Page 7 - AfrElec Week 11

AfrElec COMMENTARY AfrElec
increase its output by millions of bpd in less than two weeks.
Rystad estimates that up to 3mn bpd of extra oil will flood the market from April, including 2mn bpd from OPEC+ members based on their storage, spare capacity and ramp-up capabilities.
They could add a further 800,000 bpd in May by utilising spare capacity to the full.
War-torn Libya, meanwhile, could contrib- ute a further 1mn bpd of supply if a ceasefire is reached and its output returns to pre-shut-in levels.
Saudi Arabia aims to increase production to 12.3mn bpd in the coming months. Its output could climb to 10.8-11.0mn bpd in April, from 9.8mn bpd, Rystad estimates, rising to 11.2mn bpd in May.
Without additional drilling, which will take longer than a few months, the kingdom’s maximum production is capped at 11.5mn bpd. But it could empty its storage in order to meet its 12.3mn bpd target. Riyadh is targeting
an additional increase to 13mn bpd, but it is unlikely this could be achieved in 2020.
Russia, meanwhile, has said it can bring an additional 300,000 bpd on stream within 90 days, having produced 11.28mn bpd in Febru- ary. While the country is able to achieve this, Rystad said it had assumed a more conservative growth of 200,000 bpd in its estimates.
The UAE could provide an extra 200,000 bpd in April and even more at a later stage by utilis- ing its entire spare capacity, while Kuwait could contribute 110,000 bpd and Iraq 250,000 bpd, Rystad believes.
Whether or not the supply war will go ahead is uncertain. But indications are that both Mos- cow and Riyadh are ready for a prolonged strug- gle for market share. The pair are also eager to push higher-cost shale drillers out of the market, and may not relent until they feel this goal has been achieved. On the other hand, the coronavi- rus’ ever-worsening impact on oil demand could result in them changing course.™
INVESTMENT
AfDB leads DFIs in promoting private investment in energy access
AFRICA
THE African Development Bank (AfDB) and a number of European development finance insti- tutes (DFIs) have committed $160mn of initial funding for the Facility for Energy Inclusion (FEI), which aims to stimulate public equity and private debt investment in African power.
The FEI aims to raise $400mn to fund improvements to energy access across Africa through small-scale renewable energy and mini- grid projects
The European Commission, KfW, the Clean Technology Fund, Norfund and other investors have all contributed to the initial $160mn. .
The FEI will be managed by the AfDB and will act as a financing platform to catalyse fur- ther financial support for new energy access technology.
The AfDB said that it had provided $90mn of finance and would act as the FEI’s anchor spon- sor. This includes $20mn from the Clean Tech- nology Fund.
“After three years of hard work, we are pleased to see the second and larger piece of our energy access debt funding platform — FEI — up and running on the back of very significant com- mitments from our partners. We look forward to seeing FEI catalyse financing for new energy sector business models and accelerate our efforts to electrify Africa,” said Wale Shonibare, AfDB acting vice-president of power, energy, climate
and green growth.
The European Commission has committed
€25mn to the fund, while Norway’s Norfund has committed $23mn and Germany’s KfW €25mn. The FEI will also include a $10mn project preparation facility (PPF) from the Global Envi- ronment Facility that will provide reimbursable grants for transaction advice to facilitate finan-
cial closure.
“We anticipate that the facility will be suc-
cessful in attracting private capital to this seg- ment of the market”, says Mark Davis, executive vice-president, clean energy at Norfund.
“Our junior equity investment aims at mobi- lising public equity and private debt investors to scale up the financial means available for innovative renewable energy projects like new mini-grids to electrify Africa” said Babette Stein von Kamienski, head of division infrastructure, Southern Africa at KfW.
The FEI aims to support small-scale inde- pendent power producers (IPPs) that deploy mini-grid and captive power projects.
The FEI is to target projects worth under $30mn and with less than 25MW of green gen- erating capacity.
Initial pipeline projects have been identified in Burundi, Cape Verde, Madagascar, Malawi and Mozambique.™
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