…as body approves establishment of Investment Corporation
-By Saidu Abubakar
The task ahead of the African Petroleum Producers Organisation (APPO) that seemed huge and herculean in nature, is continually being overcome as the continental body has recently performed its Headquarters Agreement signing ceremony, which marks the formal return of APPO to its permanent headquarters, in Brazzaville, Republic of Congo. This indicates that APPO is determined to succeed for the good of its member-countries and its peoples. Interestingly also, the Council of Ministers of APPO has approved the establishment of the African Energy Investment Corporation, AEICORP, to replace the old APPA Fund for Technical Cooperation.
The mission of this new institution is to finance the development of hydrocarbons and energy sector infrastructure in Africa. Unlike its predecessor, the APPA Fund which was wholly owned by APPO Member-Countries’ Governments, AEICORP is a public/private partnership. The governments are stakeholders, but so is the private sector both in Africa and outside.
Consultants have been engaged by AEIRCORP to raise the equity of the corporation for the purpose of subscription.
It would be recalled that for thirty-one years since its founding, APPO had been headquartered in Brazzaville, Republic of Congo. But when the Council of Ministers took a decision to reform the Organization and appointed Nigeria as chair of the seven-nation reform committee, the Council directed that the headquarters of the Organization be temporarily relocated from Brazzaville to Abuja to enable Nigeria give the required leadership and direction.
Among the recommendations of the reform committee was that the headquarters hosting right be open to all member-countries interested to apply. A minimum criterion for eligibility was approved and four member- countries indicated interest to host the headquarters. Republic of Congo also indicated interest in retaining the headquarters. After a lot of back and forth inspecting facilities and politicking, the three other countries agreed to withdraw from the race, provided the Republic of Congo met all the minimum requirements.
Delivering speech at the headquarters signing agreement between the Republic of Congo and APPO in Brazaville recently, the Secretary-General of APPO, Nigeria’s Dr. Omar Farouk Ibrahim stated: “I recall that the Council of Ministers of APPO, at its 38th Session on June 15, 2020 unanimously passed a Resolution to move the headquarters of APPO from its temporary location in Abuja, Nigeria, to the permanent headquarters in Brazzaville, the Republic of Congo. The Council also considered and approved the new Headquarters Agreement between the Republic of Congo and the African Petroleum Producers’ Organization.
“It will be recalled that APPO’s Headquarters was temporarily transferred to Abuja in April 2018 when Nigeria assumed the Presidency of APPO with the mandate to carry out the approved program of reform of the Organization.
“During this reform, new minimum requirements to host APPO Headquarters had been approved and the right to host the Headquarters was opened to all interested APPO Member Countries.”
According to him, four member-countries namely Egypt, Equatorial Guinea, Federal Republic of Nigeria and the Republic of Congo, the host country, had expressed their interest. The three new applicants for the right to host the APPO Headquarters subsequently withdrew and left the Republic Congo as the sole candidate.
“A nine-member ministerial delegation led by the President of APPO HE Foumakoye Gado, visited Brazzaville in February, 2020 to assess Congo’s degree of compliance with the minimum requirements and welcomed the result, which led to the Ministerial Resolution to return the Headquarters to Brazzaville,” the APPO scribe revealed further.
Major reform exercise that the Organization went through in the last couple of years, Dr. Farouk added, “gave us a good opportunity to reflect on what APPA had been doing in its 33 years of existence, and whether it has the capacity to tackle the current and future challenges starring the African energy industry in the face. We came to the conclusion that a lot has changed in the global energy scene since APPA was founded in 1987 and a lot more will change in the coming years. These changes will have huge impacts on the economies and peoples of our member countries. A number of short, medium, and long-term challenges for the African Oil and Gas Industry were identified. It is apt to mention only two at this time. The first and immediate challenge is that of the impact of COVID-19 on the economies of our countries and the lives of our people. COVID-19 brought to the fore some of the major weaknesses of the oil and gas industry in our member countries. Although COVID-19’s impact is felt globally, the impact is not uniform across countries, even within Africa. Countries that rely heavily on export revenue for their day-to-day administration, like our Member Countries, are more hard-hit.”
He also said that the meeting of the APPO Council of Ministers last June, for example, the Secretariat, at the request of the Republic of Congo, presented a Report on the short and long term impact of COVID-19 on the economies of APPO Member-Countries.
“That Report highlighted the grave danger that our Member-Countries face over their heavy dependence on external markets for their export revenue, FDI, oil and gas technology etc. The study noted that the economies of our Member-Countries are more prone to global shocks than other economies that are not dependent on oil and gas revenues,” he pointed out at the occasion. The second challenge is the global paradigm shift away from fossil fuels to renewable energy. As an organization of countries whose economies are heavily dependent on oil and gas revenue, we had taken a critical look at the Paris Climate Change Agreement popularly called COP-21 to which world leaders, including our own leaders, have committed. We asked ourselves, what becomes of the economies of our Member Countries that are heavily dependent on hydrocarbon export revenue if all the goals of COP-21 are met? How prepared are our countries for a fossil fuel free world economy? We reflected on the future of the oil and gas industry in Africa in the light of global paradigm shift on energy sources. We noted that the developed countries have already initiated measures against fossil fuel use including but not limited to; Fossil fuel divestment, Penalties for the use of fossil fuels, Discrimination in the use of fossil fuels, and introduction of subsidies on renewables.
He said the implication of the success of COP 21 is that poor countries that God has blessed with abundant oil resources like APPO member-countries cannot use it to develop their economies especially in the long term because there will not be market for them, either because discriminatory policies would have succeeded in eliminating whatever cost advantage oil has over renewables or global paradigm shift against fossil fuel use has made its use very unpopular, or more stringent penalties will be imposed and enforced on countries that deal with fossil fuels.
“These challenges are real. Challenges of funding, of technology and of energy infrastructure. The time has come for us to strategize to ensure that we get the maximum benefit of our resources. But we cannot do this as individual countries. As individual countries, we do not have the finances. We do not have the technology. The infrastructure is almost non-existent. But if we pool resources together, we can surmount the challenges. Even more developed countries have found it necessary to collaborate to achieve economic objectives.
“And this is the new focus of our Organization. It is a huge task. But we are determined to succeed for the good of our Member countries and our peoples. In this regard, I am pleased to inform your Excellencies that the Council of Ministers of APPO approved the establishment of the African Energy Investment Corporation, AEICORP, to replace the old APPA Fund for Technical Cooperation, whose Managing Director is here with us. The mission of this new institution is to finance the development of hydrocarbons and energy sector infrastructure in Africa. Unlike its predecessor, the APPA Fund which was wholly owned by APPO Member Countries Governments, AEICORP is a public/private partnership. Our governments are stakeholders, but so is the private sector both in Africa and outside. As the consultants engaged by AEIRCORP to raise the equity of the corporation come to Congo for your subscription, I wish to appeal to both the government and private investor to subscribe to the project. I assure you that it is one investment that you will all be happy that you made,” Dr. Farouk assured.
While welcoming the decision of African Petroleum Producers’ Organisation (APPO) to site the headquarters of African Energy Investment Corporation in Abuja, President Muhammadu Buhari pledged the full support of the country in ensuring the successful take off of the organisation.
At a meeting with Dr. Omar Farouk, Secretary General of the organisation at the State House penultimate Thursday, President Buhari also gave assurance that Nigeria will pay for its share subscription.
The President, who received praises for the vision of setting up APPO and the ratification of its charter by Nigeria back in 1985 as Military Head of State, said the peculiarities of the challenges facing African oil producers required them to come together under the association to share experiences and solve their problems collectively.
The President said the growing clamour for a reduction in the use of fossil fuels notwithstanding, countries like Nigeria needed to produce more oil to feed the petro-chemical industry and create jobs.
On the peculiar challenges facing the country amid its large population and the immense deficit in infrastructure, President Buhari urged the Organisation of Petroleum Exporting Countries (OPEC) to consider the weight of the responsibility of the nation with “200 million people, with severe deficit in infrastructure” when sharing oil production cuts.
In his remarks, the Minister of State, Petroleum Resources, Timipre Sylva informed the President that the proposed APPO Energy Investment Corporation to be sited in Abuja will start with USD 1 billion from the AFRO-EXIM Bank and is expected to bring employment and other benefits to Nigeria.
The Secretary General of APPO who was accompanied by Dr Adedapo Odulaji, the OPEC Governor in Nigeria, conveyed the appreciation of both the Congolese President and the Prime Minister for the President’s support in the relocation of the headquarters of the association to its chosen location, Brazzaville, the Congolese capital.
He expressed hope that members of the 16-member organisation will surmount the challenges posed by COVID-19 as well as that from receding fossil fuel use as a result of the climate change treaties signed by member states and other nations.
Recognizing the serious challenges posed to Member Countries’ economies by both COVID-19 and COP 21 among other challenges, APPO Ministers sought support at the highest levels of our Member Countries. This led to the decision to hold a Summit of Heads of State and Governments of APPO Member Countries in Brazzaville sometime in 2021. He congratulated the Republic of Congo for its choice as the host of the first APPO Summit.
“The Headquarters Agreement that we have just signed is the last of a series of activities we have taken in the last 5 months to relocate to Brazzaville, from transferring personnel to equipment and the seat of the headquarters.
“Our satisfaction, and everyone can understand it, is now complete. I should like to use this opportunity to express on behalf of the Organization, our gratitude to the President of the Republic of Congo, His Excellency DENIS SASSOU NGUESSO, for his unflinching support and for giving his very high approval for the signing of this Headquarters Agreement between the Government of the Republic of Congo and the African Petroleum Producers’ Organization, APPO. I should also like to acknowledge and thank His Excellency Mr. Clément MOUAMBA, the Prime Minister for his commitment to the course of APPO, which was clearly demonstrated when the APPO Ministerial delegation visited Brazzaville last February. We also recognize the role and support of the Ministers of Foreign Affairs, Cooperation and Congolese Abroad and that of Justice. I also would like to express our deep appreciation to my Minister, the Minister of Hydrocarbons and to congratulate him for his diplomatic success in bringing back the headquarters to its original seat.
“We also want to thank the good people of Congo who have been excellent hosts to us for the past three decades.”