West Africa’s gas transition
With West Africa positioned as one of the world’s fastest-growing regions, energy transition financing has become critical to unlocking the continent’s industrial potential. As countries like Ghana and Nigeria leverage their substantial gas reserves, financial institutions like Standard Bank are playing a pivotal role in supporting natural gas infrastructure development that bridges the gap between current energy needs and future renewable goals.
Energy transition in West Africa represents a pragmatic approach to sustainable development. Rather than leaping directly to renewables, the region is strategically utilising its abundant natural gas resources to meet the energy needs of the region as it progresses towards an increasingly greater supply of renewable energy.
“We see gas as a long-term enabler of industrial growth,” explains Musah Abdallah, Executive Head of Standard Bank Ghana’s Corporate and Investment Banking (CIB). This perspective reflects the bank's commitment to supporting Africa's unique energy journey through targeted energy investments in Africa.
Infrastructure as the foundation
The development of dual fuel power plants in Africa has emerged as a game-changing strategy. These facilities, capable of running on either diesel, heavy fuel oil, or gas, provide the flexibility needed during the energy transition in West Africa. Currently, around 70% of Ghana’s power plants operate on gas, demonstrating the practical success of this transitional approach.
Standard Bank has been instrumental in financing critical infrastructure projects, including Ghana's second gas processing plant in Prestea and a 100 kilometre gas pipeline to Kumasi. These energy investments in Africa directly power industrial zones and support economic growth across the region's middle belt.
Natural gas infrastructure development extends beyond national borders. Through initiatives like the West African Gas Pipeline, countries can share resources and export gas-powered electricity under guaranteed trade agreements. Ghana already exports to Côte d'Ivoire, with plans for additional pipeline infrastructure to connect more regional partners.
Sustainable financing approach
Standard Bank's approach to energy transition financing is guided by Environmental, Social, and Governance (ESG) principles, with a commitment to achieving net-zero across its lending portfolio by 2050. The bank employs data-driven tools and transition-finance frameworks to support this transformation.
"We use a variety of mechanisms to support this transition, including data-driven tools and transition-finance frameworks. We're also exploring green bonds and other green financing options," Abdallah explains. These approaches help de-risk gas investments while enabling expansion into renewable energy sectors.
A strategic bridge to renewables
The bank's strategy recognises that natural gas infrastructure ensures a stable domestic energy supply as the country continues its journey to cleaner energy sources. Gas produces significantly less carbon than coal or oil and helps avoid the environmental harm caused by gas flaring – a common practice when gas is left unused during crude oil extraction.
"We are not comfortable with where we are, but a journey of a thousand miles begins with the first step, and gas is unavoidably our first step," Abdallah acknowledges. This honest assessment reflects the realistic approach needed for sustainable energy transition in West Africa.
Ghana's transformation of its Ministry of Energy into the Ministry of Energy and Green Transition signals the government's commitment to this balanced approach. The nation's new economic transformation agenda, including “The Big Push” and a 24-hour economy initiative, relies on reliable, stable, and affordable power, making dual fuel power plants in Africa essential infrastructure.
Global investment and partnerships
Interest from international investors continues to grow, with leading financial institutions from South Africa, the US, and China showing increased commitment to energy investments in Africa. Standard Bank's relationship with the Industrial and Commercial Bank of China (ICBC) could unlock additional capital for funding opportunities across the region.
The reality for West African nations is that investing in natural gas infrastructure isn't delaying economic progress; it's building the foundation necessary for transformation. Through strategic energy transition financing, Standard Bank is helping Ghana and its neighbours shape the continent's evolution into an economic powerhouse.
With multilateral funding and innovative green financing mechanisms, the region can achieve its dual objectives of meeting immediate energy needs while establishing the groundwork for long-term renewable energy adoption. This pragmatic approach to energy transition in West Africa demonstrates that sustainable development requires both vision and realistic implementation strategies.
This article was originally published by CNBC Africa.