A power station in Botswana (Pic By www.bpc.bw)
African governments have been told that the continent will need to invest billions of Dollars annually in order to meet the continent’s energy needs by 20140. Event Director of African Utility Week, Evan Schiff added that investment in the sector could be a lucrative undertaking.
Speaking ahead of the event taking place in Cape Town from 12-14 May, Schiff stated that governments and business should collaborate to achieve this.
“Investing in the power sector in Africa can be very lucrative and we have the success stories to prove it”, he said.
“$42 billion a year will be required to meet Africa’s energy demand by 2040, including a private-sector financing increase of up to ten times the current levels. In order to achieve this governments and business must work together and fresh approaches will be vital.”
According to Schiff, private equity fund raising for Africa increased by 136% in 2013 to US$3.3 billion, up from US$1.4bn a year earlier. He added that greater private sector participation and competition has been encouraged through power sector reform and long-term power purchase agreements through the state utility or other credible off-takers.
“IPPs are considered a solution to persistent supply constraints. It is also exciting to see that intra-African investment is gaining momentum. African investors nearly tripled their share of FDI projects over the last decade, from 8.0% in 2003 to 22.8% in 2013 according to EY’s latest attractiveness survey,” he said.
During the African Utility Week, a high-level Finance & Investment Forum will specifically focus on project finance, risk management, IPPs and case studies.
The forum will also have a special focus on renewables and innovative ways of financing green energy while creating sustainable jobs. Evan Schiff adds: “with the African Development Bank SE4LL Fund recently confirming a $777,000 preparation grant to support a 72MW solar power plant project to become the first renewable IPP in Cameroon, it shows that there are creative investment vehicles and initiatives out there for energy projects on the continent that previously were considered too marginal for project financing”.
Power Africa, US President Barack Obama’s initiative to improve access to power in sub-Saharan Africa, will be the official country partner of African Utility Week. Power Africa works with African governments, the private sector, and other partners to add more than 30,000 megawatts (MW) of cleaner, more efficient electricity generation capacity as well as increase electricity access by adding 60 million new home and business connections throughout all of sub-Saharan Africa.
Andrew Herscowitz is the coordinator for Power Africa and panelist at the Finance & Investment Forum:”we’ve seen that there is plenty of investor interest in the continent and there are plenty of people with great ideas and potential to execute power projects, but the problem that we see is getting those deals to the point of bankability. So I really see that Power Africa has this sweet spot, working with all of our partners including the World Bank, which committed USD5-billion, the African Development Bank which committed USD3-billion, the government of Sweden that committed a USD1-billion, and our private sectors partners that committed over USD20-billion. I think we have this opportunity to align our efforts to figure out what role we can play to bring those projects to bankability so that investors will find a place to put their money.”
