Experts caution African oil producing nations against resource nationalisation, advocate enabling environment for private sector players

Oredola Adeola

Oil and gas producing countries in Africa have been charged to reduce the destructive policy of resource nationalization sweeping across the continent and create enabling environments for private energy firms to drive oil and gas industry growth in order to make energy poverty history by 2030.

These were some of the suggestions made at the 2022 edition of the African Refiners & Distributors Association (ARDA) Week, which runs from 13-17 March in Cape Town, South Africa.

According to the experts’ resource nationalization public sector managers in African have proven to be less prudent, inefficient and ineffective to manage capital-intensive and complex issues affecting the oil and gas industry.

NJ Ayuk, Executive Chairman African Energy Chamber (AEC), in his statement asked Africa leaders to cut the high energy taxes, create enabling environments for energy firms to thrive and reduce resource nationalization to drive oil and gas industry growth.

According to Ayuk, private sector participation in downstream operations is critical to growing the continent’s hydrocarbon potentials.

Speaking in a panel discussion titled, ‘OPEC-Africa Energy Dialogue Post-COP27: Ensuring a coordinated, robust intra-African oil & gas industry alongside implementation of energy transition aspirations,’ also emphasised on the need for the government to cut taxes and amend fiscal terms to achieve a robust energy industry capable of addressing energy poverty and ensuring affordability and access.

Commenting on best practices to drive Africa’s energy industry expansion, Ayuk, stated that, “We as Africans and industry need to be more solution driven. We need to look at how do we rally the finance required to make things happen.

He said, “We need to create an enabling environment and look at what are we doing wrong to change things, we need to correct what is wrong. If renewables were the solution, South Africa would not be in darkness. Germany would not be importing coal from South Africa.

“We cannot be told that renewables are the way to go when we are receiving less than 2% of the global investments. We need to talk about how we can achieve intra-African free trade to boost energy access and ensure clean cooking.

“We don’t need to be ashamed of making money, because when we make money, we will be able to define our own energy road plan and fix the energy crisis problem.”

Expanding on how the continent can create an enabling environment for oil and gas market players, Ayuk stated that, “We need to be providing access to deals. Resource nationalization needs to stop. Uganda and Ghana made discoveries 16 years ago and to date, no development of the resources has materialized.

He said, “We, as Africans need to look at private sector parties, create and sign deals. Mozambique is still suffering 12 years after the discovery of massive reserves.

“We should reduce the time being taken to approve and build oil and gas projects. We need to look at fiscals and how we can continue attracting firms.

“When we cut the bottlenecks currently restricting industry expansion, firms will start to come in. Africa should prioritize the use of African solutions, action and opportunities while governments must cut down taxes, they are too high.”

Dr. Omar Ibrahim, Secretary General of African Petroleum Producers Organisation (APPO) in his contribution during the panel session noted that Africa needs to do more when it comes to critical thinking around energy security and sustainability, especially when we go into global energy discussions.

He said, “We all accept that the world is seeing a shift from fossils to renewables, yet in doing so, huge challenges for Africans around energy security and socioeconomic development are being brought on us.

“As we go to looking for solutions to address energy challenges associated with the energy transition, we are going back to the old system of seeking aid from western parties. Each African country is rich enough if they decide to prioritize energy over the past ten years,” Dr Ibrahim.

Dr. Haris Aliefendic, Senior Research Analyst at the Energy Studies Department, OPEC, while commenting on the progress being made by the African downstream sector in addressing industry challenges, stated that the continent, together with the Middle East and Asia Pacific, will account for over 90% of all infrastructure additions by 2045 as capacity migrates from developed countries to new markets where oil and gas demand will be high.