What is this Energy Security?
Energy Security is the ability to ensure that future essential energy needs can be met, both from adequate domestic resources exploited under economically acceptable conditions or maintained as strategic reserves, and from accessible and stable external sources supplemented, where necessary, by strategic stocks.
It can also be simply defined as a condition in which a nation and all or most of its citizens and businesses have access to sufficient energy resources at reasonable prices for the foreseeable future, without serious risk of major disruption of service.
The prevailing question now is: Has Africa been able to achieve Energy Security even with external help and investments? The answer to this is obvious- No. The production of fossil fuels is expensive from the point of extraction to the point of sale. Therefore, Africa will continue to rely on external help and investment to deliver.
Furthermore, in most African Countries, the fossil fuel industry and its financiers continue to market ongoing and new fossil fuel extraction as an important driver of development, claiming that it will create public revenues, jobs and energy access for the world’s poorest nations. However, poor contract terms, debt traps, and disproportionate ownership by foreign multinationals show that the industry mainly serves the interests of companies and nations outside of Africa, with African people and governments bearing the risks. New projects risk locking Countries into fossil fuel dependency. How then can Africa sustain its Energy Industry, if it continues to take this route?
In the next ten years, new oil and gas projects to the value of $230 billion are at risk of becoming stranded assets. Combined with growing national debt and government deficits, these could generate a dangerous ripple effect leading to massive unemployment and rising poverty, locking countries into a vicious cycle of poverty for decades to come.
Also, instead of bringing development, fossil fuel projects often have severe impacts on local communities and the environment, leading to displacement, loss of access to land and water, and consequently loss of food security. The jobs promised seldom materialize or are only short-term. Pollution caused by oil spills and gas flaring has severe consequences for health, water and ecosystems. Fossil fuel developments contribute to climate change, which in turn disproportionately affects African communities.
Oil-rich Nigeria, Africa’s biggest fossil fuel exporter, has the largest energy access deficit in the world. Even after over 65 years of oil exploration, only 55% of Nigerians had access to electricity in 2019. As fossil fuel investments are becoming riskier due to price fluctuations and climate policies, many fossil fuel companies are demanding a softening of fiscal terms. This has seen many African countries agree to these terms to ensure investors stay on board. For example, contracts may stipulate that developers can first recuperate their costs, before paying taxes. This means that taxes only start coming in several years after fossil fuel production has commenced. As a result, many African Governments incur costs and debts linked to fossil fuel development, without sufficient tax income flowing back, meaning public interests end up being sacrificed.
Mozambique for example, which already suffers from an enormous debt burden, has welcomed gas developments as these are supposed to help pay off its debts in the decades to come. However, as the world’s major economies are moving towards phasing out fossil fuel towards the uptake of renewable energy, the economic prospects of oil, gas, and coal in Africa will be severely affected, and fossil fuel investments risk becoming stranded assets in the near future.
Similarly, the COVID-19 crisis and the recent drop in oil prices gave a clear picture of what can happen to African countries whose economies are heavily dependent on fossil fuels. Even Nigeria, a major oil-producing country, was hit hard economically by this drop in oil prices. This presents a strong prediction of what can happen to African economies, which are – and are currently being made – dependent on fossil fuels via ongoing public and private sector fossil fuel finance flows.
The Governments in Africa and its Institutions do not exactly help matters, as they even create barriers towards the autonomy of Africa’s Energy sector. A research carried out in South Africa by Todd and McCauley cited a lack of strategic direction, weak institutions, bureaucracy, and corruption as barriers to the Country’s Energy Autonomy and Transition.