Africa’s biggest oil, gas finds  doing little for local economies

The last thing Senegal needed in its long-drawn-out effort to capitalise on large oil and gas finds off its coast was political turmoil.

Africa’s newest natural gas superstar had bubbled with optimism when BP, Woodside Energy Group and Kosmos Energy agreed to develop the fields off the shores of the West African country a few years ago. The finds were touted as a game changer in a country where villages are still not connected to the power grid and more than a third of the inhabitants live in poverty.

“General electrification for the entire population will become a reality,” Sokhna Ba, the youngest member of Senegal’s parliament, said in an interview in the capital Dakar late last year. “The revenue could also be used to improve the living conditions of the population.”

But a string of delays in BP’s  US$4,8 billion Grand Tortue Ahmeyim, or GTA, gas project, with the latest coming just last month, has meant it won’t happen soon, prompting the country to say it may miss the International Monetary Fund’s economic growth forecast in 2024. 

Now, matters have been made worse by a bid to delay elections that extends President Macky Sall’s term by almost a year, throwing the country that is among the most stable democracies in West Africa into crisis and raising the cost of funds needed for its energy aspirations.

Senegal joins other African countries that have struggled to ride some of the world’s biggest oil and gas discoveries in decades. The finds have rarely lived up to their promise, often doing more harm than good. Everything from project delays to political uncertainties and mismanagement have capped export revenues, forcing the nations into additional borrowings and worsening their financial situations. Senegal’s debt is becoming more expensive, Mozambique has had to restructure its loans and Ghana defaulted amid the mismanagement of its oil and gas production.

The discoveries have also done little to improve the energy situation at home. Domestic markets across the continent are no match for the lucrative ones beyond its borders. 

Foreign companies balk at developments that don’t target export markets, leaving local economies with limited access to their own gas that can be used to generate electricity for homes and industry. Almost 600 million people, or just under half of Africa’s population, lack direct access to energy even as 6 percent of the world’s gas and about 7 percent of its oil is produced there.

“Natural gas is mostly being exported, with African countries benefiting from foreign exchange revenues, but it is true that domestic needs for more energy are significant and are not being met,” said Vijaya Ramachandran, director for energy and development at the Breakthrough Institute, a California-based think tank.

Africa is the only continent where the number of people without electricity access has actually risen over the years. Most Africans connected to the grid consume less per capita than a refrigerator in the US. — Bloomberg.

You Might Also Like