change to alternate sources of capital, primarily merchants and other speculative individual capital.
Sweny and Onyeche quoted that “Private sector participation will need to grow, particularly in the power sector, but will require viable and successful projects and innovative financing programs”. Noting that the issuance of ESG bonds by African entities increased substantially from $3 billion in 2018 to $5.1 billion in 2021, they said a pipeline of credible, climate-related, “bankable” projects is key to unlocking private investment.