Africa Should Be Allowed To Use Its Resources

On the backdrop of the climate change debate, Africa finds itself in an unfortunate position where it is required by the global energy industry to slow down its progress and not explore its hydrocarbons potential to its fullest. This is not right.

At the African Energy Chamber, we do not deny the impacts and severity of climate change. We recognize the role and significance of the Paris Agreement which over 30 African countries have signed. However, we believe the energy transition should be gradual and considerate of the power gap the exists in Africa.

On the continent, our foremost obligation as industry leaders is to ensure that Africa’s people have access to energy. We are determined to address the everyday issues that the continent is faced with.

Energy poverty is Africa’s most critical concern. For us, it is a life and death situation. In Africa, over 600 million people still do not have access to power. And, we remain a net importer of energy yet we boast 125 billion barrels of proven oil reserves, accounting for 7.3 percent of global oil reserves and, 509 tcf of gas – accounting for 7.2 percent of global reserves.

Our natural resources are important for our development. We cannot ignore what the continent needs, in the interest of supporting global trends when our economies remain underdeveloped. Our hydrocarbon potential is vast and Africa is home to a number of emerging economies who are steadfast on taking their rightful place in the global energy sector, our time to industrialize is now.

We applaud our brothers, sisters and friends in the west such as Norway and Germany for having used their oil and gas resources to develop their countries and build thriving economies. But, Africa deserves the same opportunity to build world-class economies.

“At the African Energy Chamber, we understand that issues of climate change are important but, this new drive for environmental colonization bullies African countries to leave their resources and depend on the sun,” said NJ Ayuk Executive Chairman of the African Energy Chamber and author of Amazon best-seller, Billions at Play: The Future of African Energy and Doing Deals.

In the past, Africa has been far too reliant on foreign aid and while in some ways it has been extremely helpful and beneficial, it has also taken away our independence. In several instances, Africa has always taken the passenger seat when it comes to deciding its future but, it must end now.

Our continent needs to be left alone to decide its own fate.

The African Energy Chamber strongly stands against the idea that Africa should ignore its potential and ability to leverage its resources as a means to drive growth, create opportunities for investment and development.

As the voice of the African energy industry, we are proud to announce our counter-campaign on the insistence that the continent should pursue a less carbon-intensive energy future as a way to support global interests which Africa has not yet benefitted from.

Most Heart Diseases Are Simply Caused By Our Lifestyle Choices – Cardiologist

Dr. Okello Emmy, the lead cardiologist from Uganda Heart Institute, has advised Ugandans to embrace healthier lifestyle in order to prevent heart related illnesses.

The cardiologist, speaking at the second edition of the Prudential Heart Camp revealed that heart diseases are preventable and most of them are simply caused by our lifestyle choices.

“I urge all Ugandans to adopt a much healthier lifestyle by exercising, eating right, keeping away from stressful activities, having regular medical check-ups to check your blood sugar levels, BMI, Blood Pressure, that’s the only way we can prevent heart disease,” said Dr. Okello.

Dr. Okello said Uganda Heart Institute received patients who have been diagnosed with heart diseases while others are referrals.

He said people with fresh cases are advised how to adjust their lifestyle in order to live a normal life and how to curb the continued progression of the disease while referred patients are helped to adjust their medication.

“We were glad to receive many people whose hearts were healthy and this is exactly what we encourage, you should not wait to feel pain or other signs and symptoms of heart disease before you see a doctor,” the doctor said at the health organized by Prudential, an insurance company.

The Prudential heart camp was hosted in partnership with Ministry of Health, Uganda Heart Institute, International Medical Centre, NBS TV, Radio One and Akaboozi, Capital FM.

Over 3000 Ugandans had access to free heart check-ups which consisted of ECHO, ECG and advice from professional Cardiologists, Doctors and Nutritionists on how to prevent heart disease.

Other check-ups included BMI, blood sugar and blood pressure all at no cost. In addition, the campaign hopes to reach 10 million Ugandans country wide through TV, Radio and Social Media to spread the message of better heart health through regular check-ups, exercise and better nutrition.

“Our decision to host a Heart camp was prompted by the rise of Non-Communicable Diseases in Uganda. The last national survey published by the Word Health Organization and Ministry of Health indicates that in Uganda alone, 1 out of 4 adults has high blood pressure which is a major cause of heart disease and other heart related complications’’ said Arjun Mallik, MD Prudential East Africa at the press conference during the closing of the camp.

Some interesting statistics from the Prudential Heart Camp include:-

  • 57% were male, 43% were female
  • 64% had abnormal blood pressure, majority of whom were between the ages of 32 to 50
  • 61% were overweight
  • Only 1.5% had high amounts of sugar in their blood

Some of the abnormalities noted include hypertension, enlarged hearts (dilated cardiomyopathy) and diseases of the valve.

How Co-Operatives Aid Development In African Economies

By Edward Israel-Ayide

The rapid advancement of mechanization from the mid-1700s to the early 1800s which is now considered as the Industrial Revolution, resulted in job losses for many skilled workers across Europe. The knock-on effect of this development was a significant rise in poverty.

With a reduction of earnings and often disappearance of spending power, it became difficult for the broader population to contend with middle-men and traders who sought to profit from the situation by institutionalizing unreasonable prices and labor practices.

In 1844 a group of 28 weavers and skilled workers got together in Rochdale, England with the aim of establishing a society to counter the injustice of price fixing and low wage setting, and by launching their own shop they made it possible for the local community to buy staple goods which had become out of reach.

They derived valuable lessons from previous botched attempts to form co-operatives and ostensibly designed the now-famous Rochdale Principles which have become the standard for Co-operative societies globally and which were officially adopted by the International Co-operative Alliance (ICA) in 1937 as the model for Co-operative societies.

This pioneering group, inspired by a genuine concern for the economic wellbeing of their members and community, are now known as the Rochdale Pioneers and are the founders of the modern Co-operative Society which today, reportedly comprises of around 2.6 Million co-operatives with over 1 Billion members and clients.

Since the time of the Rochdale Pioneers, Co-operative societies have progressively become a meaningful part of economic development; not only for society members but also for the wider communities within which they operate.

Across Africa, Co-operative societies have performed a critical role in the fight against poverty by providing opportunities to create wealth through trade and the development of agriculture. According to a World Bank report, co-operatives possess the potential to provide affordable credit to small-scale farmers because they can reduce transaction costs and lower the risk of default.

This is possible because successful co-operative societies provide incentives for members, encouraging a loyalty which also delivers the added benefit of maintaining a competitive position. In providing services to their members, cooperatives generate income through a variety of commercial ventures.

Sustainable, or in other words successful Co-operative societies are those which can balance the concerns of the society with the benefit of aiding the economic growth of the area which it serves.

The perfect illustration of this is the Total E&P Nigeria Staff Multipurpose Co-operative Society Limited (Total E&P Co-op); a Co-operative Society comprising the staff of Total E&P Nigeria Ltd, (a local subsidiary of Total S.A. the French multinational integrated oil and gas company).

Founded in 1984, in the humble surroundings of the mailroom at the Nigerian Oil Company, the staff at Total E&P seized the opportunity that economic downturn presented, to establish a communal economic system, where active members could unite to make bulk purchases of essential commodities at reasonable prices, for distribution amongst its members.

The Total E&P Co-op was born and soon blossomed to incorporate a more sizeable number of staff coming together to establish the forebear of Total E&P Co-op; Total E & P (Nigeria) Thrift and Credit Society Limited which was a savings and loans society.

By 1994, the Co-operative Society had shifted focus to matters of basic human requirement and pooled member funds together towards the purchase of real estate through the collaboration with commercial banks. Today, Total E&P Cooperative’s asset base has grown over a thousand fold from inception.

Thanks to an increasing and constantly motivated workforce contributing their quota to its core areas of interaction between members, together they boast assets in Real Estate, Treasury & Financial Services, and Business Development.

The success and growth of the Co-operative Society has been due to several contributing factors but three factors stand out in providing valuable lessons for other co-operatives (or even governments) across Africa who intend to adopt the Co-operative model to reduce poverty, increase financial inclusion and create wealth.

Combating Poverty and Creating Wealth Through Corporate Social Responsibility

The founders of the global co-operative movement-the Rochdale Pioneers-were striking weavers who opened a grocery co-op to extricate themselves and others from poverty. Their aim was to provide answers to questions about whether the economy should serve the people or vice versa; this belief in economic fairness led to the development of co-operatives as we identify them today.

Since then, co-operatives have carried out a fundamental role in combating poverty and creating wealth, especially at the grassroots level. As stated by Joseph Ventura, an expert on the impact of co-operatives; “In transforming poverty-ridden communities into vibrant economies, co-operatives also contribute to skill-development and education as they bolster gender equality and improve the health and living standards of an entire community. Co-operatives have been instrumental in meeting the Millenium Development Goals, as nations are more likely to stay peaceful by escaping the poverty trap."

For the Total E&P Co-op, these efforts have been at the core of plans for sustainability and the growth of the collective’s commonwealth. It has led to the creation of products and services tailored to the needs of members/cooperators in the real estate, insurance and financial services sectors.

Equally investment in Corporate Social Responsibility (especially through STEM education and in providing quality education to the disadvantaged members of society), help equip young Nigerians with the skills necessary to become more productive members of society.

In a country like Nigeria where over 50% of the population faces extreme poverty, these empowering initiatives help bridge the poverty gap where governments have failed and provide opportunities for the young through job creation.

In his paper “The Role Of Cooperatives In Poverty Alleviation” Christopher Imoisili, Senior Specialist Entrepreneurship & Management Development of the International Labour Organization (ILO) drew attention to how cooperatives help both members and employees to escape from poverty, by offering an umbrella of shelter to those who may be facing the risk of poverty.

He added that “By promoting student and youth programmes and cooperative entrepreneurship...cooperatives can play a major role in bridging the [poverty] gap. They can also influence political processes and legislation in favour of the socially deprived.”

Corporate Governance

While co-operatives are typically run democratically, relying heavily on member engagement; it is important that they balance this with the strategic management of their business in a way that ensures the continued survival of the Co-operative and its viability as a business concern. It has been reported that most co-operatives in Africa and other emerging economies collapse because of weaknesses in their corporate governance or the total absence thereof.

According to a 2014 paper written by Marilyn Scholl, a consultant with CDS Consulting Co-op and Art Sherwood, an Indiana State University Associate Professor of Management; there are four critical pillars upon which corporate governance should be built in any Co-operative organization and strict adherence to this has sustained Total E&P Co-op as a viable business concern.

These four pillars; Teaming, Accountable Empowerment, Strategic Leadership, and Democracy have been at the heart of the various changes that Total E&P Nigeria Staff Multipurpose Co-operative Society has made in its team structure over the years.

For example, it has applied these principles when filling critical leadership roles within the organization with those who not only have the qualifications, but are also experienced in their field of practice and can therefore be held accountable for strategic decisions taken on behalf of the Co-operative.

The co-operative also remains the first and only Co-operative Society in Nigeria to appoint an External Auditor (PricewaterhouseCoopers) to review financial records and determine its compliance with internal and regulatory policies guiding the affairs of the organization.

This system of checks and balances, peer-review and external regulation is a major turning point for public and private institutions looking to remain viable in the face of global economic trends such as price fluctuations in global oil and other commodities.

Strategic Planning 

For institutions looking to achieve viability and sustainable growth, planning for the future is a  critical requirement.  For many societies across Africa, failure to plan for the future and align with trends has been at the heart of the majority of socioeconomic failures. This undoubtedly has had an impact on broader African economies.

As Total E&P Co-op grew its membership and revenue, they created an organizational structure which would allow it to develop a sustainable strategic plan and guide operations for the years to come. Beginning in 1997, the linear business model of the Co-operative had outlived its usefulness and the growing membership base of the co-operative society now had increasingly diverse needs.

To meet these needs, Total E&P Co-op changed their model to one of a multipurpose Co-operative business and made massive investments in human capital, placing a priority to the recruitment of a full-time technical team which ensures they maximise the investments of their strategic business units and profit centers.

The strategic business units identified were those that would enable the business to create long-term profitability and position it as the Co-operative of the future. In line with this, the Banking and Investment desk of the Co-operative was set up as the ‘Treasury and Investment Hub’ whilst it migrate the financial services into a Co-operative Bank to support future ventures.

The real estate development, management, and marketing operations were restructured so that the Co-operative could partner with established property developers and build, operate and transfer investments in the real estate business. This futuristic strategic planning has enabled Total E&P Co-op to become the fastest growing Co-operative Society in Nigeria as reflected by its growth in relation to Nigeria’s GDP.

Total Living, is the culmination of plans to improve the success and sustainability of its cooperative model. They have embarked on the first real estate development project to be certified under EDGE sustainability in West Africa (a Green building standard and rating system for over 150 countries introduced by the IFC/World Bank).

La Definition, as the project is called, is a smart, innovative mixed-use development that sits on 22,000sqm of land located between the Kuramo Lagoon and Lagos beachfront. The project is set to steeply increase revenue for members of the cooperative whilst improving the amenities available to the diverse population of Victoria Island, Lagos’ center of business and commerce.

La Definition will feature some unique solutions to tackle the limited availability of grid infrastructure in Lagos including a water recycling system that will reduce demand for borehole water by up to 80% through the use of rainwater and greywater. An energy center is also planned based on the gasification of sustainable waste streams to produce very clean synthesis gas that will generate electricity and heat for the development with zero CO2 emissions.

For emerging African economies keen on implementing policies and projects geared at economic growth, job creation etc., there are important learning points to be gleaned from cooperatives The successes of Total Co-op provides an insight into how the larger Nigerian society, and indeed Africa, can progress where there is commitment to strategic planning, governance and investment in human capital.

The co-operative model may just hold the key to reversing the poverty rate on the continent with the benefit of strengthening communities and fostering sustainable development.

Edward Israel-Ayide (@wildeyeq) lives in Lagos, Nigeria and comments on socio-political events across Africa.

How To Avoid Sanctions For Breach Of Local Content

By Pablo Mitog

You want to avoid sanctions for lack of compliance with local content norms in Equatorial Guinea? Easy, start complying. We intend here to provide you the key steps to ensure your local content compliance in Equatorial Guinea. For a full diagnosis of your compliance, please make sure to contact our attorneys on the ground.

The common problems that companies have with local content in Equatorial Guinea

In 2018, the Ministry of Mines and Hydrocarbons of Equatorial Guinea informed operators Exxon Mobil, Noble Energy and Marathon Oil that they should stop doing business with several companies because they were not in compliance with local content regulations under the country’s hydrocarbons law and the clauses of their PSCs. The truth is that it was not the first time that happened. In 2015 and 2016, there were also economic sanctions for the breach of local content requirements. With the local content Ministerial order covering only 20 pages, it seems surprising that companies could be risking their operations and contracts over something very straightforward. To understand the catch, read on.

Between 2015 and 2016 in our offices in Malabo, we had the opportunity to assist the Government in a plan that was unprecedented to audit oil and gas companies and verify their compliance with their local content obligations.

We were very surprised to see how the legal departments of large oil companies did not know exactly how to protect their organizations against these demands. Because the number of companies that did not comply was very high, the Ministry decided to adopt a more collaborative than penalty approach, without which all operators and contractors would have been sanctioned in some shape of form.

Reserving the confidential client information, we observed that most of the in-house local content departments of these companies have three common problems: 1. determining who is obligated to do what under local content regulation; 2. knowing what local content includes; and 3. correctly developing a local content plan that meets very specific points required by applicable laws.

To examine these common problems, it is necessary to briefly clarify what the local content is according to the legislation of Equatorial Guinea. The keyword of the local content is “privilegio.” This is a set of privileges that companies or physical entities have and whose purpose is to obtain preferential treatment with respect to other companies and people from other places when obtaining contracts in oil & gas and mining. These privileges belong to local companies, companies of the CEMAC community, or African companies.

The local content regulations in Equatorial Guinea are broader than just those set out the ministerial order. They can be found in five main legal documents: the famous decree 127/2004 (amended in April 18 of 2018 by the decree 72/2018) that ensures local participation in the oil industry, the Law No. 8/2006 of November 3rd regulating Hydrocarbons in its articles 88 to 93, the Ministerial order 4/2013 regulating petroleum operations in articles 156 and 157, the Ministerial order 1/2014 on local content.

Lastly, all PSCs have very specific local content clauses. The Labor Code also contains laws such as Law No. 6/1992 on national employment policy that also affects companies in the sector, and the list goes on. The question is, how do we put together all the requirements of those laws to get a unique list that tells a company what exactly it should do to comply with local content? While complex, the exercise is feasible and quite straightforward when you know where to start and what to consider.

Because the circumstances and needs of each company are different, local content laws are also flexible. Flexibility in the terms of the law does not mean an exemption from compliance, but compliance mechanisms that can be negotiated with the authorities. For example, you can get more time to meet a specific obligation.

Now that we have outlined the basic frame of local content, we can explore the common problems that companies in the oil and gas sector have when they deal with a local content audit in Equatorial Guinea.

Operators or contractors: who is obligated under local content regulations?

The oil and gas industry is governed by agreements, and many companies have to form alliances and joint-ventures to operate together. This may create doubts about who is obliged to comply with local content laws. According to article 2 of Ministerial order 1/2014 on local content all companies that carry out activities in the petroleum and mining sectors are obliged to comply with local content requirements. This includes: operators, explorers, contractors, sub-contractors and their associates even if they are local businesses.

According to this, a) you have to have a contract in the sector and b) you have to operate in Equatorial Guinea. However, despite this clarity, there are many doubts that may arise, for example: what happens to companies that have contracts in the sector but are only licensed to provide material from abroad? Equally, if two companies are linked by a joint-operation agreement, must they comply individually or jointly? Another question that may arise is on whether a local company has to comply with all obligations or if it must simply comply with some.

For example, it makes no sense that a local company would be forced to transfer technology just because it is from the oil sector. For such questions that require an interpretation, companies must work with the local content authority to obtain their interpretation in writing. It should never be assumed that a certain obligation is not applicable to a company. This is part of what we consider being flexibility in the local content laws.

The main obligations that any company should pay attention to

Local content is much more than building a primary school in a village or drilling a small water well in a local community. In our experience, it is very common for companies to present small works carried out in the villages as being works of compliance with local content. While the value of such efforts should not be minimalized and corporate social responsibility should be encouraged, a company could still be sanctioned for lack of local content compliance despite having spent money and time on CSR.

Local content mainly includes five obligations that must be structured in detail in a local content plan. These obligations include:

  1. Procurement of goods and services. All necessary goods and services must be hired in order of preference established by the local content regulations. To prove it, companies must keep their invoices or any other document proving that they hired local services. However, it should be clarified that there are limitations to guarantee that the local procurement obligation does not cause prejudice to a) quality (local goods and services must meet international quality standards) and b) price (local goods and services cannot cost more than 10% of what the same good or service would have cost if it had been brought from abroad). That is why we insist that companies should take advantage of this flexibility to adapt each obligation to their particular needs.
  2. Qualified workforce. All workforce must be hired in the order of preference (local, regional and continental). Foreign workforce can be hired only with an authorization, after demonstrating that the company has made substantial efforts to find specialized local workforce and has not found it. However, the authorization to import foreign labor only gives you an extension of time, because the obligation to train local labor prevents you from keeping your foreign workforce over a long period of time. If you have proven your inability to find local manpower for a specific position, you are still obligated to train local talent to fit that role so that you are able to gradually replace your foreign labor.
  3. Technology transfer. This is another common problem for companies. We know that nobody is going to transfer the tools they can earn a profit from, and which gives them an edge on the market. Technology is the greatest power a company can have and today IOCs dominate the market because of their technology, and their edge over NOCs is not only financial but above all technical and technological. Forcing foreign companies, be them IOCs or oilfield services, to transfer their know-how is very complicated to achieve. However, the spirit of the law is not that business or industrial secrets are transferred to local premises. So how do you know that a company transfers technology within the framework of local content legislation? That question is also not easy to answer. However, the practice followed by the authorities is to verify if the company has a plan to ensure that its local resources are technically capable of carrying out their work with the international quality standards generally accepted in the industry.
  4. Training. The clearest and most difficult clause to ignore is that pertaining to the training of local employees in order to enhance their skills. Although this obligation is already included within labor laws, the object and spirit of both laws (labor and local content) must not be confused. What is the difference? If in the labor laws it is envisage that an apprentice gains experience or acquires the skills of a profession or trade, the purpose of the local content is to specialize these in very specific tasks within the petroleum industry so that they are able to carry them out in the future autonomously with the same technical competence as a foreign expert. So, complying with one doesn’t mean that you don’t have to comply with the other. Basically, the local content laws requirements of training start where the labor laws reequipments ends. With the right advise and the correct approach, both laws can be easily complied because there is not necessarily a conflict between them.      
  5. Social Infrastructures development. What does the local content regulations refer to when they impose the obligation to run infrastructure in the communities, and is any particular infrastructure expected to be developed by oil companies and their contractors? Article 93 of the hydrocarbons law says verbatim that “they must (the infrastructures) be of the widest impact on the public.” In other words, infrastructure must be meaningful and of the quality that a community would need.  It’s very important to make sure that the Infraestrure is also sustainable to the community; You don’t want to build a school without a plan to provide teachers nor learning materials or build a health center in a poor community without any nurse. The community need a school or a health center operational, not an empty building. Practical requirements in this regard have to do with a) sustainability over time b) the importance and quality of the infrastructure to substantially improve the life of as many people as possible in a local community.

What should be in your local content plan?

The local content regulations oblige all oil and gas companies to have a detailed, long-term local content plan and implement it. Companies must also demonstrate that they are reasonably executing the plan they themselves have prepared.

The important thing about this plan is that: a) it is flexible, b) it is a plan that can be adapted to the individual circumstances of each company and c) must be approved by the General Directorate of Local Content. The design of the local content plan, its evaluation and presentation to the authorities when undergoing an audit is the most critical part. Almost all companies that have been sanctioned have breached some of the essential points of their own plan.

We can organize these into four large groups: i) Documentation related to the incorporation of the company; ii) Documentation related to the procurement of goods and services; iii) Documentation related to technology transfer and training of personnel; and iv) Documentation related to infrastructure development. Although we do not intend to address all these aspects in details, the following according to our experience are the ones that can create the most problems for a company.

  1. Documentation related to the incorporation of the company:
  • Notary deed duly legalized and registered in the Commercial Registry,
  • Certificate of Tax Identification Number (NIF),
  • Registration of company in the MMIE.
  1. Documentation related to the acquisition of goods and services.
  • List of all partners and suppliers of the company, as well as the contracts, offshore and onshore signed with them,
  • National Content Development Program and its evaluation plan,
  • Detailed report on contracts awarded to local companies,
  • Proof of semi-annual shipments of the updated list of services that the company needs to contract,
  • Proof of payment of social shares to local partners.
  1. Documentation related to technology transfer and staff training:
  • Detailed reports on job vacancies and jobs to be created,
  • Training plan for local employees,
  • List of local staff and their evaluation and promotion system,
  • Annual internship program for students of the National University of Equatorial Guinea.
  1. Documentation related to infrastructure construction (with social impact)
  • Detailed report on Social Work Projects and their degree of compliance.

How serious is the local content compliance issue?

The highest penalty for breaching local content standards is that the government can order operators to terminate contracts or prohibit them from renewing contracts they have with a company that does not comply; and this has already happened in the past. Other sanctions include financial sanctions that in the past have reached anywhere between $500,000 to $3 million, sometimes more if we analyze the full impact of the consequences of a sanction. Other much lighter sanctions have included a warning with the company being given a short amount of time to meet very specific requirements.

Furthermore, if a company demonstrate a track record of non-compliance, they will lose the confidence not only of the government but of the operators, because every time a company is sanctioned, all its partners are affected in some way.

Conclusion. So far, three things must now be clear: a) failure to comply with local content requirements may jeopardize not just a company's contracts, but its very existence in Equatorial Guinea and its ability to renew or obtain new contracts b) local content is a complex issue but c) managing its compliance is not a big deal providing the right steps are taken early on.

At Centurion Law Group, thanks to the experience that we have accumulated over the years and in several African jurisdictions, we are always willing to assist and advise companies to deal with these problems in the best way so that they can protect their interests and that their operations are carried out without any risk.

Pablo Mitog,Associate Attorney, Centurion Law Group

Fate Of Russia's Impact In Africa Reliant On Continent's Ability To Make Better Deals

Russia's return to Africa has been the subject of wide media coverage, governmental concerns and civil society reactions in recent weeks, especially as Sochi gears up to host the first ever Russia-Africa Summit next week.

Most commentators have come from Europe and North America to voice concerns over Russia's dodgy arm deals in Africa, political meddling with unstable African regimes, and its overall challenging of the status quo on the continent. The problem is, when these comments are not outright hypocritical, they are missing a key point: competition is good for business, which is just what Africa needs right now.

First, Russia's presence in the continent cannot be summarized into sensationalism. It is complex and needs to be put back into context. Its modern relations with African governments and institutions started building up in post-independence Africa, time when the Soviet Union offered key diplomatic and military support to young African nations in need of it.

This assistance was multi-form and much needed for countries seeking fast development following harsh independence wars and conflicts. "The Soviet Union provided significant economic assistance, including infrastructure, agricultural development, security cooperation, and health sector cooperation," wrote Paul Stronski of the Carnegie's Russia and Eurasia Program this week.

Consequently, Putin's vision for Africa is resuming and building up on a cooperation that started in the second half of the 20th century and was only put on hold by the collapse of the Soviet Union in 1991.

In short, while arriving late to the party, Russia is no stranger to the African playground. Beyond military cooperation, its state-owned natural resources companies have already made inroads into the continent and could be a game-changer for many African countries in need of investment and electricity.

Key Russia energy companies such as Gazprom, Lukoil, Rostec and Rosatom are already present in Algeria, Angola, Egypt, Nigeria, Cameroon, Equatorial Guinea or Uganda, while mining and minerals ones such as Nordgold or Rusal are developing world-class mines in Guinea and Zimbabwe.

On a global stage, Russia's involvement in OPEC has also sent strong signals that it is committed to market stability and global energy cooperation, which ultimately benefit African producers.

"Russia's influence is increasing through strategic investments in natural resources, and such investments are welcomed by African governments and companies. They bring in key Russian capital and know-how to the continent which is seeking to diversify its investors basket and attract much needed investment into its energy industry," said Nj Ayuk, Executive Chairman at the African Energy Chamber and CEO of the Centurion Law Group.

"The African Energy Chamber is supporting such efforts and has seen a definite uptick in Russian companies' interests for the continent. We predict a lot of deals to be signed during and after the Sochi Summit for Russian energy companies to develop African resources and do business in Africa. This will be especially beneficial as Africa develops gas-based economies," he added.

Amongst the most recent agreements are for instance the MoU between Atlas Oranto Petroleum and Rosneft in 2018, under which the pan-African E&P company agreed to explore the joint-development of its assets across Africa with the Russian state-owned giant. Another one is the signing of several agreements between Russia and Mozambique this summer, involving again state-owned Rosneft but also Nordgold. In Central Africa, Gazprom is also lifting gas from Cameroon's the FLNG Hilli Episeyo, the world's first converted FLNG vessel.

As such investments and activity picks up, the real game changer will be Africa's ability to make deals that work for its people and its economies. Deal-making is what will shape the future of Russia-Africa relations and will tell whether Russia's renewed influence in the continent is good or bad for its people. Rightly so, the ability and capacity of African governments to make better deals with investors is becoming central to the global business narrative on Africa.

In his much anticipated book coming up this month and already best-seller on Amazon, "Billions At Play: The Future of African Energy and Doing Deals", Nj Ayuk dedicates an entire chapter to the critical art of deal-making. "For Africa to truly realize all of the benefits oil and gas operations have to offer, we need to see good deal-making across the board," he writes. "Clearly, good deal-making has far-reaching implications for African people, communities and business."

Contracts negotiations is in fact the key element missing from the current debate on Russia's increasing influence in Africa. There is no doubt Africa is welcoming Russia's interest for doing business on the continent, not only because it comes without the conditionality of actors such as the IMF and the World Bank, but also because Africa needs critical energy investment and a giant oil producer like Russia has good technology and know-how to export.

The only thing is, sub-Saharan Africa has seen several regulatory developments in the near future, with a particular focus on local content regulations across energy markets. Jobs creation, domestic capacity building and the growth of a strong base of local energy companies is high up on the African agenda. If African governments are able to negotiate contracts that deliver on these expectations and Russian companies are committed to see the continent grow, then the future is bright for Russia in Africa.

At the end of the day, it is all about how African governments and institutions will negotiate future contracts with Russian companies. As Nj Ayuk writes in Billions At Play, "governments must give investors a chance to generate income from the resources they are interested in and recoup their investments. At the same time, governments need to look at creating value for their country and its people. It's a balancing act. It's challenging, but it's doable."

Whether Sochi will result in that balancing act remains to be seen, but the challenge is given and Africa is up for it.

The Unrealized Oil Promise of the Democratic Republic of Congo

By NJ Ayuk

It is no secret that the DRC's mining industry is of vital importance in answering the country's and the world's mineral needs. Today, copper, cobalt and other byproducts represent the backbone of the DRC's economic structure at about 85% of its exports.

That has been the case for many years, through several regimes, with little change. Besides metals, diamonds and oil represent the remaining of all that the DRC sends abroad, the vast majority of its outbound trade balance being composed of raw unprocessed goods.

Standing in the 12th position amongst African oil producers, the DRC's petroleum industry is miniscule at best, producing an average of 25 thousand barrels of crude oil per day off its coastal ageing fields. But that seems rather odd.

While there is not much talk about this particular fact, when we think of it, it is somewhat perplexing that the DRC, which is bordered by so many oil producers and has territorial waters in the prolific Gulf of Guinea, has never really developed an oil industry or even seemed to be interested in developing one, despite its prospective reserves. With a population of around 80 million people, of which around 75%, most statistics indicate, live in extreme poverty, the DRC is today amongst the five poorest countries in the world. 

One would expect that the country's leaders would strongly push for the exploration of the country's natural resources to produce wealth and provide for better living conditions for its citizens. Yet, the DRC's oil and gas reserves remain largely unexplored, while most studies estimate that there could be around 20 billion barrels of undiscovered oil in the country's basins, both onshore and offshore.

That is a tremendous amount of oil which, if confirmed, would place the DRC as the second biggest petroleum holder in Sub-Saharan Africa, behind only Nigeria, and far outdoing Angola's reserves of 9 billion barrels of oil.

This is not the Africa we want, and this is not the DRC that we want.

First of all, keeping certain communities in poverty to retain power is a complete mistake. Power stability comes from generalized improvement of life conditions. If the country is wealthier and is capable of improving the lives of those that live in it, the more stable it will be and the more capable it will become of sustaining and giving continuity to that development.

Further, as I have extensively defended over the years, the sanctity of contracts is of paramount importance to attract investment and partnerships into any country. What company would want to invest in a country where a contract can be signed and then cancelled a few months later without further explanation or justification?

And it is not just a matter of reputation, but of direct financial burden, lest not forget that just in March this year, an international court ordered the Democratic Republic of Congo to pay South African DIG Oil Ltd USD$617 million for failing to honour two oil contracts.

That is 1.6% of the country's 2017 GDP. How can any leader possibly justify such a loss to its economy. Not to, again, mention the enormous economic potential that could come from actually letting those contracts take shape and allow companies to explore the country's oil regions.

Stability depends on investment, cooperation and development. To attract investment, conditions need to be created for the business environment to be enabling for industry development. Disrespecting contracts does not achieve that. Nor does keeping people from producing wealth.

Just in May, French super-major Total abandoned its exploration license in the DRC. Bloomberg's article on the matter was titled "Congo's Lone Oil Giant Quits Search, Partner Says". That's right, it was the last major oil and gas company to abandon the DRC's oil plays. Others had been there over the years, Shell and Texaco for instance.

About 10 years ago, Tullow Oil and partners tried to acquire a license for exploration, signed a contract, paid the bonuses, and saw the contract then cancelled and the same block then sold to yet another company just a few months later. Nothing has been done in the acreage since.

This is the absolute opposite of what must be done.

Oil and gas production can bring enormous wealth to the country and its people, not to mention the ability the country's gas reserves could have to produce electricity to power homes and industry.

Since January 2019, the DRC is led by a new government. It now has the opportunity to change the status quo of the DRC within the global oil industry and to promote investment. The country's oil and gas laws are fairly well developed and the potential for discoveries is huge; the problem is reputation.

If the country's leaders can reassure international investors that their contracts will be respected and if investments can be facilitated and transactions made transparent, there is little limit to how quickly the country's industry could grow and how much its people could benefit. Better living conditions across the country would ease ethnic and social tensions and provide the basis for a level of socio-economic development that the country has never seen before.

If the dependency on the volatile prices of mineral commodities continues, as well as the uneven distribution of wealth, and if the generalized situation of extreme poverty is sustained amongst the population, instability, rather than stability, will be the end result.

Further, the DRC has the opportunity to seek the help and support of international institutions and partners in developing its oil industry, such as the World Bank, the IMF or the Norwegian government, which have vast experience in helping other African oil producers. They can also seek closer proximity with the US, where most of the major companies with the capability, technology and capital to help develop their industry reside. 

The US government also has an interest in promoting these developments in the DRC, as maintaining stability in the sub-continent and the Central African region is of particular strategic importance for US interests. 

It is astonishing to me that the leaders in Kinshasa are not willing to look from their windows just across the Congo river to Brazzaville and want to emulate the steps taken by their neighbour, the Republic of Congo, currently the third biggest oil producer in Sub-Saharan Africa.

Finally, good signs are coming from the current administration. In April, at the latest Africa Petroleum Producers Association's Conference in Malabo, Equatorial Guinea, the DRC's oil minister announced the country would put 38 blocks on offer for bidding and negotiation, located in three different basins. This is an important step in order to call out investor attention to the country, and I applaud the initiative.

Hopefully the regime change, the country's adherence to the EITI, and the new block offer will help bring investment, but more will have to be done to reassure investors that entering this market will be a profitable and safe bet, and that their interests and rights are protected by the law.

I hope to see these developments happening soon and to be a witness to the fulfillment of the DRC's oil industry's full potential.

NJ Ayuk is the CEO of Centurion Law Group, a pan-African law Conglomerate and the current Executive Chairman of the African Energy Chamber (EnergyChamber.org), the voice of the African Oil and Gas industry. He is the author is the upcoming book "Billions at Play: The Future of African Energy and Doing Deals".

Unrealized Oil Promise Of Democratic Republic Of Congo

By NJ Ayuk

It is no secret that the DRC's mining industry is of vital importance in answering the country's and the world's mineral needs. Today, copper, cobalt and other byproducts represent the backbone of the DRC's economic structure at about 85% of its exports.

That has been the case for many years, through several regimes, with little change. Besides metals, diamonds and oil represent the remaining of all that the DRC sends abroad, the vast majority of its outbound trade balance being composed of raw unprocessed goods.

Standing in the 12th position amongst African oil producers, the DRC's petroleum industry is miniscule at best, producing an average of 25 thousand barrels of crude oil per day off its coastal ageing fields. But that seems rather odd.

While there is not much talk about this particular fact, when we think of it, it is somewhat perplexing that the DRC, which is bordered by so many oil producers and has territorial waters in the prolific Gulf of Guinea, has never really developed an oil industry or even seemed to be interested in developing one, despite its prospective reserves.

With a population of around 80 million people, of which around 75%, most statistics indicate, live in extreme poverty, the DRC is today amongst the five poorest countries in the world. 

One would expect that the country's leaders would strongly push for the exploration of the country's natural resources to produce wealth and provide for better living conditions for its citizens.

Yet, the DRC's oil and gas reserves remain largely unexplored, while most studies estimate that there could be around 20 billion barrels of undiscovered oil in the country's basins, both onshore and offshore.

That is a tremendous amount of oil which, if confirmed, would place the DRC as the second biggest petroleum holder in Sub-Saharan Africa, behind only Nigeria, and far outdoing Angola's reserves of 9 billion barrels of oil.

This is not the Africa we want, and this is not the DRC that we want.

First of all, keeping certain communities in poverty to retain power is a complete mistake. Power stability comes from generalized improvement of life conditions. If the country is wealthier and is capable of improving the lives of those that live in it, the more stable it will be and the more capable it will become of sustaining and giving continuity to that development.

Further, as I have extensively defended over the years, the sanctity of contracts is of paramount importance to attract investment and partnerships into any country. What company would want to invest in a country where a contract can be signed and then cancelled a few months later without further explanation or justification?

And it is not just a matter of reputation, but of direct financial burden, lest not forget that just in March this year, an international court ordered the Democratic Republic of Congo to pay South African DIG Oil Ltd USD$617 million for failing to honour two oil contracts.

That is 1.6% of the country's 2017 GDP. How can any leader possibly justify such a loss to its economy. Not to, again, mention the enormous economic potential that could come from actually letting those contracts take shape and allow companies to explore the country's oil regions.

Stability depends on investment, cooperation and development. To attract investment, conditions need to be created for the business environment to be enabling for industry development. Disrespecting contracts does not achieve that. Nor does keeping people from producing wealth.

Just in May, French super-major Total abandoned its exploration license in the DRC. Bloomberg's article on the matter was titled "Congo's Lone Oil Giant Quits Search, Partner Says". That's right, it was the last major oil and gas company to abandon the DRC's oil plays. Others had been there over the years, Shell and Texaco for instance.

About 10 years ago, Tullow Oil and partners tried to acquire a license for exploration, signed a contract, paid the bonuses, and saw the contract then cancelled and the same block then sold to yet another company just a few months later. Nothing has been done in the acreage since.

This is the absolute opposite of what must be done.

Oil and gas production can bring enormous wealth to the country and its people, not to mention the ability the country's gas reserves could have to produce electricity to power homes and industry.

Since January 2019, the DRC is led by a new government. It now has the opportunity to change the status quo of the DRC within the global oil industry and to promote investment. The country's oil and gas laws are fairly well developed and the potential for discoveries is huge; the problem is reputation.

If the country's leaders can reassure international investors that their contracts will be respected and if investments can be facilitated and transactions made transparent, there is little limit to how quickly the country's industry could grow and how much its people could benefit. Better living conditions across the country would ease ethnic and social tensions and provide the basis for a level of socio-economic development that the country has never seen before.

If the dependency on the volatile prices of mineral commodities continues, as well as the uneven distribution of wealth, and if the generalized situation of extreme poverty is sustained amongst the population, instability, rather than stability, will be the end result.

Further, the DRC has the opportunity to seek the help and support of international institutions and partners in developing its oil industry, such as the World Bank, the IMF or the Norwegian government, which have vast experience in helping other African oil producers. They can also seek closer proximity with the US, where most of the major companies with the capability, technology and capital to help develop their industry reside. 

The US government also has an interest in promoting these developments in the DRC, as maintaining stability in the sub-continent and the Central African region is of particular strategic importance for US interests. 

It is astonishing to me that the leaders in Kinshasa are not willing to look from their windows just across the Congo river to Brazzaville and want to emulate the steps taken by their neighbour, the Republic of Congo, currently the third biggest oil producer in Sub-Saharan Africa.

Finally, good signs are coming from the current administration. In April, at the latest Africa Petroleum Producers Association's Conference in Malabo, Equatorial Guinea, the DRC's oil minister announced the country would put 38 blocks on offer for bidding and negotiation, located in three different basins.

This is an important step in order to call out investor attention to the country, and I applaud the initiative. Hopefully the regime change, the country's adherence to the EITI, and the new block offer will help bring investment, but more will have to be done to reassure investors that entering this market will be a profitable and safe bet, and that their interests and rights are protected by the law.

I hope to see these developments happening soon and to be a witness to the fulfillment of the DRC's oil industry's full potential.

NJ Ayuk is the CEO of Centurion Law Group

Rajiv Ruparelia To Rotaractors: Start & Nurture Your Businesses Now

Uganda is a young nation with many opportunities that favour business and economic growth but young entrepreneurs must choose something they can nurture well and be remembered for it.

This advisory was made by Rajiv Ruparelia, the managing director of Ruparelia Group while speaking as a keynote speaker at the Rotaract Club of Kampala South weekly meeting that took place at Hotel Africana last week.

“You can either choose to be remembered for business, charity, entrepreneurship or social work,” Rajiv said in his speech adding that everybody will be remembered for something they did in their lifetime.

“If you want to do something start now, nurture it and take your time; teaching your self is a must because nobody will teach you. Work on it, one day you are going to be there,” Rajiv noted.

The young businessman who has slowly but steadily taken over the day to day running of the Ruparelia Group from his father Dr. Sudhir Ruparelia asked the young Rotarians to smell the opportunities and consider starting and building sustainable business enterprises.

The Rotaract Club of Kampala South meets every Thursday at Hotel Africana and last week’s meeting was held under the theme ‘building companies that last’.

The evening meeting was addressed by Rajiv Ruparelia, Prof. Maggie Kigozi, the Director of Crown Beverages and businessman Amos Wekesa, the CEO Great Lakes Safaris, as guest speakers.

The trio shared their experiences on how to start a business and how they have managed to thrive and build them to where they are.

Wekesa said that starting a business early helps build self-esteem and gives strength in scalability. He noted that people who are brave to begin early will never go astray in working and building successful businesses.

“I have run a company for the last 18 years, the things that people want to know are the things they do not want to hear. I started my business out of frustration, after being born from a poverty-stricken family.

Prof. Kigozi, in her remarks, told the Rotaractors to always start small and focus on growing their business.

“All the wealthy people in the city did not start big. If you listen to their stories you will be surprised how they started,”

She warned the youthful Rotaractors who crave for luxurious parties to stop and consider mobilizing money for starting businesses at an early age.

“Do not demand for parties from your families. Organize a family business instead,” Kigozi said.

How Infrastructure And Energy Are Key To DRC's New Economic Journey

By Koketso Lediga

The Democratic Republic of Congo (DRC), sub-Saharan Africa’s largest country, is known for being a tough place to do business but also one of unexploited economic potential.

Although the country has had a dark cloud looming over it for years, it recently held its first democratic transfer of power since it gained independence from Belgium in 1960. And like other African countries, the DRC is in pursuit of a stronger and thriving economy. The IMF has the country’s economy‘s growing at a rate of 4.3% in 2019; and nothing suggests that this will not improve in the future.

For the DRC, the pursuit for a thriving economy is well within reach given its endowment with vast natural resources that could enable it to be a contributor to Africa’s economic growth and global supply of raw materials such as copper. The DRC’s new government seems to be committed to exploiting these natural resources, as demonstrated through the several sector reforms that have already been implemented. The most impactful, both short and long term, being investment infrastructure development & renewable energy, amendments to mining and oil & gas legislation as well as its participation in the Extractive Industries Transparency Initiative.

In respect of infrastructure and energy, the DRC captured global attention with the world’s largest proposed hydropower scheme known as the Grand Inga project. A project that aimed to generate about 40,000 megawatts of power from water sourced at the mouth of the Congo River. This amount of energy can cater for a multitudinous size of the population in and beyond the borders of the DRC. Although this magnificent 6-phase project did not come to become reality, the country is fervently building synergies to improve its infrastructure and provide sustainable and stable energy supply for its citizens.

In May 2019, the DRC’s Ministry of Energy and Hydraulic Resources and the multinational clean energy company, Hanergy Thin Film Power Group signed a strategic partnership framework agreement for a 400MV solar power plant. The addition of 400MW onto the grid will go a long way with reducing the electricity scarcity that plagues parts of the country. The Ministry has communicated its commitment to meeting the country’s original target of 65% electrification by 2025. This of course will go a long way towards achieving the 2030 Sustainable Development Goals of universal access to electricity.

The DRC should be applauded for opting to sign a framework agreement which has the ability of creating an environment for parties to identify their common commercial goals. The benefits of framework agreements have been accepted by a number of seasoned lawyers. Duncan Wallace, a member of the UK bar, is of the view that framework agreements can be a commercial motivation for contractors to behave less opportunistically when additional projects, such as those that flow from traditional framework agreements, are on offer.

In July 2019, governments of the DRC, Burundi and Rwanda signed a project agreement for the construction of the Ruzizi III hydropower project. The proposed Build, Own, Operate, Transfer (BOOT) structure is beneficial to all countries as a large portion of the risk will sit with the concessionaire and minimizes the public cost and debt for infrastructure and energy development. Furthermore, this public-private partnership, if executed successfully, will undoubtedly improve the lives of millions in the three countries. 

In addition to the developments in respect of renewable energy, the country has made stride in the infrastructure sector,  with the new 34-km road which directly links the Kamoa-Kakula copper project, a mining project in the DRC and the Kolwezi airport in Zambia. The completed project will enable the unrestricted flow of trade between the two countries as it will be used to bring in mining equipment & construction materials as well as to transport copper concentrates. Given the African Union’s launch of the “operational phase” of the African Continental Free Trade Area, the economic benefits of this  corridor are endless.

Although the DRC occupies the 184th place (of 190) in the World Bank’s Doing Business 2019 report, the country has made strides in achieving political stability and improve its governance to pave way for economic growth and energy and infrastructure development. And as a result, creating a conducive environment for foreign direct investment.

Koketso Lediga, Managing Director, Infra-Afrika Advisory

In Central Africa, A Revolutionary Driller Is Teaching Us A Lesson About Oil

By Mickael Vogel

Chad’s rigs count has been surprisingly high for a year now, in a country that produces only about 100,000 bopd. With seven rigs deployed on its territory since September 2018 accoridng to Baker Hughes GE, Chad counts more rigs than most African petroleum provinces.

It is more than Angola, sub-Saharan Africa’s second largest producer of oil. It is almost more than Congo, sub-Saharan Africa’s third largest producer. The list continues: it is more than Gabon, Cameroon, or even Equatorial Guinea.

The reason: Chad is drilling. In efforts to expand exploration and boost domestic production, the land-locked Central African nation is proving that focusing on basics is a recipe for success. Drilling efforts have translated in increased production and oil revenues, despite several industry setbacks.

The recovery of Chad’s economy and petroleum sector after the recent plunge in oil prices has indeed not been a smooth journey to say the least. Chad has Africa’s 10th largest proven oil reserves but its output has been slipping in recent years due to maturing fields and disruptions caused by the conflict with Boko Haram in the southwest.

Lower commodity prices added another layer of complexity to an already very intricate situation, and put the economy in jeopardy. Hopes brought by the renegotiation of the country’s debt with Glencore and the rebound in oil prices were short lived.

In 2019, both ExxonMobil, which produces a fourth of the country’s oil and Glencore, which represents about 9% of Chad’s production, announced their intention to sell their assets in the country.

But as two of its biggest operators prepared their exit, Chad welcomed new ones and did not loose focus on bringing out what former minister Me Béchir Madit had then called a “second golden age of oil between the end of 2019 and 2025.”

To ensure the growth of its industry, Chad launched the construction of the mini Rig-Rig refinery in 2017 to address crying domestic shortage of petroleum products, granted several new fields to the CNPCIC in the Bongor Basin, welcomed new operator United Hydrocarbons, and renegotiated its debt with commodity trading giant Glencore in 2018.

As oil prices started rebounding, good news came along. Taiwan’s Overseas Petroleum and Investment Corporation completed its exploitation platform and connection pipeline to the Komé centre, while Petrochad developed its Krim-Krim wells.

The Société des Hydrocarbures du Tchad (SHT), the country’s national oil company, also made progress on the development of its Sedigui field by signing a contract with a Sino-British consortium for the construction of a gas pipeline, gas treatment facility and gas terminal in Djarmaya.

In two months alone, between July 2018 and September 2018, rigs deployed in Chad went up from only one to seven, according to Baker Hughes GE. That’s a considerable jump in such a short time, while most of its neighbours were still dealing with a drilling syndrome.

For a year now, Chad has had more rigs deployed on its territory than most other African markets, revealing sustained drilling activity which has now translated in numbers. As drilling activity picked up, production increased, and so did revenues.

According to the latest reports of the Ministry of Finance and Budget, Chad’s oil production and oil revenues have witnessed considerable increase in 2019 so far. In the first quarter, oil revenues increased by over 64% compared to the same period last year, led by an increase in production by over 18%, most of it due to the CNPCIC, and thanks to a better foreign exchange rate.

The second quarter confirmed the trend. During this period, oil revenues increased by another 38.6% while oil production increased by 23%, again led by the CNPCIC which has witnessed a growth of production by over 45% this year so far.

Between January 2019 and June 2019, Chad produced 22,791,749 barrels. On a daily basis, that’s an average of 126,000 bopd, a very healthy figure for a state whose revenues come at 70% from oil exports.

Improved situation in Chad explains why the acquisition of ExxonMobil’s 40% stake in the Doba Basin has become a source of intense bidding and negotiations. It also explains why the country’s economic forecast are bright.

In 2019, the IMG predicts Chad’s economy to grow by 4.5%, well above the world’s average of 3.3%. When many African oil nations struggle with a slow recovery, Chad reminds us that a successful energy strategy is a no brainer, and drilling must be a part of it.

Mickael Vogel,

Director of Strategy, African Energy Chamber

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