Emerging powers in Africa Watch
India steps up scramble with China for African energy
Louise Redvers
2010-02-04, Issue 468
http://pambazuka.org/en/category/africa_china/61982
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India has stepped up its efforts to gain an economic foothold in Africa in a new scramble with China for the continent's resources, signing energy deals with top oil producers Angola and Nigeria.
India has lagged behind China's aggressive courting of African nations to secure rights to energy as well as raw materials.
Beijing is using its deep pockets to build roads, railways, even a new parliament building in Malawi, to win favour across Africa, deploying at least half a million Chinese workers to labour on projects around the continent.
India's democratic system and often lumbering bureaucracy have left it slower to make inroads and less likely to fund big projects, since government must account for all spending to parliament.
But this month India deployed two high-level missions to the continent, with Oil Minister Murli Deora last week leading a delegation of top energy executives through Sudan, Nigeria, Angola and Uganda.
India's state Oil and Natural Gas Corporation (ONGC) left with deals for 359 million dollars worth of investments in Nigeria and an agreement for joint exploration and refining projects with Angola, seen as a precursor to a broader future deal.
Deora also tried to patch up a dispute over payments on oil deals in Sudan while discussing major new oil finds in Uganda.
Nigeria is already India's largest African trading partner, at about 10 billion dollars annually, and Deora said in Lagos that his country wants to see that figure grow.
India's flagship gas company GAIL has expressed an interest in liquefied natural gas (LNG) projects in Angola and Nigeria, Africa's two top oil producers.
India also offered to invest billions in building and refurbishing refineries in Angola and Nigeria, which cannot process enough crude to meet their fuel needs.
"India has been trying to get its foot into Angola for a long time so this is a significant development," said Edward George, Africa-China specialist the Economist Intelligence Unit in London. "The key will be the next licensing rounds to see if ONGC can win oil blocks," he said.
India had lost out on previous attempts to win contracts in Angola, much in part to Chinese competition, but GAIL chairman Shri BC Tripathi played down rivalry between the growing giants.
"We don't see China as a direct competitor but we know they are like us and have a growing economy so need to source oil," he said in Luanda.
India's ambassador to Angola, AR Ghanashyam, believes the latest deal is just the start of co-operation with India and pointed out that ONGC was already working with Sonangol in Iran. Trade between the two nations is expected to exceed two billion dollars this year, up from 1.3 billion dollars in 2007/8 and from 300 million dollars the year before, mostly in oil exports to India. Trade with China last year totalled more than 25 billion dollars, however, as Angola became the country's fifth-largest supplier of oil.
China has granted Angola an estimated 10 billion dollars in loans, compared to around 70 million dollars in Indian loans, mainly for rebuilding a railway in southern provinces. In practical terms as well, China has a larger physical presence in Angola, with more than 40,000 workers, compared to 1,500 Indians.
"We are a much smaller country that China," Ghanashyam said. "We have half their GDP and cover one third of the area but give us 20 years and we will catch them up."
Analysts said Africa could benefit from increased competition.
"It's very good for Africa to have another investor to compete with China because it will drive competition and hopefully bring benefits in terms of quality and delivery," George said.
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* This article was first published in Trade Africa on 31 January 31, 2010.
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