Sharm El-Sheikh – The OPEC Fund aims to increase the development funds provided during the current year, coinciding with the conclusion of partnerships with other development banks on the sidelines of the recently concluded UN Conference of Parties on Climate Change (COP27) that was held in Sharm El-Sheikh.
Daily News Egypt met with Abdulhamid Al-Khalifa — Director-General of the OPEC Fund for Development — to find out about the fund’s plans during the coming period.
How much development funding has the fund pumped?
The OPEC Fund has committed over $22bn of its own resources to over 4,000 projects in more than 125 partner countries worldwide with a total project value of some $190bn.
We work with the public sector, private sector investors, and multilateral development banks. Roughly four out of five of our operations are co-financed, mostly with other MDBs.
What is the total number of projects to which the fund contributed?
The fund has committed over $22bn of its own resources to over 4,000 projects in more than 125 partner countries worldwide with a total project value of some $190bn.
Which countries benefit most from the fund’s resources?
Around 50% of OPEC Fund’s historic commitments have been allocated to promoting sustainable development in Africa. Around 30% of our financing was provided for projects in Asia Pacific and 15% in Latin America and the Caribbean.
The OPEC Fund does not finance projects in its member countries and is the only globally mandated development finance institution that provides financing from member countries to non-member countries exclusively. All developing countries — with the exception of its own members — are eligible for assistance.
What is the role played by the fund in advancing sustainable development in countries?
Multilateral development banks play a crucial role advancing sustainable development around the world and promoting the global goals. We are doing this by offering a broad range of financial products in countries and market conditions where funds are not easily accessible through commercial banks.
We work with partner governments directly and co-finance with like-minded organisations. We are able to mobilise additional funds through strategic alliances with other bilateral and multilateral development organisations of our member countries. For example, in both our food security and climate finance initiatives, we were able to pave the way for the institutions of the Arab Coordination Group to join our commitment.
Are there negotiations with Egypt to grant it development loans?
Egypt has been a long-standing partner of the OPEC. We have supported Egypt’s development priorities in key areas such as, for example, energy security and energy transition, food security, and infrastructure development.
We aim to support Egypt in achieving its developmental goals and have pledged support for the nine priority projects under the Nexus for Water, Food, and Energy programme (NWFE), continue to identify smart financing solutions to extend grants and concessional loans to ensure that these projects get the technical support needed to become bankable and effective projects, as well as to support the implementation.
The number of projects in which the fund contributed in Egypt?
The fund has committed more than $1.3bn to more than 85 projects in various sectors of the economy. Our support was in the form of public and private sector loans and grants.
These include grants in solar energy — the OPEC Fund invested $114m in the 200 MW capacity Kom Ombo solar plant, joining the European Bank for Reconstruction and Development (EBRD), the African Development Bank (AfDB), the Green Climate Fund (GCF), and Arab Bank. The plant will serve 130k households.
We also financed the power plant in southern Helwan, which included the development of a 1,950 MW power plant fuelled by natural gas and associated gas pipelines, improving the stability of the power system and the reliability of electricity supply.
This is in addition to providing food security financing for Port Said Grain Facilities with a $14m loan to boost food security and reduce agricultural losses with the development of two major grain silos and increase storage capacity by 1.5 to 2m tonnes of wheat grain each year
Finally, the fund is supporting small businesses. We provide funds for SMEs, which are critical for economic stability and jobs. Following a $25m loan in 2009 and a $40m loan in 2015, in 2020, we provided a $95m loan to Egypt’s Micro, Small, and Medium Enterprise Development Agency (MSMEDA), supporting the creation of thousands of jobs and boosting self-employment, especially for women and youths.
Were there any memorandums of understanding signed during the COP27?
This was the first time we have actively participated at a COP, and we used this opportunity to further promote and advocate the climate agenda, in addition to our other strategic priorities, such as food security, water and sanitation, and the role of private sector investments to support the UN’s sustainable development goals (SDGs).
Our first deal at the COP was with the Arab Coordination Group (ACG) — a group of ten regional and multilateral development institutions. We unveiled a $24bn climate finance facility for the period from 2022 to 2030.
The financial package will support developing economies to accelerate energy transition, increase climate resilience, and promote energy security.
In September 2022, we adopted our ambitious Climate Action Plan and committed ourselves to double our share of climate financing to 40% of all new financing. We are proud that our action has inspired our partners to do even more.
Our partners launched the Climate Finance and Energy Innovation Hub — a joint initiative with the UN Capital Development Fund and Sustainable Energy for All. The hub aims to leverage every $1 of sovereign finance to attract $4 of green and sustainable capital into projects.
Under the Hub, we are working on clean cooking projects and have earmarked $100m for projects in Madagascar, Malawi, Rwanda, and the Democratic Republic of Congo.
Partnerships are key for us. At the COP27, we have extended our cooperation with the African Development Bank, which will allow our institutions to increase co-financing, improve synergies, and share knowledge. Africa is a key continent for the OPEC Fund — taking up half of our operations — and we hope we can further mobilise development finance in partnership with the AfDB.
How much is the capital of the current fund?
Traditionally, the OPEC Fund has two sources of income — the contributions of our member countries and funds received from operations or otherwise accruing to the fund.
Since its establishment in 1976, the OPEC Fund has had four replenishments. As of the end of 2021, the total paid-in contributions amount to $3.4bn.
The fund’s balance sheet is characterised by very strong liquidity and extremely strong capitalisation with over $6bn in assets and no debt.
Who are the shareholders?
The OPEC Fund for International Development was established in 1976 by member states of OPEC as a multilateral institution in support of development in low- and middle-income countries.
The 12 member countries are Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the UAE, and Venezuela.
What is the volume of funds targeted to be pumped during the next year?
Long term sustainable development goas, global developments, immediate emergencies such as the COVID-19 pandemic or the food and energy security challenges, as well as the needs and ambitions of our partner countries guide the fund’s operational priorities.
In 2021, we committed $1.5bn through 47 projects around the world. Our investments included landmark transactions, such as the award-winning Temane Power Plant in Mozambique, support for small rural agricultural producers in Honduras, and the construction of water supply and sanitation infrastructure in Sierra Leone.
We have also fully utilised the OPEC Fund’s $1bn COVID-19 response facility by the end of 2021.
In 2022, we also presented ambitious commitments to provide financing under a new $1bn Food Security Action Plan and the first Climate Action Plan.
Our financial commitments for the year will be announced after the end of the fiscal year.