Thursday, April 05, 2007

African energy ministers form petroleum revolving fund

African energy ministers form petroleum revolving fund
By Kabanda Chulu
Thursday April 05, 2007 [04:00]

AFRICAN energy ministers have formed a petroleum revolving fund that will help to mitigate the impact of international oil prices. However, Zambian energy minister Felix Mutati said there was need to look beyond the revolving fund and seek alternative sources such as development of the bio-fuel sector.

During a forum which ended in Mozambique on Tuesday, the ministers stated in a communiquè that non oil-producing African countries were vulnerable to price instability.

The ministers also appealed to international financing institutions to disburse grants as part of funding for hydropower projects so that electricity tariffs could be affordable to ordinary people.

"Instability in international prices of crude oil is making non oil African producing countries to be exposed to various economic risks and also the looming power deficit will reduce the recent economic growth that has been attained," stated the Communiquè.

"So this petroleum revolving fund will try to mitigate the impact of these problems and we request financiers to disburse grants for the power projects so that we maintain lower electricity tariffs that will be affordable to people."

The communiquè stated that African countries should also prepare bankable documents that would easily pursue lending institutions to fund the intended power projects.

It is reported that the southern African region requires US$ 24 billion for the development of hydropower projects that would help to reduce the looming power deficit because the installed power capacity would not meet the increasing demand.

Mutati, who attended the forum in Maputo, said there was need to look at alternatives sources of energy because the revolving fund might get exhausted.

"The funds will not be there in the longer term, hence the need to develop other sources of energy such as bio fuel that will in turn create jobs and reduce the foreign exchange spent on purchasing of crude oil," said Mutati. "Actually, the Zambian government is seriously looking at ways of enhancing large-scale production of the bio fuel sector."



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