Adnan Adams Mohammed
Deloitte, an assurance and advisory firm, has given its take on the approach Africa nations need to adopt to achieve effective energy transition.
The international firm believes that the transition from traditional fossil fuels to cleaner energy needs to be through a gradual process while adopting energy mix approach up to the year 2050.
As a follow-up interview on the topic “Creating the perfect investment conditions for Foreign Direct Investments into the African energy sector: where is the money?” moderated by a partner at Deloitte at the just ended Africa Oil Week Conference in Cape Town, South Africa, Jenny Erskine noted that, Africa is partly ready for the transition agenda, in spite of the infrastructure and investment challenge it has, the continent has the needed resources (sun, wind, cobalt, lithium) that are greener and can be tapped easily to start the process to greener energy.
“Mining the cobalt, lithium and other minerals could pollute the environment, but it can lead to the net zero carbon emission as the output of those minerals are need to manufacture materials needed for the energy transition”, the Oil and Gas Sector Leader for Deloitte Africa, Jenny Erskine said in an interview.
However, Claude Illy, a partner at Deloitte with finance expertise and based in South Africa, reiterated in the zoom interview that, effective mining policies must be looked at and streamlined to ensure better mining mechanisms are put in place to protect the environment and regulate the industry.”
While adding that, “governments must take action to create enabling environments for investors to ensure transparent, fair investments that favors both parties.”
Looking at option of a win-win investments opportunities, Ms Erskine elaborated on a Public Private Partnerships (PPPs), Build Operate Transfer (BOT), Equity financing (for smaller projects) and debt financing (for bigger projects, from commercial banks, export credit agencies, bilateral and/or multilateral institutions) and long-term off-take agreements (partially guaranteed by multilateral banks in difficult to finance countries) as a possible means to conclude a favorable greener energy projects to aid the steps and strategies towards achieving the global agenda.
Meanwhile, taking a critical look at some of the disadvantage of the agenda, Africa nations might have to leave more of its untapped fossil fuels in the earth and waters as many nations are yet to even start exploration activities on their potential oil and gas wells both onshore and offshore. Also, Africa as known for exporting its raw materials, it will lead to creating a huge numbers of unemployment as the mineral resource mining and production companies fold up in no time to pave way for greener energy generation projects.
Ensuring clear, transparent, and consistent policy, and maintaining a stable regulatory environment in Africa’s most prominent mining jurisdictions is key to attracting international mining capital at a scale
commensurate with the continent’s potential. Building on that foundation, solid governance, transparency, minimum red tape, an enabling business environment and trust among industry players and stakeholders will help to change common perceptions about Africa.
Botswana, Ghana, South Africa, and Zambia, amongst others, have declared themselves as “open for business” to mining companies and foreign investment, and demonstrate that openness by their overhaul of mining legislation, and visible stakeholder engagement efforts, even as perceived investment attractiveness remains low.
