Continental Focus, International Reach

$30 Billion Injection into African Downstream

Sunday, March 31, 2019

According to the African Refiners and Distributors Association (ARA), the significant achievements in the current massive $30 billion investment push into the African downstream have been in logistics, distribution, storage terminals, import facilities and retail marketing. The investment is most evident in countries such as Nigeria, South Africa, Morocco and Angola.

This was revealed by the speakers at the ARA’s annual conference in Cape Town last week.

Africa has been identified as arguably the only place in the world where demand is steadily growing, at around 4% a year in gasoline and diesel, because of the massive growth in the continent’s economies.   The growth is attributable in part to a significant increase in population, while efficiency, communications, and growth in GDP are leading to more expenditure on energy.

In the refining sector, that has faced many challenges, there are green shoots of investment; most notably the huge Dangote Refinery in Nigeria, which is progressing fast, with refining units soon to be installed. On completion, this facility will massively alter the profile of fuel supply in Africa, but it will, in effect, just slow down the level of imports that remain essential as the continent continues to grow. But Dangote in not the only investor in refining.

In Egypt, Africa’s largest refiner, EGPC outlined its massive investment program for in its eight refineries in addition to the imminent start-up of the privately financed $4.5 billion project at the Egyptian Refining Company (ERC). Algeria too has been investing heavily in upgrading its refining system.

Keynote speaker at the conference, Minister of Energy of Cote d’Ivoire Abdourahmane Cissé, presented the €600 million new finance package for the SIR refinery in Abidjan and announced the planning for upgrades to meet the ARA’s AFRI-4 specifications. Also under the spotlight was the rapidly progressing Uganda Refinery.

Other topics extensively discussed by the active 600 participants were an idea presented by Tope Shonubi, CEO of Sahara Energy, to develop an African ‘brand’ to encourage tearing down of barriers to trade; and the endorsement of ARA’s ongoing work with regional economic communities and the African Union, to harmonize gasoline and diesel specifications.

Presentations by the African Development Bank, the African Finance Corporation and Standard Bank focused participants’ attention on the critical need to create the right structures to satisfy the massive requirement for finance to meet the growing demand in Africa.