Energy partnership on the agenda at the EU-Africa summit
With growing energy interdependency between Africa and Europe, a partnership in this sector is to be formally established at the December EU-Africa Summit in Lisbon.
© EIB/BEI Photo Library
It all began at the European Council of 8–9 March 2007 when the heads of state and government of the EU-27 adopted a global action plan in the energy field for the 2007-2009 period, including provisions to set up a specific dialogue on energy with the countries of Africa. Subsequently, in mid-May, Europe’s foreign ministers proposed that this energy partnership should be the subject of a formal agreement at the EU-Africa Summit.
In their conclusions, ministers detailed EU plans to create a long-term global framework for dialogue drawn up with the African Union in cooperation with the New Partnership for Africa’s Development (NEPAD) and the Forum of Energy Ministers in Africa (FEMA). For this, the European ministers recommended that a high-level EU-Africa meeting on energy should be held every two years.
Among the objectives is improving access in Africa to safe, reliable, affordable, diverse, climate-friendly and sustainable energy services in cooperation with the World Bank. The partnership also seeks to ensure that the sector contributes to the Millennium Development Goals and to increasing energy supply security for Europe and a safe market for Africa. The strategic importance of Africa as a supplier of hydrocarbons – with potential production of 50 million tonnes of liquefied natural gas (LNG) a year (or 30% of the world’s total) – is also stressed by Dutch MP Jos Van Gennip, author of a report published in 2006 by the Parliamentary Assembly on this issue.
However, the ministers go on to say that to achieve these objectives there must be increased investment in Africa’s infrastructures while at the same time promoting renewable energies and energy efficiency. The Council notes that Africa has a vast potential in terms of fossil fuels and renewable energies, but that many remain largely unexploited – principally biofuels, hydroelectric power, geothermal power and solar or wind power.
Consequently, the Council advocates increased support for the African energy sector through bilateral cooperation and the assistance of the European Development Fund. It stresses the need to implement the partnership between Europe and Africa in the field of infrastructure with an allocation of €5.6 billion for the 2008–2013 period as well as by reviving the ACP-EU energy facility (€250 million).
But the EU also plans to focus the dialogue on the energy policies of the African countries themselves and the use of oil and gas revenues for development purposes. The Commission and Member States have been asked to assist African partners in increasing the flow of revenue from extractive industries directly to economic and social projects. The ministers have proposed to create solidarity funds for the oil sector that energy users and private investors would pay into as well as stabilisation funds financed with capital originating in the exploitation of energy resources that would be destined for future generations.
With these initiatives, the EU plans to improve the transparency of finance originating in the exploitation of natural resources as an essential precondition for creating an improved business climate. It plans to assist African governments in strengthening transparency in decision-making and negotiations with partner countries.
The EU will, for example, promote implementation of the Initiative on Transparency in Extractive Industries (EITI) and encourage European multinationals to conform to its standards. At the same time it will encourage European banks to implement the standards of the World Bank Group’s International Finance Corporation in the transparency of payments and contracts in this sector.
Learning the lesson from the growing presence of emerging players in Africa – as confirmed by the annual meeting of the African Development Bank in Shanghai in May – the EU proposes that ‘new donors and investors’ should be included in the dialogue. This follows statements made at the beginning of the year by Development Commissioner Louis Michel and European Investment Bank (EIB) President Phlippe Maystadt of their intention to discuss these issues with the Chinese.
The partnership should also put into place a more favourable regulatory framework for the energy industries in Africa. This is the reason for the offer of support for African efforts to create a legal, regulatory and fiscal framework designed to attract investors and venture capital. These measures must be implemented with the Economic Partnership Agreements (EPAs), set to be signed at the end of 2007 with the six ACP regions.
The partnership also includes measures that take into account climate change by supporting the abilities of African countries to adapt to these changes. For example, by limiting greenhouse gas emissions – specifically those arising from deforestation – by making a more efficient use of the biomass. On this, Louis Michel proposed in September that EU Member States should create an alliance to help developing countries adapt and prepare for climate change. The Commission has also put forward an initial sum of €300 million for the 2008–2010 period not including additional contributions that individual EU Member States could provide. In practice, the EU plans go toward supporting efforts to reduce gas flaring during the oil production.
The political signal given by the EU-27 should encourage cooperation between the European Development Fund and the Facility for Euro-Mediterranean Investment and Partnership. Managed by the EIB, this group makes loans and venture capital available to major industrial infrastructure projects and has a budget of €8.7 billion euros for the 2007–2013 period. Major projects such as the Trans-Saharan Nigeria-Algeria gas pipeline are planned to meet integration expectations on the African continent and provide supply security for Europe.
In this way the resources of the bilateral banks and agencies combine with the resources of the EIB for the ACP countries (€3.7 billion for the 2008–2013 period) to set and meet goals that bring benefit to both Africa and the EU.
