July 14, 2024
Suit 25, Mangal Plaza, Nouakchott Street, Wuse Zone 1, Abuja- Nigeria.

TotalEnergies CEO Highlights Insufficient Government as Hindrance to Renewable Energy Investments in Africa

Patrick Pouyanne, CEO of TotalEnergies, emphasized on Wednesday that insufficient government loan guarantees are impeding renewable energy investments in Africa. Pouyanne highlighted that the International Monetary Fund (IMF) is imposing strict limitations on country indebtedness, constraining governments from providing necessary guarantees for electricity projects.

Pouyanne stated that the current challenge facing electricity projects in Africa revolves around solvency issues, where developers risk not receiving payment. He noted that renewable developers often seek guarantees from governments to mitigate this risk. However, African governments, under pressure from the IMF, are reluctant to provide these guarantees due to concerns of over-indebtedness.

Consequently, TotalEnergies finds its operations in Africa primarily limited to business-to-business mining projects, where payment assurances are more certain. Despite having oil and gas operations in 40 African countries, TotalEnergies’ renewable energy ventures are hindered by the lack of government guarantees.

The company has undertaken renewable energy initiatives in Africa, including two solar parks in Egypt, with plans for a hydroelectric power plant in Mozambique and a solar power and battery storage project in South Africa. Globally, TotalEnergies has achieved 22 gigawatts (GW) of installed capacity in renewable energy projects by the end of 2023, surpassing other oil majors.

Pouyanne expressed disappointment at the absence of a dedicated international financial body to provide counter guarantees to African states, thereby relieving them of excessive borrowing constraints. He cited an example of TotalEnergies’ self-insurance of a 1 GW solar plant project in Iraq due to financiers’ demands for additional loan guarantees from the government.

These remarks were made during a government-industry dialogue organized by the International Energy Agency, focusing on Africa and renewable energy. Pouyanne’s comments shed light on the challenges and complexities faced by energy companies in navigating the African renewable energy landscape amidst financial constraints and regulatory pressures.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.