• Tuesday, May 21, 2024
businessday logo


Why AU, AfCFTA failed to deliver local content for energy security

Why AU, AfCFTA failed to deliver local content for energy security

Dr Riverson Oppong is the new Chief Executive of the Association of Oil Marketing Companies and LPG Marketing Companies. He was formerly the Manager of Commercial Operations at the Ghana National Gas Company. He is an experienced oil and gas business analyst with solid technical and commercial knowledge in oil and gas field development and portfolio management. In this interview with BusinessDay’s Abbas Ibrahim at the 8th SAIPEC Conference, he spoke about the opportunities and challenges with local content development, AU and AFCFTA, natural gas utilisation, and energy security in Africa.

What are your thoughts about the 8th Sub-Saharan Africa International Petroleum Exhibition and Conference (SAIPEC)?

This is the 8th SAIPEC Conference, and we’ve come here to Nigeria to share knowledge and experience across Africa. For me, this is one of the biggest conferences that’s held in Africa. As you can see today, you have people from Angola, Mozambique, Tanzania, Ghana, Uganda, Kenya, Senegal, and more.

So what we are witnessing today is a discussion on local content vis-à-vis national content, and my presentation was very straight to the point that we need to look at national content that will look at the whole of Africa coming together, because there is no sense when a cement production happening here in Nigeria and can be transported to Ghana, Togo, and Benin, where this tracks past, wouldn’t buy cement from Dangote but would rather import from France.

Read also: Africa should balance energy security with transition concerns – ARDA

What is national content to you if you cannot partake in whatever is produced by your neighbouring country? So basically, what I’m saying is that local content needs to cut across the value chain, and I made a clear example when it comes to Ghana: we don’t flare and export any gas; every single gas produced is used in-house to generate electricity and promote industrialization.

In your presentation, you talked about local suppliers, the workforce, and sustainable development. So how do you think we can go about this as a continent?

I was just throwing in the fundamental understanding of what local content is. Local content is talking about supplies, human capital enforcement, mainstream, and development jobs in the oil and gas industry. However, the sustainability part of it is understanding that the entire value chain needs people in it.

Today, as we speak, have you ever heard local content downstream? Have you ever heard local content in the mainstream? No. The only local content you hear oil and gas talk about is upstream. So I’m challenging the third arm of the local content pillars, which is the sustainability part.

Does it make sense to you to produce crude oil, export it, and sell it at $90 per barrel, or, in the best case, $100 per barrel, and import diesel at $700? Now look, remember, you don’t control any of these prices. You don’t control the selling price of the crude oil. You don’t control the buying price of the diesel.

So, where do you find yourself? In a hitch. Someone is controlling the price from another country or another continent. I shared a picture in my presentation about where we are in Africa in terms of energy accessibility and availability compared to where we want to go. So how would we get there if 15 percent of locally produced gas is used domestically and everything else is exported?

Now, the next leg has to do with how much of the revenue that we make as a country and continent is used to develop the energy sector that we have a deficiency in. So, if you’re not using the gas or the resources to develop energy, use the revenue that you are making to support the energy industry. How many times has the light gone off today during this conference? More than 10 times.

Meanwhile, we are the backbone of another region, while the pipeline, which is supposed to supply gas across the whole of West Africa, stopped in Ghana. It couldn’t go to Senegal, Liberia, and the rest. But when Europe needed the gas, we were able to now connect the pipeline to go to Morocco and supply gas to Europe. What is the natural content for you if you’re doing this?

Read also: Policies, fossil prices, energy security drive global renewable capacity – IEA

You talked about how African countries are having difficulty moving to other African countries. So how do we come together as a union?

The African Union (AU) has failed, and the African Continental Free Trade Area (AfCFTA) will fail if care is not taken. If you look at it, the AU and AFCFTA objectives are not different. So why do you think AFCFTA would work if its members were not buying things produced in other African countries?

Why do you think AFCFTA would work if its members were not buying things that were produced in other African countries? I gave you an example of Benin and Togo. The same Dangote cement that passes through Benin and Togo comes to Ghana, and we buy it, but these guys don’t buy it. How is AFCFTA going to solve this? If we wanted to situate the AFCFTA head office, it would be a fight, and it is political now. We are not united.

We forget that it doesn’t matter where it is located; what matters is that the mission and vision of the organisation are accomplished. That’s what matters. So, AFCFTA needs to work, and I believe that maybe this time around it will work, and we want to make sure that we all play a role. So we are calling on all African countries, whether they have resources or not, to come together and have an African continent where we can depend on each other.

Look at how Nigerians have come together to buy Shell onshore. That’s a great example of how Nigerians furnished, designed, and constructed the original FPSO. It is a clear example that it is doable in Africa. You don’t need expertise from Singapore because they also learned like we did. They even had less experience than Nigeria had, and they did it, so it is doable.

What should we do as a nation when it comes to the Trans-Saharan gas pipeline? The pipeline projects have been moribund for years.

We have seen what’s been done in Europe. I’ve lived in five countries. I’ve seen what is done in every country or every continent. If you see the kind of pipelines that you come across in China, the US, Russia, or Europe, you will marvel and look at the small pipelines we have across Africa; meanwhile, we also have the resources. Go to the Middle East; they have these pipelines serving them. So why can’t we have the same?

There was a consortium that was working, but because of greed and political influence, they had to put a stop to it. We need to go back to the table. The pipeline that ended in Ghana should please continue throughout Cote d’Ivoire, Senegal, Liberia, and even Mauritania. This is how we’re going to solve the issue of energy security in Africa. Gas is one of the best sources of fuel for electricity generation for three reasons: it’s available, it’s accessible, and it’s affordable and technology-driven.

I always say that there should be a gas price that is not so low as to forbid investment. But it shouldn’t be so high that the off-takers cannot buy; countries like Mali, Côte d’Ivoire, and the rest cannot buy. It should be so affordable that everybody can buy that gas and use it for electricity purposes, first of all. Then we’ll talk about industrialization. Africa is one of the continents that doesn’t think about industrialization at all.

Look at China’s scenario: no country uses coal more than China. But listen to their policy: no country has more solar capacity than China. China understands the importance of power and electricity vis-à-vis the industrialization era. They’ve developed their industry with dirty, clean, and whatever kind of energy just to make sure that their industry is stable to generate income and revenue to buy off Africa.