Africa Requires $4.3bn Annual Investment in Power Sector
A new World Bank report has called for increased private sector investment in Africa’s underdeveloped electricity transmission infrastructure, as a vital ingredient for reaching Africa’s energy goals. The report observed that the continent requires some $3.2billion to $4.3billion to be invested annually between now and 2040 if it is to bridge its power gap.
The report warned that Africa lags the rest of the world in terms of electricity, with just 35 per cent of the population having access to power. “Those who do have power typically consume relatively little, face frequent outages and pay high prices,” the report noted.
The World Bank explained that transmission infrastructure is the crucial part of the chain. “Alongside generation and distribution, improving and increasing transmission infrastructure is key to closing the access gap.” So far, it noted that “transmission in Africa has been financed from public sources and new models of financing involving the private sector have received insufficient attention from policymakers or financiers.”
The report – Linking up: Public-Private Partnerships in Power Transmission in Africa– examined private sector-led investments in transmission globally and how this approach is applicable in Sub Saharan Africa, adding that the private sector has participated successfully in transmission networks in many countries in Latin America and Asia, and this approach could be replicated. “Private finance has supported the expansion of electricity transmission infrastructure in many regions of the world and the same can happen in Africa. To attract private sector investment however, governments need to adopt policies supportive of this strategy and establish the right business, regulatory and legal environment to sustain investor interest,” comments Riccardo Puliti, senior director and head of energy and extractives industries at the World Bank. The study provides a set of recommendations for countries to adapt to specific local conditions and lists ten steps to get there, including the right legal and regulatory framework, new models for concessional lending, competitive tender processes, adequate revenue flow and credit enhancement for projects, or tailored IPT projects to attract international investors, to name a few.