World Peace News: Top Stories

Rationing looms in Africa energy crisis
by Tom Pfeiffer

Reuters Translate This Article
8 July 2007

MARRAKESH, Morocco (Reuters) - Sub-Saharan Africa must urgently impose power rationing on companies and populations to limit the effects of a worsening energy crisis, industry and government experts said.

Decades of underinvestment in electricity networks and growing populations mean the poorest 20 percent in the region has no access to electricity.

Even in wealthier African countries such as Nigeria, reliability of supply is often so poor that all large businesses need their own generators. Widespread and damaging blackouts in southern Africa are testing the patience of citizens and dragging down economic growth.

Industry and government experts at a two-day energy conference in Marrakesh said it was urgent to boost maintainance of ageing power stations and transmission lines and add new ones to satisfy growing demand.

More cross-border connections could ferry electricity from countries with surplus energy to those with a deficit.

Delegates drew an alarming picture for parts of the continent where economic mismanagement meant that urgently needed energy investment have little prospect of arriving.

'There is no accumulation of wealth,' said Paris-based economic science professor Jean-Marie Chevalier. 'Predators take money and put it in Swiss bank accounts. There is a lack of productive investment.'

Studies showed peak power demand in sub-Saharan Africa is forecast to exceed capacity from this year, meaning that even if power networks worked at 100 percent, cuts are inevitable at peak times.

Delegates called for power rationing by armies, police forces, ministries and other public services, which in some countries account for almost a third of national consumption.

Old generation units must be brought back online and emergency capacity installed, although even that was proving hard to achieve in countries such as Kenya, which has faced repeated delays to a tender for 30-40 MW of emergency power.

'It's dragged on year as the process wasn't very transparent or professional,' said Philippe Durand, lead infrastructure and public-private manager at the African Development Bank. 'There were complaints by companies that made offers.'

STABILITY, SECURITY

Some $40 billion of infrastructure investment is needed in sub-Saharan Africa, of which $8 billion for electricity, delegates said. Total infrastructure spending since 1985 is around $12 billion.

Governments are heavily in debt and under pressure from the IMF to pare back public spending before being allowed to borrow more, leaving private finance as the only option.

But the political climate in much of the region and a poor track record for completing major public works creates unacceptable risks for companies, which charge premiums for power projects that governments can simply not afford.

The most striking example of the continent's problem is Grand Inga, a long-mooted project to expand a hydroelectric complex and draw 39,000 MW of power from the fast-flowing waters of the Congo river and export the energy across the region.

It would be the world's biggest hydro-electric installation and nearly as large as the generating capacity of South Africa, whose main power utility Eskom is the driving force behind the plan.

But despite the recent election of Democratic Republic of Congo leader Joseph Kabila after years of civil war, investors are not flooding in.

'No one will lend them money—It would be madness,' Henri Boye, head of Middle East and Africa at French utility EDF said.

'At Inga 20 years ago we installed 1,500 MW of capacity but the maintenance is detestable. There is no money and they are doing nothing.'

With investment risks high, international lenders say the cost of capital in sub-Saharan Africa is between 15 and 20 percent, compared to about 5-6 percent for a healthier developing economy like Chile.

Lack of electricity means a 2-4 percent cut in countries' GDP, according to the World Bank, and rising oil prices risk putting affordable energy further out of the reach of the poor.

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