President Tinubu approves $100m investment in energy sector

President Bola Tinubu has approved a $100 million investment in Nigeria’s energy sector, aiming to secure the hosting of the African Energy Bank (AEB) headquarters in Abuja.

This strategic move is part of broader efforts to position Nigeria as a leading player in Africa’s energy landscape.

Ambassador Nicholas Ella, Permanent Secretary of the Federal Ministry of Petroleum Resources, announced this development over the weekend. He highlighted that a technical inspection team from the African Petroleum Producers Organization (APPO) and Afrexim Bank has completed their assessment, affirming Nigeria’s readiness to host the AEB headquarters, set to be established by July 2024.

Following an initial bidding phase earlier this year, Nigeria emerged as a finalist alongside Ghana, Benin, and Algeria to host the Supranational Multilateral $5 Billion African Energy Bank. This institution is designed to finance Africa’s hydrocarbon resources, support energy transition efforts, and align with net-zero commitments by 2060.

The Ministry of Petroleum Resources, in collaboration with the Federal Ministry of Justice and expert consultants, has been working since January 2024 to ensure that all legal and operational frameworks are in place. The Federal Executive Council and National Assembly are now finalizing the ratification process to grant the AEB the necessary privileges and immunities for operation.

To demonstrate its commitment, Nigeria has designated a prestigious building in Abuja as the temporary headquarters and established a secured data room for the technical team’s scrutiny. Additionally, an application for land in Abuja’s Central Business District for the permanent headquarters has been submitted for approval.

President Tinubu’s approval of the $100 million investment surpasses the minimum equity requirement of $83.33 million for Class A shares. This substantial financial commitment, sourced from four agencies under the Ministry of Petroleum Resources, significantly strengthens Nigeria’s bid.

The Ministry also confirmed ongoing collaboration with the Nigerian National Petroleum Company Ltd. (NNPCL) and the Nigerian Content Development Monitoring Board (NCDMB) to meet all eligibility criteria.

Hosting the $5 Billion African Energy Bank in Nigeria is expected to bring substantial benefits, including boosting the nation’s GDP, creating jobs, enhancing the financial sector, and promoting economic diversification. Additionally, it will support foreign exchange management strategies and drive development, exploration, and investment in the oil and gas sector.

The African Energy Bank is projected to attract an additional $2 billion in equity from African sovereign wealth funds, national oil companies, and other institutional investors. Afrexim Bank has already pledged $1.25 billion as a major investor in Class A shares, alongside contributions from APPO members.

This initiative aligns with Nigeria’s strategic goals of enhancing its energy sector and reaffirming its leadership role in Africa’s energy transition and economic development.

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