Investment key to end African energy crisis

Nov 30, 2006 01:00 AM

African countries need to develop regional power grids and attract more investment to the sector if they want to avoid the power shortages plaguing the region, a senior World Bank official said.
A long-running drought, chronic under-investment, conflicts in some countries and higher global oil prices have contributed to the power outages and rationing across sub-Saharan Africa this year, forcing businesses to curtail production and factories to close.

Vijay Iyer, sector manager for energy group in the bank's Africa region, said the crisis could shave off 1 to 2 % of gross domestic product growth in some countries.
"Stepping up Africa's electricity generation and access will need quantum jumps, which requires money, capacity and commitment from countries about being more pro-active about their sectors and more bold about reforms to underpin the investment, both private and public," Iyer said. "We hope that countries will translate the sense of urgency and priority they're placing on energy now in a sustained way over the next four to five years, so that we start to see a turnaround in this situation," he added.

While there are some short-term solutions to address the problems, Iyer said countries have to look further ahead given increasing economic demands and population growth. Despite better-managed economies, higher-than-expected economic growth and fewer conflicts in Africa, private-sector investment in the energy sector has not followed as expected, Iyer said.
In a recent speech in Australia, World Bank President Paul Wolfowitz said the goal was to increase access to energy to the poor to 47 % by 2010 from a current 23 %.
"We need to work to meet that energy demand; we can't run away from the problems, and the idea that we can manage their development without energy growth is simply not a possibility," Wolfowitz told the Energy and Mineral Business Council.

Developing energy projects in Africa has not only been expensive because of the difficult terrain and risky environments, but pressures from environmental groups have made the private sector more cautious about investing in power.
In the eastern Democratic Republic of the Congo, the $ 40 bn Inga hydropower power project has long been a beacon of hope for improving the region's power supplies. The project would target a capacity of 40,000 MW and link the continent's power pools when completed.

A related plan by African countries seeks to link five existing power pools on the continent into a single resource to optimise generation and distribution.
"Countries have been thinking too long about energy security within their borders, but energy security solutions lie cross-border," Iyer said. "Therefore regional energy planning and trade hold the key for the future." Part of the solution, Iyer said, is to increase financing by donor countries for energy projects in Africa.

Currently, donor funds for energy in sub-Saharan Africa is about $ 1,2 bn a year, of which $ 600 mm to $ 700 mm is from the World Bank. Here, Iyer said, the World Bank could play a vital role by bringing together donors to increase funding.
"Alternative and renewable energies are a good solution but energy for all is still a big dream in Africa," said Iyer. "If we can get to energy for half in the next 10 to 15 years, it will require a scale of energy resources and access," he said. Iyer said governments also need to step up their efforts to attract more investment by promoting bankable projects and showcasing them to potential private-sector investors, he said.

Source: Nampa
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