African energy importers can benefit from securing cheap Russian supplies as a result of the price cap, US Secretary of the Treasury Janet Yellen has said.
Yellen was talking in Senegal, on the first stop of a 10-day Africa tour.
Russia’s invasion of Ukraine has threatened global energy security, she said. A coalition has imposed a price cap on Russian crude oil exports and will shortly make a similar move for refined products.
“The aim is to stabilize global energy prices and reduce Russian revenues,” she said. It does not aim to cut off Russian flows entirely.
Treasury has estimated it could “result in around $6 billion in annual savings for the 17 largest net oil-importing African countries. We are seeing examples of emerging markets saving even more by using the price cap to negotiate steeper discounts with Russia. And we encourage more countries to do the same.”
While there may be scope for states to strike bargains with Russia, prices are still higher than they were – causing trouble for politicians and consumers alike.
Nigeria, for instance, has benefited little from higher oil prices because of the amount if must pay to secure fuel supplies. Ghana too is facing problems with inflation, driven in part by higher fuel prices.
Yellen went on to talk about Africa’s part in meeting energy demand and in capturing carbon. The US has invested $1 billion in African climate efforts, she said, with more to come.
In Senegal, this includes backing a 158 MW wind farm, which increases electrification while avoiding greenhouse gas emissions.
“Later in this trip, I will speak to how we are facilitating a just energy transition in South Africa,” she said.
“It is unacceptable that a continent with such rich potential for clean energy is also the one with the greatest energy deficit. Six hundred million Africans still lack access to electricity. The United States is committed to partnering with African countries to close this gap,” she said.
The US’ Power Africa has helped connect more than 165 million Africans to electricity, she continued, “and we believe its work is more important than ever”.
Yellen said the aim of the trip was to focus on Africa’s economic potential. This, she said, was driven by “its demographic trends and the impressive dynamism of its growing cohort of young and diverse entrepreneurs”.
As part of this economic growth, debt will play a part. The US politician said many African economies lacked “fiscal space” and many “simply have unsustainable debt burdens. We believe that the international community, including China, needs to provide meaningful debt relief to help countries regain their footing. Timely debt relief is in the interests of both debtors and creditors.”