Nigeria has been granted the hosting rights for the $5bn African Energy Bank, the Federal Government announced on Thursday.

It said the right was granted during a virtual extraordinary meeting of the Council of Ministers of the African Petroleum Producers Organisation, adding that with the hosting right, the bank would have its headquarters in Nigeria.

The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, who announced this in Abuja, said Nigeria emerged as the preferred host nation amid stiff competition from Ghana, Benin, Algeria, South Africa, and Cote D’Ivoire.

He said, “I want to announce to Nigerians that the Council of Ministers of the African Petroleum Producers Organisation has just approved Nigeria to host the headquarters of the African Energy Bank.

“The biggest challenge we have in Africa as oil-producing countries is funding. And so a short while ago the Council of Ministers held a meeting and said the time has come for Africa to find solutions to financing its oil and gas investments. Based on that, the idea of the African Energy Bank was conceived.

“We’ve been talking with our counterparts from other countries. Six countries, including Nigeria, were competing to host the energy bank. Ghana, Algeria, Benin Republic and others were competing with us, but today I want to thank all of them, APPO, and Nigerians for their support.

“I also want to specifically thank the President who gave us the full support to ensure that we get to this point where APPO has given us the hosting right for the African Energy Bank. This is not going to be a bank for Nigeria alone, but a bank for the entire African continent.”

In May, The PUNCH reported that President Bola Tinubu had approved a $100m investment by Nigeria for class A shares in the proposed African Energy Bank, as announced by the Federal Ministry of Petroleum Resources at the time

The FMPR said the approval had positioned Nigeria favourably to win the bid to host the multilateral $5bn Africa Energy Bank, which will finance Africa’s hydrocarbon deposits of oil, gas, and condensates and support energy transition and net zero 2060 commitments.

The Permanent Secretary, FMPR, Nicholas Ella, had said, “President Bola Tinubu has approved a $100m investment from four agencies of the Ministry of Petroleum Resources, exceeding the minimum equity requirement of $83.33m for class A shares.

“This decision positions Nigeria favourably to win the bid, potentially reshaping the country’s oil and gas ecosystem.”

On Thursday, Lokpobiri explained that the African Energy Bank would be instrumental in providing the necessary financial backbone for energy projects that would drive growth and development across the continent.

He said the selection highlights Nigeria’s robust energy sector and its strategic vision for the continent’s energy future, as he assured Nigerians and Africans at large that the establishment of the bank would mark a transformative era in meeting energy needs.

“We are committed to ensuring that this bank will not only move Nigeria forward but will also be a beacon of progress for the entire continent. Our goal is to foster sustainable energy solutions that are both innovative and inclusive,” the minister stated.

The bank is expected to facilitate access to funding for energy projects, thereby catalysing economic growth and enhancing energy security. The minister emphasised that this initiative aligns with the broader objectives of the African Union’s Agenda 2063, aiming for a prosperous and self-sustaining Africa.

Also in May, the petroleum ministry stated that the technical inspection team from the African Petroleum Producers Organisation, and Afrexim Bank – the joint promoters for the establishment of the African Energy Bank, completed their mission to validate Nigeria’s readiness to host the headquarters of the bank, set to be established in July 2024.

Following the first bidding round in early 2024, Nigeria, Ghana, Benin, and Algeria were pre-qualified to proceed to the final round of bidding. The countries competed for the right to host the supranational multilateral $5bn Africa Energy Bank.

“In our preparation for the bid, the Ministry of Petroleum Resources sought and obtained expert opinions from the Federal Ministry of Justice and consultants in January 2024,” the FMPR had stated.

It added, “They reviewed and approved the bank’s proposed Charter, Establishment Agreement, ‘The Treaty,’ and Headquarters Host Agreement. This approval provided the impetus to proceed, and the Federal Executive Council and National Assembly are currently finalising the ratification process. This will ensure that the AEB receives the necessary privileges and immunities to operate in line with its global vision.

“To demonstrate the country’s commitment, Nigeria has identified a prestigious building in Abuja for the temporary headquarters and opened a secured data room for the technical team’s review. The application form for land for the permanent headquarters in the Central Business District of Abuja has been submitted for approval.”

The ministry also confirmed that the Federal Government worked diligently with Nigerian National Petroleum Company Limited, and the Nigerian Content Development Monitoring Board, to meet all eligibility criteria.

“Thus, the $5bn Africa Energy Bank, when headquartered in Nigeria, shall be the largest single foreign direct investment inflow into Nigeria in over two decades with its benefits including:

“The Africa Energy Bank ecosystem shall rank as the third largest bank in Africa and shall be the most prominent bank in Nigeria in terms of shareholders’ funds. It will significantly boost Nigeria’s Gross Domestic Product, employment, financial architecture, inclusion, and propel our economic diversification while supporting foreign exchange management strategies,” the ministry stated.

It said the bank would pivot the development exploration and investment initiatives by independent petroleum producers, commercial service providers, legal and local content drivers, and technology and skills development that would leverage the bank’s proximity to the market and scale up production and capacity.

“Our financial services industry and capital markets will enjoy streamlined depths and flows for syndication, product development, and asset liquefaction, factoring all relevant services to hydrocarbon markets, positioning Nigeria as the main financial hub for oil and gas downstream, midstream, and upstream investment funding by mitigating the headwinds from climate change and energy transition optics with positive multipliers.

“The $5bn AEB is expected to grow its assets to over $120bn in seven years, thus becoming a source of sustainable FDI for Nigeria that supports our vision 2030 ambitions,” the ministry stated.

It noted that the African Energy Bank, upon take-off, is expected to attract an additional $2bn equity in classes B and C from African sovereign wealth funds, national oil companies, and other institutional investors.