Africa Oil & Power and the African Energy Chamber hosted the Closing Deals: Advancing FID During Covid-19 webinar to address the potential and challenges of African energy financing in the short and long term. For now, operators continue to face uncertainty and the impact of low oil price.
It is reported that financial institutions’ lending behaviour on the continent is impacted by projects’ environmental dynamics with a wide access to funding opportunities and project developments. Also, the pandemic has led the creation of various financial models to reduce individual risk and reduce financial exposure of companies.
Marcia Ashong, Founder and Executive Director of TheBoardroom Africa and Brace Energy, told the media, “We are in unchartered waters. The IMF is estimating a 3 percent reduction in global GDP for 2020. The effect is almost triple to that of the 2008 financial crisis. Africa remains largely a commodity-based economy, and raw materials make up one-third of the continent’s export income. The road to recovery will be extremely slow and arduous. The full effect of Covid-19 on our economies is not fully recognized yet. From the oil and gas perspective, it has derailed major projects. For example, the Aker decision in Ghana [to postpone FID] will postpone further work on its Pecan discovery.”