Is Russia’s Renewed Interest In Africa’s Energy Sector For Real?

By Allan Akombo AFKI Original Published: January 12, 2016, 3:16 am
Photo: africanbusinessreview.co.za

This article was first published on March 9, 2015

Away from the scenes of a crisis-torn Russian economy, biting sanctions and a currency crisis, Moscow is busy firming its grip on Africa’s lucrative energy sector.

In just six months, Russia has bagged three mega energy deals across Africa – fueling talk of a potential counter to the dominance by the West and other emerging economies such as India and China.

“While much attention has been given to resurgent China and India and their relationship with the African continent, Moscow has finally woken up to the race for Africa’s resources by other emerging powers and the Kremlin is keen to reestablishing Russia’s influence on the continent,” Fantu Cheru, Research Director at the Nordic Africa Institute (NAI) said in a recent review of the resurgent Russia-Africa ties.

On February 18, a consortium led by Russia’s RT Global Resources won a deal to construct and operate a $2.5billion regional oil refinery in Uganda in which Kenya and Rwanda have agreed to buy stakes in.

The Russia-government owned Rostec holds a 100 per cent stake in RT Global Resources which was created to carry out projects involving raw materials and infrastructure development in Russia and abroad.

Members of this consortium include Telconet Capital Ltd Partnership, VTB Capital PLC, Tatneft JSC and GS Engineering & Construction Corporation.

“The process of selecting a lead investor in Uganda’s refinery project has been highly competitive. We are pleased that the two bidders responded to the Request for Final Offers, from which RT Global Resources emerged as the Selected Preferred Bidder. We have confidence that we will execute project agreements and go ahead to develop Uganda’s refinery project” Uganda’s Energy and Mineral Development Minister Irene Muloni said when she announced deal.

The refinery facility, to be developed in phases, is expected to have final output capacity of 60,000 barrels per day, but will start with 30,000 barrels per day capacity.

Britain’s Tullow Oil, French oil major Total and China National Offshore Oil Corporation (CNOOC) are developing Uganda’s fields. The first phase of the refinery is expected to be in place by 2018.

Egypt

Barely a week before bagging the Uganda refinery contract, Russia signed another energy deal with Egypt.

Egyptian President Abdel Fatah al Sisi on February 10, 2015 announced that Cairo would cooperate with Moscow to see the construction of the first nuclear power plant in Egypt, on the second day of President Vladimir Putin’s official visit to the Arab country.

Egypt and Russia signed a memorandum of understanding to build the first nuclear plant in the northern city of El-Dabaa, on the Mediterranean coast west of the port city of Alexandria, where a research reactor has stood for years.

“If final decisions are made, it will mean not just building a nuclear power plant, it means the creation of the entire new atomic industry in Egypt,” Putin told a news conference.

Cranking up electricity generation has been a priority for Egypt, long hit by power shortages resulting in frequent blackouts in major cities across the country especially in the summer when hydro dam levels recede substantially.

Sergei Kiriyenko, the head of Russia’s Rosatom state-controlled nuclear corporation, revealed that a power plant with four reactors would be built, producing 1,200 megawatts (Mw) each.

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