AOP 2017: Power, Policy and Investment Highlights
Following the discussion of power prospects from the Power Projects Panel, the Power Policy Panel at Africa Oil & Power 2017 followed-up the conversation with the best ways to attract investment, and how power policy can best be drafted to encourage growth in the sector, be it from independent power producers or from the government utilities, and throughout the entire power value chain.
The experts on the panel — Igor Hulák, Partner of EMEA at A.T. Kearney; Ashwin West, Investment Principal of African Infrastructure Investment Managers; Dave Wright, Secretary General of the South African National Energy Association; and Dr. Sydney Zikuzo Gata, Managing Partner of EMC Continental; and moderator Kwame Jantuah, CEO of the African Energy Consortium — began by addressing the underlying forces, such as rapid population growth, urbanization and the continent’s need for industrialization.
“There are no silver bullets or quick fixes to Africa’s power shortages. Successful countries have deployed an ‘all-of-the-above’ approach that depends on multiple sources of energy. The need for short-term power supply solutions are clear, even as countries and regions formulate long-term strategies to provide power and connect grids,” said Jantuah in opening the panel.
Important for all governments, whether trying to attract IPPs or attract funding for government-owned projects, will be transparency, the panel argued. Additionally, transparency needs to be paired with balanced and clear regulations, as often a challenge in the development of Africa’s power sector is a lack of coordination within governments and within regional power pools.
Financers, such as the World Bank, also have a role to play in helping to create a sustainable power sector, by encouraging reginal power pools to work together and providing funding for regional projects.
Having a well-structured tariff system is one of the most important factors of a successful power industry. All too often, African power producers are forced to operate at a loss, because the population cannot afford power without significant subsidies. When the tariff system fails or government guarantees cannot be provided, independent power producers are not keen to invest.
Though the power sector does present challenges, the future of Africa’s power scenario is bright, so long as governments can align regulations and pricing policies with international standards for transparency, and regional cooperation can be achieved.