Powering Africa as the continent booms in opportunities

 

                                                                                                                                                         By Sunny Oputa

Once labeled a decade ago by The Economist Magazine as “the hopeless continent”, the Economist and many pundits have changed their minds about Africa and now describes it as a continent of hope, opportunities and the bastion of next global economic growth. This is as a result of the rapid economic growth in Africa and the next wave of industrialization.  Abundant natural gas resources in Africa which have been under –utilized are envisaged to provide the new dais to leap frog massive growth in Africa and this is expected to attract huge investment opportunities.

 

Whether it is in Nigeria, Algeria, Equatorial Guinea, Senegal, Ghana, Gabon, Angola, Mozambique or Tanzania the emergence of various aspects of gas business has become ubiquitous discussion points. It is common to hear start-up companies, entrepreneurs, foreign investors, and national governments discussing the emerging gas commodity market, the profound investment opportunities   and the need to set up allied gas businesses.

 

Sheba, a young entrepreneur I spoke with sometime ago, wants to set up a gas bottling company to enable him sell gas in cylinders to domestic consumers in Nigeria. He wants to capitalize on the nation’s gas master plan, to develop his business. But Sheba has the problem of attracting adequate financing that would enable him set up the level of business he wants.  He knows that it won’t be easy for him to attract funding locally. Although local banks have started providing some level of funding to local companies, yet it remains an uphill task to have access to capital. Sheba, like many young entrepreneurs in the African continent, are not conversant with the requirements and details that investment banks and  international investors would expect to grant loans or accept to engage into a partnership with him. And, also he doesn’t know if there are other available resources outside his nation for start-up entrepreneurs that have viable projects.

 

Sheba is in the same exact situation as some of the African nations that are struggling to borrow billions of dollars for the development of the emerging gas commodity market in their countries. 

 

While it requires large amount of cash to develop gas fields and then process the commodity, the recent push by Africa’s gas-rich countries to develop this emerging market is finally gaining momentum. Out of the estimated 6263, 34 Tcf of gas reserves in the world, the continent of Africa contains about 514, 92 Tcf. And thirty two percent of Africa’s total natural gas reserves are embedded in West Africa, making the region an interesting focus for the emerging gas market.

 

It has been estimated that the emerging natural gas market of Africa will blossom in 10 years and the massive revenue accruing from this burgeoning market, if well utilized has the great potential of transforming the economies of the producing/exporting nations.

 

Currently, the use of natural gas and energy in the region is at very low ebb due to lack of infrastructures, industries, development, poverty and awareness. Some parts of the region in the sub-Sahara Africa remain mostly without electricity. Gas - generated electricity is the latest initiative being pursued to light up this region. Most of the gas produced in the region is not fully utilized locally: some is flared while at the same time an emerging market for the exportation of natural gas in the form of liquefied natural Gas (LNG) is developing at a rapid rate is estimated that the future of the market lies in both an emerging local utilization and aggressive exportation.

 

A global project that is currently generating momentum for gas monetization in Africa is the President Obama’s Power Africa Initiative. About 600 million people that constitute 70% of the population of Sub-Saharan Africa live daily without adequate electricity. During his 2013 visit to Cape Town, South Africa on June 30, President Barrack Obama announced the Power Africa initiative as a way to increase the availability and access to electricity for the millions of people in Africa by adding more than 30,000 megawatts of cleaner and efficient electricity generation. The United States’ government partnership with national governments, public and private sectors in enhancing the initiative has gained prominence in both the African and global markets.

 

Carl Fleming, Associate/Advisor  M & A at AKIN GUMP HAUEU & FIELD LLP with  present a  didactic paper on The Power Africa Initiative in the 8th Annual Sub-Saharan Africa Oil and Gas Conference scheduled for April 29 -30, at the Marriott Westchase Houston.  Fleming’s paper will focus on leveraging United State government’s policy to increase private sector opportunities in Sub-Sahara Africa.

 

 

 

 

 

 

 

 

Carl Fleming
Associate /Advisor M&A

Akin Gump HAUER & Field LLP

 

Carl J. Fleming advises clients on mergers and acquisitions, project finance and development, and public policy matters.

Practice & Background

 

Mr. Fleming has a decade of experience representing clients in major international transactions and policy matters, including transactions in more than 20 countries across Africa. He advises U.S., European and African companies, private equity funds and governments in connection with equity acquisitions and sales, project finance and infrastructure development transactions, renewable energy transactions, and public policy matters. His work has been noted by the Wall Street Journal, Washington Lawyer Magazine, Africa Insider and other trade publications.

Prior to joining Akin Gump, Mr. Fleming worked for the U.S. government at the Millennium Challenge Corporation (MCC). There he served as a senior international attorney, advisor to the White House’s senior advisor to MCC and diplomat. He has developed negotiated and implemented international agreements with foreign states to open markets in such regions as sub-Saharan Africa, North Africa and the Middle East. He has counseled government ministries in the energy, infrastructure, agriculture and water supply and sanitation sectors. 

 

More specifically, as a senior international attorney, he counseled MCC country teams and foreign governments throughout Africa on the development, negotiation and implementation of large scale infrastructure programs. As advisor to the White House’s senior advisor to MCC, he advised the office of the CEO and its Board (including Secretary of State, USTR, USAID and Treasury) on MCC’s investments across its entire Africa country portfolio, exceeding an aggregate value of $10 billion in over 15 countries. As a diplomat, he cultivated positive relationships with foreign government officials, advising them on their most challenging policy, governance and commercial matters.

Before joining the U.S. government, Mr. Fleming spent several years in private practice in the New York offices of another large international law firm representing clients in international and domestic finance transactions involving project financings, leveraged acquisition financings, mezzanine financings, bridge financings and bond offerings.

 

Mr. Fleming is a member of a USAID Power Africa working group to assist with the drafting of model power purchase agreements for electric power utilities in Sub-Saharan Africa to be used as template documents in African power development transactions supported by the US government's Power Africa initiative. He is also a member of the Corporate Council on Africa and the African Private Equity and Venture Capital Association. 

Mr. Fleming attended the Georgetown University Law Center, where he was selected to be executive articles and notes editor for the Georgetown Journal of Gender and the Law, senior writing fellow for the Georgetown University Law Center Legal Writing Center and member of the Georgetown University Law Center Federal Legislation Clinic.

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