A Look at Power Shortages in Sub Saharan Africa

According to the IMF Regional Economic Outlook on Africa 2008, Africa’s overstretched electricity systems have become exceedingly vulnerable to supply shocks and these acute electricity shortages have resulted in widespread outages and load shedding. As shown in the figure below, shortages of electricity in 2008 were caused by 4 main reasons: drought, conflict, structural issues and oil price shocks.

For instance, in recent years, when droughts reduced power in the hydro-dependent countries of East Africa, prolonged blackouts became commonplace. In countries like South Africa, plant outages for maintenance in a context of low reserve margins have also had serious consequences. Additionally, countries whose power infrastructure has been damaged by conflict have also suffered severe shortages. And finally, high petroleum prices have created enormous cost pressure for countries in West Africa, that depend on imported oil products for power generation.

An increasingly common response to the crisis has been short-term leases for emergency power generation by a handful of global operators. Though this capacity can be put in place within a few weeks, it is expensive. The costs of small-scale diesel units, for example, are typically about US$0.35/kwh. The equipment is typically leased for up to two years, after which it reverts back to the private provider. An estimated 700 megawatts (MW) of emergency generation are currently operating in sub-Saharan Africa which represents more than 20 percent of output capacity. The total price tag is substantial and ranges from 0.5 percent of GDP in Gabon to 4.3 percent in Sierra Leone.

Interestingly, this energy crises is a symptom of a deeper malaise, the cause of which needs to be understood in order to be addressed.  In this regard, I will discuss the four paradoxes highlighted in the report which shed light on the complex challenges that need to be addressed: abundant energy but little power; high prices but even higher costs; widespread but ineffective reform; and high expenditure yet inadequate financing