Downstream Infrastructure Revival Priority for African Energy Transition

Energy security

In his presentation, Kragha provided insight into how the African continent can maximize the development and exploitation of its energy resources to achieve energy security while at the same time ensuring the energy transition is just and inclusive for the entire population.

Kragha explored how issues such as the Russian-Ukraine conflict and energy transition related policies have highlighted the need for Africa to prioritize downstream investments and infrastructure development to address critical energy issues such as growing demand and rising energy poverty. According to Kraghar, what the Russian-Ukraine conflict has shown is a need for short-term interventions to address the energy crisis alongside mid- to -long-term goals of an energy transition.

“What is driving us as ARDA, despite what happened globally, is that energy demand will grow through 2040 due to population growth and industrialization across Africa,” Kragha shared.
Kragha highlighted the vital need for the continent to balance the energy transition with security, stating that “Energy security is the short term priority we have. We are not the biggest polluter in the world, hence we are focusing more on uninterrupted, secure and affordable supply of energy.”

While Africa’s energy demand continues to grow significantly with the continent set to become the world’s largest buyer of refined petroleum products, Kragha spoke of the need for the continent to attract new investments to modernize existing projects and accelerate the pace at which the continent is developing ongoing projects.

“Storage and distribution infrastructure including pipeline and storage should be a focus. We cannot have the dialogue about refineries without storage,” stated Kragha.

With a lack of adequate investments hindering the growth of Africa’s downstream industry, Kragha commented on the various mechanisms being implemented and adopted by ARDA to support the development of downstream infrastructure. He stated that, “We want to make sure we have a finance plan to ensure projects are bankable. We want to engage with Afreximbank and the Africa Finance Corporation to ensure our members are able to be financed to produce cleaner fuels and the development of storage and distribution.”

“We are also developing a Liquefied Petroleum Gas Sector Development Fund with Standard Bank and other multilaterals to ensure the use of gas is optimized by our members to address local energy needs,” added Kragha.

Meanwhile, while Africa is prioritizing addressing increases in energy demand, Kragha emphasized that risks of heightened pollution will introduce new threats for economies, unless countries adopt cleaner fossil fuels. According to Kragha, “Africa’s growing demand must be met with cleaner fossil fuels. With fossil fuels set to continue to account for 60% of the demand, ARDA will continue to promote the exchange of best practices on energy sustainability among our members as well as champion investments across the downstream industry.”

While other blocs including Europe are prioritizing energy decarbonization, Kragha emphasized the importance for Africa to exploit its fossil fuel resources, which remain largely untapped, to be able to become a globally competitive economic zone and energy industry.

“We are not the biggest polluter in the world. Europe contributes the most emissions and Africa has only contributed 2.7%. If Africa is to execute all of its gas projects, there won’t be any heavy impact on global emissions. There is no one size fits for in energy sustainability and we need a just transition.”
However, Kragha emphasized that despite being the lowest emitter, Africa must continue to decarbonize its energy industry, stating that, “We need to demonstrate that we can deliver carbon credits across the downstream. What must Africa must do on a decade-by-decade basis is to decarbonize. By 2030 we need cleaner transport, clean cooking and power solutions.”

All this and more will be further unpacked during the 2023 edition of the African Energy Week (AEW) conference and exhibition, Africa’s premier event for the oil and gas industry. Under a mandate of making energy poverty history by 2030, AEW 2023 will connect investors and project developers with African policymakers, generating new capital for Africa’s burgeoning downstream sector. AEW 2023 is the African Energy Chamber’s annual energy conference, taking place in Cape Town from October 16-20.

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Energy Capital & Power

Energy Capital & Power is the African continent’s leading investment platform for the energy sector. Through a series of events, online content and investment reports, we unite the entire energy value chain – from oil and gas exploration to renewable power – and facilitate global and intra-African investment and collaboration.