Home News Power Africa Initiative To Transform Economies?-ACEP

Power Africa Initiative To Transform Economies?-ACEP

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Ghana signed a new compact with the Millennium Challenge Corporation to improve its energy sector
Ghana signed a new compact with the Millennium Challenge Corporation to improve its energy sector
Dr. Mohammed Amin, Executive Director, Africa Center for Energy Policy (ACEP)
Dr. Mohammed Amin, Executive Director, Africa Center for Energy Policy (ACEP)

The African Centre Energy Policy (ACEP) has lauded the Power Africa Initiative (PAI) that has identified the causes of Africa?s power problems ? technology, investment, regulatory and reforms. ?If well implemented, the initiative could transform African economies and bring social and economic relief to the people?. However, ACEP suggests that if the initiative is to produce the needed results in the sector the following must be considered.

Suggestions

ACEP urges that it is very important that leadership and the political class in the beneficiary countries take energy issues out of politics. Critical issues of pricing, regulations and contracting for example has shown that Political decisions have favored popular views which are often at variance with economic sense. Hard decisions of withdrawing subsidies and incentivizing pricing to attract private investments must not wait any longer as the very poor who are to benefit subsidies are feeling the pinch of power cuts more.

Also infrastructure financing must recognize a financing mix of local and foreign options. African countries must set up an ?Africa Fund for Energy Investment?, a Sovereign Fund which can mobilize resources to be tapped by Governments for strategic investments in the energy sector. The Fund can support investment in transmission and distribution networks which are not attractive to foreign private capital because they are mostly state natural monopolies. This will reduce competition for foreign private investment between generation expansion and system improvement.

ACEP further calls for Infrastructure standards which must favor plant effectiveness and operational efficiency to prevent dumping of low quality equipments in Africa. In thermal generation for example, African countries must move from single cycle plants to combined cycle to ensure efficient use of fuel. Conversion from single to combined cycle is very expensive; hence it is important to invest in combined cycle plants from the onset. ?The think-tank suggests that African Governments should integrate local content policies in the power sector. Foreign and local partnership is important to build local capacity to sustain investments in the power sector. Power plant manufacturers should be encouraged to assemble power plants in Africa or in future build the plants here using local materials.

In statement on their website signed by Dr. Mohammed Amin Adam, Executive Director who is currently in the US notes that ?there is a compelling argument for the US to include regulatory reforms under the Initiative because poor management of utilities arising from politically motivated appointments of managers and board members, political interference in regulatory institutions and low level of accountability; are largely responsible for the poor state of Africa?s power sector. Thus, addressing the problem from technology and investment perspectives alone could (to say the least) beg the real issues of governance affecting the sector.? The statement adds.

And so the regulatory reforms must include utility service accountability. Whilst investments are being improved, consumers must hold utilities accountable. Trigger factors that account for electricity pricing must be transparent whilst utilities must sign consumer charters based on which consumers can bring utilities to account.

There is no doubt that the power deficit in Africa is hampering development and undermining investments on the continent and that available statistics show Africa had 147 GW of power generation capacity as of January 2011. With average growth of 8% in demand, this is woefully inadequate to meet the surging demand for power for the continent?s industrial development and economic growth. Similarly, World Bank estimates that Africa?s largest infrastructure deficit can be found in the power sector, whether measured in terms of generation capacity, electricity consumption, or security of supply. Africa?s power infrastructure delivers only a fraction of the service found elsewhere in the developing world. With 48 countries, Sub-Saharan Africa and a population of about 800 million, generates roughly the same amount of power as Spain with a population of 45 million.

The PAI therefore promises to provide relief to African people who have been in darkness for most of their lives especially those in off-grid areas. The Initiative will first focus on some six (6) African countries ? Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania. The initiative is expected to add more than 10,000MW of new generation capacity to expand access to about 20 million people and commercial entities through expansion of mini-grid and off-grid solutions; and building generation, transmission and distribution structures. It is also expected to enhance energy resource management capabilities.

Source:?Seibik Bugri

www.goxi.org/profile/seibikbugri

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