Power Africa

President Obama promoted his new, multi-billion dollar “Power Africa” initiative to expand electricity access in Africa during his recent visit to Africa, calling it a benefit to Africans and the U.S. alike.

The President said it is a win for the United States because the investments made in Africa, including in cleaner energy, means more exports for the U.S. and more jobs in the U.S

According to reports, Power Africa has identified six initial partner countries – Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania – all of which “have set ambitious goals in electric power generation and are making the utility and energy sector reforms to pave the way for investment and growth. 


Power Africa will bring to bear a wide range of U.S. government tools to support investment in Africa’s energy sector. From policy and regulatory best practices, to pre-feasibility support and capacity building, to long-term financing, insurance, guarantees, credit enhancements and technical assistance Power Africa will provide coordinated support to help African partners expand their generation capacity and access.

The United States will commit more than $7 billion in financial support over the next five years to this effort, and will partner with the private sector, who themselves have committed more than $9 billion in investment. 

See more here

Solar Lighting Boom in Africa?

Nairobi — As many as 120 million households in Africa will be living off-grid by 2015, creating one of the world's largest markets for portable solar lighting in the next five years. This is according to a report, 'Solar Lighting for the Base of the Pyramid - Overview of an Emerging Market' which is published by Lighting Africa, a joint International Finance Corporation (IFC) and the World Bank initiative that is developing continent-wide programmes for solar lighting.

The report projects an up to 65 per cent growth rate in sales of portable solar lights, comparable to the recent explosion in mobile phone sales on the continent. Currently, only 0.5 per cent of some 140 million African people living without regular or reliable access to electricity have such lights.  The growth will be fueled by entrepreneurs using the latest technologies and designing products to suit consumers' tastes, the report says. But the market could grow even faster if distribution and financing were scaled up, it says.

Arthur Itotia, Lighting Africa programme manager, told SciDev.Net that the initiative does not just aim to light households but also to save people money and reduce the health risks associated with fuel lamps.  "By converting from kerosene to clean energy millions of consumers can improve their health, reduce their spending on expensive fuels and, ultimately, benefit from better illumination and more productive time in their homes, schools and businesses."  

The report also found that an average African household could spend US$225 less a year on kerosene by using solar lighting. Lighting Africa is helping to build the market for off-grid lighting across Sub-Saharan Africa by investing in consumer education, improving access to financing and looking at new ways to distribute the lighting.

Dana Rysankova, senior energy specialist in the Africa Energy Unit at the World Bank, said that Africa's high population growth and low levels of access to the grid mean that it will soon surpass Asia in the number of people without electricity.  The lessons learned from Africa, she said, are being used to give advice to other areas.  "For example, Lighting Africa advised another World Bank project in Haiti that was disseminating solar lanterns after the devastating earthquake there," said Rysankova.

But other experts warn that such noble ideas risk being overridden by market forces - especially if left solely in the hands of private sector players.  "Much as the idea is great and tenable, the implementers need to shape the market to allow poor households to buy the lights," said Simon Mugambi, an independent energy market consultant.

Dan Okoth All Africa 22nd December

Economics and Politics of Electricity- The Case of SA

Today, 25 African countries face an energy crisis and the World Bank has recently stated that only 26 per cent of the Sub-Saharan Africa population has access to electricity, in spite of various interventions by international agencies to address the continents' energy power crisis. In fact the number of African households without electricity access is projected to rise from 590 million in 2008 to 700 million in 2030, following the growing population in the continent against the background of inefficient power systems.

The irony is that the African continent is well endowed with energy resources but most remain untapped. To combat the energy crisis, many countries have had to contract expensive diesel-fuelled emergency generation plants – in some cases, the estimated annual costs are equivalent to more than one percentage point of growth domestic product (GDP). 


Some solutions to this problem include: boosting cross-border power trade, improving existing utility companies, improving access to electricity on a large scale, while helping countries chart low-carbon growth paths. A major portion of the challenges require massive infrastructure investments, however there are some opportunities for distribution and supply companies.  However for the private sector to participate, the economics and politics of electricity need to be understood- as shown in this piece on South Africa. 

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World Bank decision is crucial for South Africa's economic future

ENERGY FORECAST 2010

The World Bank’s decision, due on Thursday this week, whether to give Eskom a $3.75-billion loan - the bulk of which will be used to complete its 4 800MW Medupi coal-fired power station in Limpopo, with the balance to be invested in wind and concentrated solar power projects - could have a telling influence on the country’s economic development in the immediate years to come. If activist environmental groups have their way, disputed global long-term environmental benefits will get preference over domestic short- to medium-term economic necessity.

The background facts are that the present-day South African economy is two-thirds larger than it was a decade and a half ago on the back of substantially increased electricity needs, to which supply has not kept up. To achieve the growth rates going forward, which are required to ensure social stability, sustained job creation and poverty alleviation, increased generating capacity is needed urgently.

With the development of alternative renewable electricity still some years away from affordability and sustainability, coal seems to be South Africa’s only hope to keep the economy going during the bridging period until alternatives come on stream in any meaningful way. Fact is that for now, coal remains South Africa’s most abundant and affordable energy source.

The Medupi plant is a first of its kind which will be using the most efficient and lowest emission coal-fired technology available.

Minister of Finance Pravin Gordhan, in a recent article, wrote: “If there were any other way to meet our power needs as quickly or as affordably as our present circumstances demand, or on the required scale, we would prefer technologies that leave little or no carbon footprint. But we do not have that luxury if we are to meet our obligations to our people and to our broader region. South Africa generates more than 60% of electricity produced in sub-Saharan Africa.”

Activists still say “no”

To the environmental lobby groups, these arguments are not good enough. Staging a protest in front of the World Bank’s Pretoria offices 10 days ago, environmental watchdog Earthlife said the loan would be unhealthy for people in the vicinity of the proposed Medupi power station. It also would impact negatively on the country’s carbon footprint.

Earthlife organiser Makoma Lekalakala said that for environmental and social reasons, the World Bank must not grant the loan to Eskom.

“If the World Bank grants the loan, that means greenhouse [gas] emissions are going to increase and at the moment, South Africa is the highest greenhouse emitter in Africa. In that way, we will be doubling our emissions,” said Lekalakala.

Coal is not the future of generating energy in South Africa, which has abundant renewable power resources. Demonstrators also sarcastically awarded Eskom the Fossil Fool Award for even having considered the loan.

The narrow focus of activist groups, however, does not always achieve the most desired results in the long run. In the Untied States, today the world’s largest economy, still relies for more than 50% of its power needs on coal-generated electricity, with a massive negative impact on the global environment.

This picture, however, could have been dramatically different if it were not for the 'successes' of the activist lobby against nuclear power in the 1970s, which stunted the development to its full potential of that much 'cleaner' electricity option.

The fact that South Africa has plans in place to reduce the expansion of its carbon footprint over time and start reducing it before the middle of this century, again brings to the fore the question of why it should be expected now of developing countries effectively to pick up the tab of the past carbon overindulgence of the developed world.

Political complications

In the interim, Eskom’s loan application further is politically complicated by the involvement of the ANC as a player in the electricity sector.

Opposition leader Helen Zille of the Democratic Alliance (DA) has chosen the fact that the ANC’s investment arm has a 25% stake in Hitachi Power Africa - a main supplier to the Medupi power station - as a front to do political battle with the government.

She has written to the World Bank, asking whether a finding by the public protector, that former Eskom chairperson Vallie Moosa acted improperly in awarding a R38.5-billion Medupi contract to the Hitachi consortium, would influence the loan application.

Referring to calculations that the ANC is set to gain at least R1bn from the contract, she wrote in her weekly newsletter to supporters that “it is no exaggeration to say that if the loan is granted and the deal goes through, no opposition party may ever be in a postion to compete fairly with the ANC again. The ANC will entrench its single-party dominance and, in doing so, gravely weaken our democracy."

She also indicated that the DA would be meeting with the World Bank’s local chief Ruth Kagia and would lobby board members ahead of Thursday’s decision. She wanted Eskom to get the loan, but only on condition: that Chancellor House (the ANC’s investment arm) pulls out of the consortium which is building the power station.

Kenya to Migrate from Hydro to Geo Thermal Power

Business Daily Oct 22 2010

Kenya is making quick progress towards shift to more reliable geothermal power following the launch of a Sh152 billion ($1.9 billion) energy expansion project set to connect millions of consumers to the national grid.

The project funded by World Bank and other development agencies will see Kenya Electricity Generating Company (KenGen) boost its geothermal production capacity from 105 megawatts to 385 megawatts by 2013.

It will also provide 1.5 million more Kenyans with electricity in the next six years in urban, peri-urban and rural areas.

Drilling of the geothermal wells will be financed by Exim Bank of China to a tune of Sh7.6 billion ($ 95 million), KfW of Germany Sh1.2 billion ($15 million) and the Government of Kenya will provide Sh17.4 billion ( $217 million).“This is part of the drive to shift the power base from the weather-dependent hydro and expensive thermal sources to geothermal that is not affected by weather conditions,” said Energy Minister Kiraitu Murungi.

About Sh82 billion ($1.03 billion) has been set aside for power generation.

The project is also set to improve supply lines and reduce outages during transmission.

About Sh19.7 billion ($247 million) has been earmarked for construction of five new transmission lines between Eldoret and Kitale, Kisii and Awendo, Kindaruma to Garissa via Mwingi, Olkaria and Lessos and between Suswa and Isinya.

The project is expected to enhance Kenya Power and Lightning Company’s (KPLC) connection rate, enabling it to meet its annual target of 200,000 new connections.

“We will connect at least one million new consumers by 2012 and we expect to have raised our electricity access from the current 23 per cent to 50 per cent after the project is completed in 2016,” said Mr Murungi.

Mr Murungi said that the priority areas for electricity expansion will be the agricultural economic zones in a bid to mitigate losses incurred by farmers due to unavailability of power.

“We have identified the fishing industry, dairy, coffee and tea growing areas as the priority areas to allow for the establishment of cooling plants. This will enable farmers and fishermen time to bargain for better prices since they wont be forced to sell their products at low prices for fear that they will get spoilt,” said Mr Murungi.

World Bank country director, Mr Johannes Zutt said the bank has injected Sh26.4 billion ($330 million) as part the energy sector investment to increase geothermal power generation, enhance connectivity, and refurbish power plants to enhance efficiency.

“No country has ever achieved eight to 10 per cent growth annually needed normally to reduce poverty without modern energy,” said Mr Zutt.

See full article here.

Africa's Energy Infrastructure

Africa's 5 power pools are well illustrated in the 2010 Energy Atlas. The Energy Atlas also shows the current energy projects in the continent including the % of population with access to power. Despite various efforts to generate increased renewable and non renewable energy, Africa is the only continent estimated to generate less power than demand necessitates, in the next few decades.  

                                               Click to enlarge

Source: Africa Energy

Programme for Infrastructure Development in Africa (PIDA)

The Programme for Infrastructure Development in Africa (PIDA) was launched on 24 July 2010 in Kampala, Uganda, along the sidelines of the 15th African Union Heads of State and Government Summit.  PIDA is a continent-wide program to develop vision, policies, strategies and programs for the development of priority regional and continental infrastructure projects in transport, energy, trans-boundary water and the ICT sectors.

PIDA is a joint initiative of the African Union Commission (AUC), the New Partnership for Africa’s Development (NEPAD) Secretariat and the African Development Bank (AfDB) Group. PIDA's program scope is quite broad in coverage. It covers transport (air, sea, river and lake, lagoon, rail and road), energy (electricity, gas, petroleum products and renewable energy), ICT, and transboundary water resources (primarily irrigation, hydropower, and lake and rivers transport), and deals with the regional and continental aspects of these sectors. 

The motivation for this initiative is rooted in Africa's infrastructure deficiencies which continue to hamper the continents growth and economic development. Infrastructure deficiencies also lead to increased production and transaction costs which result in decreased competitiveness for businesses and thereby also hinder the implementation of social and economic development policies.  The 3 institutions further recognize that in Africa:

• There is access to electricity for only 30% of the population compared to rates ranging from 70 to 90% for other major geographical zones of the developing world (Asia, Central America and the Caribbean, Middle-East and Latin America)
• Transboundary water resources constitute approximately 80% of Africa’s freshwater resources. However, current levels of water withdrawal are low with 3.8% of water resources developed for water supply, irrigation and hydropower use, and with only about 18% of the irrigation potential being exploited.
• A telecommunications penetration rate of about 6% compared to an average of 40% for the other geographical zones, and a very low penetration rate for broadband services and fixed lines.
• A road access rate of 34% compared to 50% for the other geographical zones.
• The global competitiveness indices calculated by the World Economic Forum indicate that for Africa these indices are lower than those of other regions of the developing world and infrastructure appears to be the underlying factor that contributes most significantly to Africa's relatively low competitiveness.  In fact the 2009 Africa Competitiveness Report concluded that Infrastructure remains one of the top constraints to businesses in Africa.

Other issues to be addressed by PIDA will include: the need to fill information gaps on infrastructure deficits, causal analysis, development of prioritized strategic frameworks, establishment of infrastructure investment programs around RECs strategic priorities and improved implementation strategies for these programs.  All national aspects (including, without exception, physical infrastructure, national policies, institutional and regulatory frameworks, technical standards and benchmarks) will only be considered if they have an impact on, or could be affected by, the regional and continental aspects.

The PIDA initiative requires a total amount of USD 11,391,527, which includes the cost of an independent advisory panel of experts (supported by DFID), regional and sector consultative workshops (supported by NTCF and EU) and implementation of an infrastructure database (supported by the EU). The Sector Studies component alone requires a total amount of USD 7,552,343, with the ADF providing 25.6%; the African Water Facility (AWF) with 24.6%, the Islamic Development Bank (IsDB) with 23.3%, and the NEPAD-IPPF USD 2.0 million grant representing 26.5% of the cost.  

Sources can be accessed here.

Proposed West Africa Solar Power Commission

ECOWAS. Tapping into solar energy.  This is useful.

In a previous post we discussed the announcement by the EU Commissioner for Energy on the EU's plans to start importing solar power from Northern African countries; Algeria, Tunisia, and Morocco, through the the Desertec Industrial Initiative, launched in July 2009. 

Along similar lines, West Africa is also gearing up to develop solar resources given the abundance of sunshine and near possession of the largest desert in the world. In this regard, the Heads of State and Government of ECOWAS have endorsed an initiative by President Abdoulaye Wade of Senegal that will enable the region to harness its solar energy potentials through the construction of solar power plants that will provide cheap energy as a complementary source for meeting West Africa’s energy needs. 

The move reiterates a proposal at the Copenhagen World Summit on Climate Change for Africa to commit to solar energy not only because of its availability but also because it is a less expensive source of energy that would help improve the competitiveness of the continent’s industries.

As evidence of support for President Wade’s initiative, the regional leaders urged each Member State to attach technical and financial experts to President Wade ‘in view of establishing the Commission on solar power that shall operate under President's Wade's chairmanship and authority.

EU Plans to Import North African Solar Power

Bridges Trade BioRes • Volume 10 • Number 12 • 25th June 2010

Gunther Oettinger, Europe’s Energy Commissioner, has announced that the EU is expected to begin importing hundreds of megawatts of solar energy from North Africa within the next five years. The Commissioner’s comments came following a 20 June meeting with Algerian, Tunisian, and Moroccan ministers aimed at moving the renewable energy initiative forward. Importing energy from arid regions south of the Mediterranean has been proposed by Brussels as one of several strategies for helping the EU to meet its long-term goal of decarbonising its economy.

The EU currently aims to have 20 percent of its total energy requirements come from renewable sources by 2020. To help meet this goal the EU is looking to import solar energy to supplement domestic renewable energy initiatives. The solar energy captured in northern African nations would be transmitted to Europe via an inter-connector - a high voltage cable that will run under the Mediterranean Sea.

Launched in July 2009, the Desertec Industrial Initiative, which comprises 12 companies including Siemens, Deutsche Bank and REW, is in the process of developing a plan for solar power development in northern Africa. The consortium will seek public funding for its projects. The EU has stated that it will assist with updating regulations to allow transmission across European borders, coordinating stakeholders and conducting feasibility studies. The consortium has yet to produce a business plan for the proposed projects.

“I think some models starting in the next 5 years will bring some hundreds of megawatts to the European market,” Oettinger told Reuters on Sunday after the meeting. The long-term vision for the project is to provide thousands of megawatts to Europe in the next 20-40 years. The project will require a projected investment of about €400 billion and will aim to provide 15 percent of EU electricity demand. Subsidies from the EU will not be considered until the consortium produces a business plan for the project but are expected to go towards the construction of the interconnector.

Because the cost of transmitting energy from North Africa will be significant, officials must first determine whether the costs are offset by the amount of green energy the EU will actually receive. Even if solar power plants in the Sahara exhibit much higher performance, there could be a significant energy loss in the transmission to the EU.

The ministers from Algeria, Tunisia, and Morocco have agreed they are ready to start trade negotiations. In response to past concerns from Algerian officials regarding the EU’s exploitation of North African resources, Oettinger responded in a Reuters interview by saying, “maybe a bigger percentage of the electricity will be exported to Europe but at the same time we have to export the technology, tools, machines, experts, and so it’s a real partnership, not only a partnership by selling and by buying.”

There are concerns over how the EU will ensure that the energy transmitted is, in fact, green energy, not cheap and dirty fossil fuels. Oettinger says the problem of monitoring must be resolved in the next couple of years.

Kenya's Economy; Driven by Services With Merchandise Exports Declining

While telecommunications, construction and transport sectors continued to drive Kenya's economy in 2009, merchandise exports have shrunk over the years and the Port of Mombasa has been identified as one stumbling block to Kenya's continued economic growth.  

This is according to the 2010 Kenya Country Report by the World Bank which finds that Kenya's growth rate was 2.5% in 2009 with higher projections of 4.0% foreseen in 2010. Even tourist arrivals registered a 18.9 percent growth in the first quarter of this year showing positive signs for this sector. Nonetheless, for the third consecutive year, Kenya's growth will continue to lag behind its EAC neighbours, as shown below.  

     The Report finds that overall, services grew by 4.2% and increased share of GDP from 50 % in 2000 to 55% of GDP in 2009. Agriculture contracted by 2.4%,and the role of agriculture in the economy  declined from 32% in 2000 to 26% in 2009, due in part to drought. Meanwhile, industry grew at 3.9% in 2009 due to the construction sub sector. 

This mixed performance is in part structural and in addition, Kenya remains sensitive to climatic conditions.  For instance, the 2009 weak performance in manufacturing was caused by the spillover effects from the drought which caused higher electricity costs, power outages and reduced water supply. The drought had spill-over effects in all sectors and clearly increased efforts in key infrastructure services will be necessary, to sustain increased growth.

Kenya’s economy is currently more dependant on domestic consumption than exports, and Kenya’s highest value exports, especially horticulture and tourism remain heavily dependant on Europe. This high degree of export concentration makes Kenya vulnerable to external shocks and points to the need to further diversify export markets. 

Surprisingly, Kenya has an export strategy, which was approved by Cabinet in 2004.  See previous post here on the weaknesses of export-led strategies. 

While exports of goods have been unimpressive, services exports increased from 8% in 2000 to 12% of GDP in 2009.  The strength of the domestic sector and the weakness in exports has created a large and growing current account deficit which reached 5.5% of GDP by end 2009. This current account deficit was financed mainly by increasing short term financial inflows including investment. 

                              One lesson learnt- so to speak- is that Kenya has not yet developed a targeted and strategic industrial policy. This is despite having several national policy documents such as the Vision 2030, the Private Sector Development Strategy, the Master Plan for Kenya’s Industrial Development, and the recently drafted National Trade Policy. 

Trading the Nile River Rights

Following a decade of negotiations under the auspice of the Nile Basin Initiative, the Nile Basin States have opened an Agreement termed the Nile River Basin Cooperative Framework Agreement, for a period of one year. The Agreement is a landmark achievement given the decades of discontent over the inequitable sharing of the Nile River and will be open for signature until 13th May 2011. The organs consists of the Commission which is comprised of: (a) Conference of Heads of State and Government (b) Council of Ministers (c) Technical Advisory Committee (d) Sectoral Advisory Committees (e) Secretariat according to Article 17 of the Nile River Basin Cooperative Framework Agreement.

The River Nile is the longest river in the world with three main tributaries which reach ten African countries.  However the resource has been almost exclusively utilized by Egypt and Sudan by virtue of a 80 year old governing legal framework on the utilization of the waters.  The May 7, 1929 agreement between the United Kingdom (on behalf of its colonies) and Egypt, was in the form of exchange notes and the colonial-era “treaty” gave Egypt sole property rights to the Nile's waters, up until 1959 when Sudan formalized a partial-sharing agreement with Egypt.  Meanwhile the sources of the 6695 km Nile river consist of the White Nile which flows from Uganda (Lake Victoria) into Sudan, and Egypt, and the Blue Nile which starts in Ethiopia (Lake Tana) with tributaries in DRC, Kenya, Tanzania, Rwanda, Eritrea and Burundi, which flow into the Nile or into Lake Victoria.

Recently, a framework agreement has been agreed upon by Ethiopia, Tanzania, Rwanda, Uganda and Kenya who seek to alter the rivers’ water-sharing arrangements, with Burundi and the DRC promising to sign the landmark agreement in the course of the year. The upstream countries want to be able to implement irrigation and hydropower projects in consultation with Egypt and Sudan, but without Egypt being able to exercise the veto power it was given by the 1929 colonial-era treaty with Britain.  Meanwhile Egypt has reportedly rejected the agreement along with Sudan, however with the new Southern Sudan Government, its not clear how this matter will be handled by the latter.

I suppose the key issues in the newly concluded agreement are those of equity and sustainability. Consider for instance the riparian state of Ethiopia whose Blue Nile tributaries, highlands and lakes are estimated to supply about 86 percent of the total waters of the Nile River, however the country currently only uses about one percent of the Nile’s resources.  Ethiopia unlike most Sub Saharan African countries was not colonized and reportedly does not recognize the 1929 Nile River agreement between the UK and Egypt. Simultaneously the country is faced with grave development needs and challenges, and according to the World Bank 2008, Ethiopia has a real per capita GDP of US$280 (which is below the Sub Saharan Africa average) and a population of about 81 million making her the second-most populous country in sub-Saharan Africa. 

One could say that Ethiopia should view the Nile the same way other sovereign nations view their oil resources or mineral wealth; as a valuable source of foreign currency, development and national pride.  Along these lines, Ethiopia sees a huge potential in the export of electricity and is reportedly constructing a network of mega dams on the web of Nile rivers that tumble down from its highland such as the controversial 243 metres high Gibe III Dam (shown above) at a cost of 1.4 billion euros, which will be the highest dam on the African continent.  This is expected to meet the needs of the rural areas, where the bulk of the 80 million Ethiopians live and where only 2% of households get access to electricity.  Beyond hydroelectric power, agriculture and irrigation are other critical issues also relevant to the utilization of the Nile waters.

This is a complex and historic issue with many facets hence more can be said however, that would the subject of a thesis and not suitable for a blog.  To conclude, let me welcome this new Nile Cooperative Framework Agreement which is expected to formalize the transformation of the Nile Basin Initiative (NBI) into a permanent Nile River Basin Commission and facilitate its legal recognition in the member countries as well as regional and international organizations. 

NBI was formed in 1999 by its Members, who recognized their common concerns and interests, and whose vision is “to achieve sustainable socio-economic development through the equitable utilization of, and benefit from, the common Nile Basin water resources.” 

For a captivating analysis on this issue click here

Unraveling Africa’s Insufficient Power with the Continents Abundant Energy Resources

Ironically, Sub-Saharan Africa (SSA) is richly endowed with both renewable and exhaustible energy resources yet the continent suffers from power shortages.  The fact is the continent’s energy resources tend to be concentrated in a handful of countries where physical and political barriers to trade make it difficult for countries to access centers of power supply and their economies are too small for  them to develop their own resources. For example, the Democratic Republic of Congo (DRC) alone accounts for about 40 percent of sub-Saharan Africa’s hydroelectric potential, although sources indicate that the Congo River has the potential to power a continent. Additionally, Ethiopia accounts for another 20 percent of the continents potential. However both countries are relatively far from the economic centers in southern, western, and northern Africa, and the multi-billion-dollar investments needed to exploit hydro potential are massive.  In addition, national economic and political considerations in the Africa for Africa models seemingly cannot be set in stone. 

For instance the multi-billion dollar Inga 3, the largest hydroelectric project in Africa, which would have been developed in the Congo River by the Western Power Corridor (Westcor) consortium consisting of Namibia, Angola, Botswana, South Africa and the DRC, was supposed to start generating electricity in DRC by 2012 for the participating countries. However the project is reported to have backfired when the DRC's National Electricity Society (SNEL), announced that Westcor would be dissolved.  Instead, the DRC government has opted for a proposal by BHP Billiton, the world's biggest mining company, to build a 2 500-megawatt hydropower plant in the country to support its proposed aluminum smelter.  The DRC government also expressed the view that it would be good for the DRC to retain more electricity for its own use. 

Currently, only 6% of DRC’s population has access to electricity and some NGOs have advocated that if projects are developed, the first priority should be to increase the rate of access to electricity to 60% of DRC’s population. Without such a national benefit from the development, some fear it would cause new civil unrest. They argue that lighting the rest of Africa while leaving most of DRC in the dark would be politically and morally unacceptable.

While national interests are important, the development of regional power pools in Africa is crucial to the development of abundant power resources.  Currently regional power pools have been formed in Central (CAPP), East  Africa (EAPP), Southern (SAPP), and West (WAPP) Africa and the pools are at very different stages of development, both technically and institutionally. For instance, the political process is most advanced in the WAPP, supported by political agreements at the head of state level through the ECOWAS. The pools, particularly the WAPP and SAPP, have facilitated significant cross-border exchanges of power and a number of countries, such as Botswana and Niger, rely on imported power while others, such as Nigeria and Mozambique, are major exporters of power. However, none of the pools are yet at the point where the arrangements are fully competitive.

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