As Western Funding Dries, Nigeria Intensifies Bid to Host $5bn First African Energy Bank

*Tinubu approves $100m initial equity requirement

Emmanuel Addeh in Abuja

The federal government has ramped up its bid to host the first energy bank in Africa, the African Energy Bank (AEB), with President Bola Tinubu approving $100 million as share of the initial equity requirement.

A statement yesterday by the Permanent Secretary in the Ministry of Petroleum, Nicholas Ella, said the technical inspection team from the African Petroleum Producers Organisation (APPO) and Afrexim Bank- the joint promoters for the establishment of the AEB had completed their mission in the country.
It stated that the team was in the country to validate Nigeria’s readiness to host the headquarters of the continental bank which is set to be established in July 2024.

Algeria, Benin, Egypt, Nigeria, South Africa, Ghana and Côte d’Ivoire were among the initial main candidates jostling to host the headquarters of the emerging AEB, and all organisational work to create the bank must be completed by June 30.
As the West continues to pile pressure on oil companies from their countries to halt the funding of fossil fuels, the AEB says its mission is to provide a powerful impetus to energy development on the African continent through investment, including in the private sector.

The initiator of the creation of the bank is APPO, headquartered in the capital of the Republic of Congo, the city of Brazzaville. APPO unites 18 countries.
But following the first bidding round in early 2024, Nigeria, Ghana, Benin, and Algeria have now been pre-qualified to proceed to the final round of bidding.
The countries will compete for the right to host the supranational multilateral $5 billion AEB, which will finance Africa’s hydrocarbon deposits of oil, gas, and condensates and support energy transition and net zero 2060 commitments, the statement added.
“In our preparation for the bid, the Ministry of Petroleum Resources sought and obtained expert opinions from the Federal Ministry of Justice and consultants in January 2024.

“They reviewed and approved the bank’s proposed charter, establishment agreement, ‘The Treaty’, and headquarters host agreement. This approval provided the impetus to proceed, and the Federal Executive Council (FEC) and National Assembly are currently finalising the ratification process.
“This will ensure that the AEB receives the necessary privileges and immunities to operate in line with its global vision. To demonstrate the country’s commitment, Nigeria has identified a prestigious building in Abuja for the temporary headquarters and opened a secured data room for the technical team’s review.

“The application form for land for the permanent headquarters in the Central Business District of Abuja has been submitted for approval.
“President Bola Tinubu has approved a $100 million investment from four agencies of the Ministry of Petroleum Resources, exceeding the minimum equity requirement of $83.33 million for class ‘A’ shares. This decision positions Nigeria favourably to win the bid, potentially reshaping the country’s oil and gas ecosystem,” the statement said.

The Ministry of Petroleum Resources confirmed that Nigeria was working diligently with the Nigerian National Petroleum Company Ltd. (NNPC), and the Nigerian Content Development Monitoring Board (NCDMB), to meet all eligibility criteria.
Thus, it stated that the $5 billion bank, when headquartered in Nigeria, shall be the largest single foreign direct investment inflow into Nigeria in over two decades with numerous benefits.

“The Africa Energy Bank eco system shall rank as the third largest Bank in Africa and shall be the most prominent bank in Nigeria in terms of shareholders’ funds.
“It will significantly boost Nigeria’s Gross Domestic Product (GDP), employment, financial architecture, and inclusion, and propel our economic diversification while supporting foreign exchange management strategies.

“It will pivot the development exploration and investment initiatives by our independent petroleum producers, commercial service providers, legal and local content drivers, and technology and skills development that will leverage the bank’s proximity to the market and scale up production and capacity.
“Our financial services industry and capital markets will enjoy streamlined depths and flows for syndication, product development, and asset liquefaction, factoring all relevant services to hydrocarbon markets, positioning Nigeria as the main financial hub for oil and gas downstream, midstream, and upstream investment funding by mitigating the headwinds from climate change and energy transition optics with positive multipliers,” the federal government added.

The $5 billion AEB, it said, is expected to grow its assets to over $120 billion in seven years, thus becoming a source of sustainable Foreign Direct Investment (FDI) for Nigeria that supports its vision 2030 ambitions.
The bank, the government explained, upon take-off is expected to attract an additional $2 billion equity in classes ‘B’ and ‘C’ from African sovereign wealth funds, national oil companies, and other Institutional investors whose investment objectives are aligned with the vision and mission of the bank.
Afreximbank’s board, it stressed, has committed to invest $1.25 billion, as a major investor in class ‘A’ shares alongside the APPO members club.