Investors in South Africa want corruption-free environment

Sep 30, 2005 02:00 AM

Eliminating corruption in Southern Africa is one of the key priorities in luring investors to the region, particularly securing much-needed investment in the electricity sector, an energy minister told a regional conference that ended in Windhoek recently.
Only when a country is considered corruption-free, coupled with a stable political democratic environment, would it create a conducive setting under which investors could plough their money into the energy sector.

Hammering on this point at the recent Regional Electricity Investment Conference held in Windhoek, Swaziland's Energy Minister Mfomfo Nakambule said there must be strong "political commitment to fight corruption, because investors tend to use this issue as to whether to invest or not". Closely related to this issue is that governments should speed up their efforts in taking action to secure energy investments.
"For instance, too much time is taken by Government to grant licences or to take decisions and this is very frustrating to investors," which ultimately leads to the loss of capital, he said. Sentiments were also expressed that when a "policy is delayed, an investment is denied".

While a lot of attention has been given to the generation of and transmission of electricity in the region, focus should also be placed on creating adequate, reliable and accessible electricity supply to ordinary people. Stressing public/private partnerships, Kevin Morgan of BHP Billiton in South Africa said the price of electricity should be made internationally competitive in a way that attracts customers.
In addition, electricity tariffs in the SADC region are said not to be cost reflective, in turn pushing away investors' incentives to place funds in electricity projects.

Namibia like the rest of the members of the Southern African Power Pool (SAPP) is seeking potential partners in the energy sector. Projects such as the Kudu Gas and the Caprivi Namibia Power Line link are seen as alternative means of addressing the regional electricity deficit.
During the recent three-day Electricity Conference in Namibia, the 100,000 MW Congo Project was cited as having great potential to ensure reliable energy for the entire region and beyond Africa. The Western Corridor Power Project, as the project is commonly known, is envisaged for 2010 and is expected to supply power not only to Namibia, but to Angola, Botswana, South Africa as well as to the vast Democratic Republic of Congo (DRC).

On its part, the Ministry of Mines and Energy and NamPower see great potential in the 800-MW Kudu Gas project envisaged to be completed by 2009. In an effort to address the power shortcomings projected for 2007, South Africa and Namibia are currently negotiating the possible extension of the NamPower-Eskom contract.
Despite the potentially good electricity generation projects in place, it has been reported that investments to fund some of these projects have been minimal. However, suggestions have been made that "if the 250 mm inhabitants can all save one dollar per year, then the savings can start up their own financial resources to implement these projects."

Such a venture in the long run would help Africa deviate from making use of funds from the World Bank and the International Monetary Fund (IMF).
The SADC Electricity Investment Conference ended after which a resolution was passed to conduct a follow-up investors conference in Johannesburg, South Africa in November this year to fund potentially viable and bankable alternative electricity projects.

Source: New Era
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