Despite the GCC accounts for around 54% of the world’s conventional oil reserves and around 40% of global natural gas reserves, the inevitability of our one day reaching a peak oil stage is undeniable, making the search for renewable and alternative energy solutions a particularly pressing issue for our generation as we seek an optimal balance between conventional and renewable sources of energy, according to an expert.
Citadel Capital Proposes an Integrated Vision for Energy and Shares Innovative Solutions for Energy Project Financing in Africa and the Middle East.
Citadel Capital, the leading investment company in Africa and the Middle East with $9.5 billion in investments, has a long-standing interest in alternative and renewable energy, dating to the time of its acquisition of ENTAG and ECARU as the nuclei of Tawazon, its platform for investment in the solid waste management sector. Tawazon is an important part of the firm’s energy arm owing to its waste-to-energy emphasis, where it produces RDF for use by industry as an alternative feedstock for their own power needs.
“An integrated approach from a multiplicity of sources along the value chain — upstream, midstream and downstream — stretching from petroleum to electricity to renewable is required in order to come up with a solution that truly tackles the energy problems that the region faces today,” Mohamed Shoeib, Managing Director of Citadel Capital’s Energy Division said.
“However, with regional Governments outside the GCC facing sharp balance sheet constraints preventing them from funding large-scale infrastructure projects, and the turbulence in the European markets (a leading source of project finance in the past), as well as concerns over the post-Arab Spring climate, securing funding for such large-scale projects is becoming increasingly difficult. What we need therefore are bold and innovative approaches to fundraising.”
“DFIs in the US and Europe have specific mandates to promote growth and stability in the Arab world, while credit export agencies — particularly in Asia — are keen to fund projects in strategic regions where they are keen to promote the export of goods and services from their respective countries,” said Shoeib. “Moreover, SWFs — particularly in the GCC — have mandates to invest in the region and a distinct preference for North Africa.”
Most recently, the ‘triple combo’ was deployed June 2012 to great effect, helping Citadel Capital reach financial close on the Egyptian Refining Company (ERC), a $3.7 billion Greenfield oil refinery that was kept on track despite the Global Financial Crisis, the European Sovereign Debt Crisis and the Fukushima nuclear meltdown, and represented the largest instance of inward investment in Egypt post-revolution.
“As ERC shows, it is possible, given the current climate, to bypass the traditional sources of project finance in the region — large national and European commercial and investment banks — to successfully launch a large-scale energy project such as this one,” said Shoeib. “It is important to remember; however, that key to securing financing via this method is not just the financial viability of the project, but also its lasting social, environmental and economic impact.”