By Rosana Philander
There is growing consensus on the connection between a vibrant hospitality sector in Africa and the reliability of electricity as our correspondent in South Africa has gleaned facts on conversation around the subject matter…
The African Energy Week recently held in Cape Town, South Africa, put the spotlight on the bright side of the hospitality sector.
Leoncio Amade Nze the Executive President for the CEMAC region of the African Energy Chamber explained that energy is key for the hospitality industry when tourists are travelling in other countries. He said it was important that business have 24 hour access to energy.
The price of energy in countries also affects the hospitality industry. “Fossil fuels are going to be around for a long time, but we must use it sustainably and make it cleaner. There are 1,3 billion people in Africa. Power production drives economies and Africa has a huge potential to grow and we have a lot of gas. But the African Free Trade Agreement that will create economies between African countries, has not been implemented,” he said.
Energy is important for social and economic development. It is estimated that 620 million people in Africa do not have access to electricity. This is due to a lack of infrastructure. It is said that gas is an ideal transitionary option which has lower greenhouse emissions. Natural gas is reliable and readily available for power generation in African countries. Nigeria has emerged as Africa’s leading oil producer and global competitor. Nigeria is poised to see an influx of exploration.
South African Minister of Trade and Industry Ebrahim Patel, said the Africa Trade Agreement still needs to be completed and a legal framework need to be put in place. “I just came from Ghana and we agreed on 88% of goods to trade with. But we need energy, water road and rail systems. This will help with growth and build our local industrial capability.”
South Africa is one of the top tourism destinations in Africa. Tourism contributed 8,7% to the Gross Domestic Product in 2019 and there was a 1,2% increase in 2000. But the sector has also been affected by die Covid-19 pandemic, but as countries are opening up again, things are starting to change. It is expected that Covid-19 cases will decrease further during summer and the country had a successful vaccination roll-out.
Currently South Africa is still heavily reliant on coal for energy. Gwede Mantashe South African Minister of Mineral Resources also reiterated that fossil fuels are going to be around for a while. “By 2030 we will have coal down by 60% and have 18% of renewable energy. We cannot switch it off immediately because it will have a negative effect on livelihoods. As the continent, we come from issues of oil and gas, or hydrocarbons, as they are collectively termed. Back then, in the aftermath of the oil crisis in the 1970’s, the development of Africa was brought to its knees due to the high oil prices.
“After the creation of the OPEC Fund for International Development in 1976, to assist developing countries with the challenge of the balance of payments, it was the African countries of Algeria, Nigeria, Gabon and Libya who pioneered an African solidarity solution. These four countries spearheaded the resolve that 4% of their oil produce would be reserved to assist non-oil producing African countries with their balance of payments challenges,” Mantashe said.
Dr Omar Farouk Ibrahim Secretary General of APPO (African Petroleum Producers’ Organization) said oil and gas played a key role in the last century. “Countries used it to develop their economies. You cannot get people out of poverty without energy. We are not against renewable energy, but are not going to rush into it. For this we need foreign investment.”
NJ Ayuk the Executive chairman of the African Energy Chamber, added:”We are pushing for gas, oil and renewables. There is a big focus on gas monetization. Senegal is a success story of this. For years I have called for harnessing Africa’s petroleum resources to bring about prosperity for Africans. Instead of flaring gas or exporting all of it, African countries should be using it to diversify their economies and establish new revenue streams, from petrochemical and fertilizer manufacturing to liquuified natural gas (LNG) plants. Partnering with foreign investors, more African countries can build midstream and downstream infrastructure from pipelines and ports refineries.”
On the role of natural gas in Africa it was said that a lot of people still do not have access to electricity. Half a percent of Sub-Saharan Africa is responsible for carbon emissions. Nigeria has the largest natural gas. Vladimir Ilyanin Deputy Managing Director of International Business Development and Strategy at Gazprom EP International, said:”It is the right time for gas to take off in Africa and it is a clean source of energy. As minister Gwede Mantashe said, co-operation in the region in terms of gas is important.
Sasol’s Vice-President of Stategy and Energy Optimization Marinus Niemand, also said that gas has for over 20 years been the cornerstone of South Africa’s energy sector. “It is also a great transitional option. Ten percent of energy uptake is based on gas. Gas and coal can be part of a synergy mix. Gas is a great transitional option. Ten percent of our energy intake is based on gas. Sasol is also considering a number of investments upstream. The time is now and gas is starting to compete as a substitute in energy,” Niemand said.
Between 2014-2017 gas and oil reserves worth R1 billion was discovered in Senegal. The country’s Minister of Petroleum and Energy Assatou Sophie Gladima, said they wanted to provide electricity to small villages. “We want to export our gas to neighbouring countries which will help with electricity demands. Senegal’s gas and oil sector was shaped by building capacity. And we have done a lot of benchmarking beyond industrialisation. We want to use gas for energy and by 2025 we want to make 70% use of gas. And later move to renewable energy, but gas is needed for the industrialisation of countries,” Gladima said.
OPEC Secretary General, HE Mohammad Sanusi Barkindo, said in his keynote address:” We foresee a bright future for African oil industry with significant opportunities for growth.”
On the future of energy, the Secretary General stressed that “access to affordable, reliable, sustainable and modern energy is a right for all, not a privilege,” and emphasized that “the energy poverty numbers for Africa are stark.” He underlined that these facts must be reflected in dialogues and conversations, including those on climate change. “OPEC has argued for an energy transition that is broad and inclusive, equitable and fair, and reflects common but differentiated responsibility and respective capabilities,” he highlighted, adding that the Organization believes that there is no one-size-fits-all solution to combating climate change.
Barkindo also addressed a number of key issues relevant to Africa’s oil industry, including its potential in the upstream and downstream sectors, as well as the importance of investment and the right enabling environment to ensure that supply meets demand.“Creating the stability in the oil market necessary to attract the required levels of investment has been one of the primary motivations behind OPEC’s collaborative efforts with 10 non-OPEC countries under the ‘Declaration of Cooperation’ umbrella.”
According to Taiwo Okwor the Vice-President of Investments from the Africa Finance Corporation, there are ample gas reserves in Africa. “But there are energy deficiencies. Another aspect about gas infrastructure is that we don’t talk to each other. If we want to develop gas infrastructure we cannot think in silos. We need to think of how gas is going to be distributed to domestic and international markets. Then we will get more investors in Africa. Nigeria is one of the country’s that looked at investment,” Okwor said.
Frederick Ndi-Obiosa the Regional Manager for KBR Advisory Consulting, who spoke about liquIfied natural gas (LNG), an integration of renewables and gas is a good solution. “Africa has a bright future but there also needs to be compliance which will attract investment,’ he said.