Poor infrastructure, smuggling, funding gap crippling Africa’s petroleum downstream
16 March 2021 |
3:03 am
With a growing population, huge energy demand, and projected industrial and agricultural boom, cross-border infrastructural deficits, funding gaps, smuggling, and lack of harmonized taxes
Stakeholders seek options for maximising AfCFTA
With a growing population, huge energy demand and projected industrial and agricultural boom, cross-border infrastructural deficits, funding gaps, smuggling, and lack of harmonized taxes are critical bottlenecks limiting the growth of Africa’s downstream petroleum, stakeholders have said.
Except the price differential challenge is addressed, energy experts have insisted that the gains of the African Continental Free Trade Area (AfCFTA) in the downstream sector of the continent’s petroleum industry may remain a mirage.
The experts, who gathered at the Ghana International Petroleum Conference stressed that challenges bedeviling local capacity and distribution of petroleum products across the continent may mar the gains of AfCFTA.
AfCFTA, which came into force earlier this year, was created by the African Continental Free Trade Agreement among 54 of the 55 members of the African Union. Despite the projected benefits of the initiative, Africa’s limited refining capacity, lack of transport network linking the countries, ambiguous trading models, small ports and bottlenecks across borders as well as ports could limit the projections as they applied to the petroleum sector.
Nigerian-born energy expert and the Executive Secretary of the African Refiners and Distributors Association (ARDA), Anibor Kragha, noted that although Africa’s rapidly growing population and huge energy resources have enormous opportunities, continuous importation of petroleum products, if not checked, would create energy security challenges.
The need for harmonisation of regulations on cleaner fuel to ensure that petroleum products produced in the continent conform to a continent-wide specification according to him remained sacrosanct, otherwise, public health burden may ravage the continent.
“We have had to import petroleum products over the last couple of years. With what we have seen with COVID-19 and the disruptions that are potentially possible to trade across the continent, we need to become more self-sufficient,” he said.
Kragha disclosed that ARDA and the African Union are working on harmonising regulations to ensure that petroleum products imported and refined on the continent meet AFRI Clean Fuel Specifications.
The Cleaner Fuel spec recommends the adoption of AFRI five (50 ppm sulphur for gasoline and diesel) by 2025, and AFRI 6 spec (10 ppm for same products) by 2030.
The Managing Director, CITAC Africa, Gary Still, said Africa must focus on how to simplify the supply chain within the continent, stressing that it is cheaper to move containers across the Atlantic to the west coast of Africa than it is to move the same container from the coast to the Sahara.
“So, policies that are needed should create efficiencies in the supply chain and remove those barriers to get greater access to cheaper energy because energy is a driver of economic growth and GDP, which is the solution to creating wealth and trade in Africa.
“We have already seen moves in this direction; places like Mozambique, Mozambique Maputo corridors are in operation and are still being developed…
“There is a corridor, which is also being developed to move products across the Kalahari into places like Botswana Gaborone and further going up north towards Dola Copperbelt in Zambia and into DRC. But this needs to become common practice,” Still said.
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