TotalEnergies Debt Rules Hurt Africa's Renewable Investments - OilPrice.com
TotalEnergies: Debt Rules Hurt Africa’s Renewable Investments | OilPrice.com
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Tight rules on government debts by the IMF are hampering more investments in clean energy in Africa, where countries are not always available to guarantee loans due to said rules, according to the chief executive of French supermajor TotalEnergies.
When companies look to develop a new renewable energy project in Africa, they ask governments for guarantees because the clean energy developers don’t want to run the risk of not being paid, Patrick Pouyanné said at an industry event on Wednesday, as carried by Reuters.
“But the African governments, they will tell you, are not able to give these guarantees because the IMF is coming and telling them, 'Don't go and give these guarantees, you are already over-indebted',” said the CEO of TotalEnergies, which is developing solar and solar plus battery projects in several African countries.
According to Pouyanné, Africa’s clean electricity projects are being hurt by “a problem of solvency... you have a risk not to be paid”.
Africa needs a lot of investment to realize its enormous solar and wind power potential, according to the International Energy Agency (IEA). The continent also needs urgent action to bring down financing costs and boost access to capital, the agency said in a report in September.
“Even though Africa accounts for almost 20% of the world’s population and has ample resources, it is the destination for around just 2% of global clean energy spending,” the IEA said.
By 2030, energy investment needs to double to over $200 billion per year, in order for African countries to achieve all their energy-related development goals, including universal access to modern energy, while meeting in time and in full their nationally determined contributions, the agency noted.
“The African continent has huge clean energy potential, including a massive amount of high-quality renewable resources,” said IEA Executive Director Fatih Birol.
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“But the difficult backdrop for financing means many transformative projects can’t get off the ground.”
By Tsvetana Paraskova for Oilprice.com
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