TESLA SUED BY WALMART FOR FAULTY SOLAR PANELS
manage environmental issues such as gas flaring.
It is important to approach these investments with a modular investment philosophy to manage risk-return attributes.
These investments are important by themselves or in conjunction with conventional E&P investments because the paucity of capital and other challenges invariably means that weaker, less developed infrastructure or segments of the value chains limit the ability of the upstream sector to enhance value in a sustainable manner.
For example, gas flaring is both economically and environmentally unsustainable and can limit oil production.
Secondary and tertiary enhanced recovery investments, and non-conventional resources such as bitumen and shale oil/gas, can also provide significant opportunities.
However, Africa remains a highrisk region for various reasons – political risk, regulatory uncertainty, resource nationalism, security, challenges with contract enforcement, militancy, theft, corruption, lack of transparency to name but a few. These have translated into reduced availability and higher cost of capital relative to other continents.
Some progress has been made by some governments, but a lot more needs to be done. Ultimately, they need to play a long-term game which is often difficult against short-term pressures and realities. Simplified laws and regulation, continued deregulation, public/private investment models should remain a key focus.
Platforms such as Africa Oil Week are an invaluable opportunity for all stakeholders in African upstream oil and gas to hear each other out on all the issues, and to engage on what is needed to take this important growth sector forward.
Investors are increasingly focused now on legal and regulatory compliance, social investing and returns, sustainability indices, diversity management, reputational risk and stakeholder management besides looking for world-class corporate processes and systems, good corporate governance structures and sound enterprise risk management.
They have close to zero tolerance for non-compliance.
It is important that companies demonstrate that they have thought about the matters relevant to their business environment and have taken appropriate measures to manage them.
Also, they need to be flexible in considering an increasingly diverse range of financing structures which may be better match investor risk-return expectations.
Sustainable financing strategies are important.
The integration of environmental, social and corporate governance processes with finance matters is here to stay.
Ultimately, these factors will drive the availability and cost of capital.
Companies able to manage sustainability issues will be more attractive to financiers, customers, suppliers, governments, regulators, communities and other stakeholders because decisions will not be taken solely due to traditional economic considerations.
It is also important to recognise that sustainable business need not result in economic losses; quite often it provides an avenue for sustainable value.
Olu Ogunfowora is a partner at Nigeria-based energy and infrastructure advisory firm Argentil Capital Partners. He will be speaking at Africa Oil Week in November. WALMART sued Tesla, claiming it failed to live up to industry standards in the installation of solar panels on top of hundreds of stores, resulting in multiple fires across the US. The retailer said it had leased or licensed roof space on top of more than 240 stores to Tesla’s energy operations unit, formerly known as SolarCity, for the installation and operation of solar systems. But as of November, fires had broken out at no fewer than seven of the stores, forcing the disconnection of all the solar panel systems for the safety of the public. Walmart’s inspectors found that Tesla “had engaged in widespread, systemic negligence and had failed to abide by prudent industry practices in installing, operating and maintaining its solar systems,” according to a breachof-contract complaint filed on Tuesday in New York State court. Walmart is pushing to source 35 percent of its electricity from renewable sources by 2020. The company has more than 350 on-site solar installations and has signed contracts to add more than 120 new installations by next year, it said in its 2019 report on environmental, social and governance goals. The company didn’t reply to a request for comment on whether those totals include the Tesla systems. Tesla is best known for its electric cars, but its solar unit acquired in 2016 had sought to sell solar power plus batteries for storing electricity to commercial businesses eager to reduce their electricity bills and carbon footprints. Walmart was an early customer of SolarCity’s rooftop solar panels as well as Tesla’s batteries, and has pre-ordered the company’s electric Semi truck, which is not yet in production. The retailer’s inspectors saw dangerous connections at several locations, according to the complaint. I Bloomberg