Private funding required for Africa’s $47bn pipeline of priority power projects

19th February 2013

By: Terence Creamer

Creamer Media Editor

  

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The funding gaps associated with the energy components of the African Union’s $360-billion Programme for Infrastructure Development for Africa (Pida) remain material and will not be closed in the absence of improved project preparation, greater regional cooperation, policy and regulatory certainty and private capital, industry experts warn.

Under Pida, which offers a roadmap for key cross-border infrastructure projects until 2040, priority energy projects with a combined price tag of $47-billion have been earmarked for implementation before 2020.

Included under the priority energy portfolio are nine hydropower schemes, four transmission corridors and gas and oil pipelines.

The energy projects form part of a rolling five-year Pida programme that has been assembled under the banner of the New Partnership for Africa’s Development (Nepad),

The African Development Bank’s regional director Ebrima Faal told delegates at the African Energy Indaba 2013, in Johannesburg, on Tuesday that the funding requirement for the priority energy, transport, water and information and communication technology (ICT) projects stood at more than $60-billion.

These projects would also only partly dealing with existing infrastructure backlogs across the continent.

In fact, the World Bank estimated that Africa needed to invest $93-billion a year to deal with its prevailing power, water, transport and ICT backlogs and Faal estimated that only about $45-billion was currently being spent yearly. Energy comprised about $23-billion of the $31-billion yearly investment shortfall.

“So we are looking for significant amounts of money,” Faal said.

Besides policy, regulatory and governance reforms and certainty, efforts would also have to be made to prepare projects in a way that would make them attractive to private investors, whose resources would be critical to closing the current funding gap.

“Most of Africa’s infrastructure projects, including power, have been funded by the public sector. Of course, the private sector needs to be brought on board not only as financiers and project developers, but also in terms of their ability to fast-track construction . . . and bring in new technology.”

Nepad Agency energy division head Professor Mosad Elmissiry gave assurances that progress was being made on delivering on the Pida projects, noting that some hydro schemes on the list had already reached financial close, while components of the large transmission projects were also under way.

he nine hydroelectric projects include the Great Millennium Renaissance dam, in Ethiopia; the Mphanda-Nkuwa project, in Mozambique; the Inga hydro projects, in the Democratic Republic of Congo; the hydropower component of the Lesotho Highlands Water project phase 2; the Sambangalou project, on the Gambia river; the Kaleta II, in Guinea; the Batoka Gorge project, on the Zambia-Zimbabwe border; the Ruzizi III project, in Rwanda; and the Rusumo Falls development, being pursued by Tanzania, Rwanda and Burundi.

The four corridors included: the North-South Transmission Link, from Egypt to South Africa, with branches mostly into East Africa; the Central Corridor, from Angola to South Africa, with branch lines into Central and West Africa; a North African Transmission Corridor from Egypt to Morocco, with links through Libya, Tunisia and Algeria; and the West African Power Transmission Corridor, linking Ghana to Senegal, with branches.

Elmissiry said the goal was to achieve 60% energy access by 2040, which would require a fivefold increase in Africa’s current power production capacity.

World Energy Council (WEC) vice-chairperson for Africa Professor Abubakar Sambo, who was recently appointed an energy adviser to Nigerian President Goodluck Jonathan, praised the focus on hydropower, as only 7% of the continent’s hydropower resources were currently being tapped.

However, more effort was required to turn Africa’s flared gases into account, with Sambo lamenting that as much as 12 times Africa’s current energy consumption was currently being lost to flaring.

WEC secretary-general Dr Christoph Frei noted that Africa’s energy leaders were also deeply concerned by the high levels of energy poverty, with only 30% of Africa’s population having access to a modern form of energy.

Frei noted that a recent WEC survey found that these leaders also viewed progress of regional interconnectors as critical to dealing with the prevailing lack of energy access.

Edited by Creamer Media Reporter

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