OPEC Fund Quarterly - 2022 Q4

SPOTLIGHT

NOVEMBER 17

Acclimatizing the private sector

T he countries of the Middle East and North Africa are central to discussions about global energy security and transition. With pledges to support climate action with multibillion-dollar investment programs, the region is also attracting the attention of the private sector, the topic of the OPEC Fund’s final panel at COP27. Co-hosted by the IsDB, the panel included the OPEC Fund's Assistant Director-General, Private Sector & Trade Finance Operations, Tareq Alnassar, who cited a range of renewable energy projects co-financed by the OPEC Fund in Jordan and Egypt. “If the right incentives are in place for investors and they have sufficient confidence that their investment will generate a decent return, the private sector can actually be mobilized,” said Mr. Alnassar. He emphasized that multilateral development banks have the capacity to move beyond debt financing and can play a major role in risk-sharing or de- risking investments, such as by providing green trade finance for climate and sustainable trade products. His views were shared by the IsDB’s Senior Climate Change Specialist Habib Abubakar, who named private sector investments as the missing link for tapping the region’s renewable energy potential. “The Middle East is critically positioned to lead the net zero transition. The region is blessed with abundant solar energy which can be exported to other parts of the world which lack sufficient electricity supply.” The OPEC Fund’s Private Sector Business Development Director Khalid Khadduri laid out various successful approaches that have transformed the renewables sectors in Jordan and Egypt. “Methods such as ’scaling’ – combining multiple smaller projects into one financing agreement – can be replicated in other countries. We then need innovative approaches, for example to manage local currency risks in energy projects with cooperation of

Participants at the private sector panel

all actors including governments, the private sector and MDBs.” He underlined that “South-South cooperation, for example in transfer of technology and intra-regional investment flows, can help accelerate MENA’s energy transition.” Afreximbank’s Senior Manager Youssef Beshay spoke about the green bond markets in Africa and MENA as emerging instruments to finance the green transition. He explained that demand is huge from global investors for green bonds. However, the market in the MENA region is moving slowly and only two percent of globally issued green bonds are issued in Africa: “The main reason for that is the lack of clear incentives for issuing green bonds vs conventional bonds. With market access and standardization, this can change.” Closing the discussion, Hiba Ahmed, Director-General of the Islamic Solidarity Fund for Development, emphasized the role that the private sector can play as a financier and partner throughout project lifecycles: “As former finance

Tareq Alnassar, OPEC Fund, Assistant Director-General, Private Sector & Trade Finance Operations

minister of Sudan, I know that the private sector has an ever-increasing role not only in financing projects but also implementing, capacity building and even in monitoring and evaluation. It is clear that without the cooperation of all actors we cannot succeed.”

SHARM EL-SHEIKH IN SUM

Beyond the numerous panel events and climate commitments made with UN and international partners, the OPEC Fund also joined high-level roundtables on food security and the Middle East Green Initiative; signed agreements with Saudi Arabia and the African Development Bank; and held meetings with the Asian Infrastructure Investment Bank and the New Development Bank. OPEC Fund Director-General Dr. Abdulhamid Alkhalifa gave an

interview to Bloomberg’s Arabic- language news service, Asharq Business, in which he called on the world’s major emitters of greenhouse gases “to do more to help achieve a just and inclusive energy transition, including helping developing countries access climate finance.” With the nascent “Loss and Damage Fund” agreed in extra time at COP27, that breakthrough seems closer than ever – although the real work will likely begin next year at COP28 in Dubai.