Private sector financing key to growth of energy sector

MANAMA: Access to private sector financing and increased energy efficiency are key to sustainable growth of the Mena energy sector, says the Arab Petroleum Investments Corporation (Apicorp), a multilateral development bank in which Bahrain owns three per cent stake.

A white paper titled The Energy Transition: Reshaping Investments and Strategies, issued by the bank, has identified steps in light of the transition towards a low-carbon world.

Based on the outcomes of a strategic roundtable that brought together 40 high-level industry experts from the energy and financial sectors, including representatives of government, multilateral organisations and the private sector, the recommendations encompass sustaining energy investments, enhancing finance, improving regulations, pricing carbon, bolstering efficiency and re-educating the public on misconceptions surrounding the hydrocarbon industry.

Apicorp chief executive Dr Ahmed Ali Attiga said, “In this age of rapid evolution for the energy industry, greater stakeholder collaboration between leaders of the energy and finance markets is of critical importance. At the Apicorp workshop on energy transition, the participants identified the need for countries to develop new regulatory models with higher standards of governance to create the right incentives and enable higher private sector participation. This involves outlining clear and specific national and local environmental concerns, setting targets and establishing independent authorities to oversee the implementation of the entire process.”

“The actionable and achievable recommendations outlined in Apicorp’s white paper provide a roadmap that would help the industry that has long served as a cornerstone of the region’s economies enter the next decade as a relevant and positive disruptor,” Dr Attiga added.

The five recommendations are:

Improving access to private sector financing: To meet the demand for capital in the energy sector, the accessibility and diversity of investments must improve by creating a more supportive ecosystem with new financial and commercial models that enable greater private sector penetration.

Regulatory consistency: Simplified, stable and transparent regulations will increase investor sentiment and confidence.

Introducing carbon pricing: Carbon pricing is needed to steer the industry towards lowering carbon emissions and encourage the adoption of low-carbon fuels including fossil and technologies.

Bolstering efficiency: To improve risk appetite, it is imperative to improve energy efficiency across the value chain for both supply and demand and streamline operations to maximise value out of energy assets.

Mythbusting: At a time when all fuels and technologies will be needed to manage an effective energy transition, negative sentiment around hydrocarbons is impeding the sector’s ability to attract the necessary financing and talent, both of which lie at the core of a sustainable, innovative and growing energy mix.

Apicorp chief economist and head of strategy, energy economics and sustainability Leila Benali said, “The transition towards a low-carbon world is perhaps the energy market’s biggest shift in nearly a century. For the Mena region to keep pace and truly unlock the massive potential of its vast energy resources, countries need to act swiftly and engage the private sector to proactively adapt and innovate, especially in this period of increasing competition for attracting capital.”



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