Africa: The priority is to ensure access to energy

Africa: The priority is to ensure access to energy

Giuseppe Didonna
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In order to make investments in the continent more attractive it is necessary to focus on demand, which currently accounts for just 4% of global demand

The last day of events at the World Energy Congress drew attention to the African continent, where just under 70% of the population still has no access to energy and 80% of which live far from urban centers. The possibility of accelerating the financial transition, and attracting investments, were the issues at the focus of the discussion, since they are key factors for developing sustainable infrastructure, in an area that can rely on an unlimited clean energy potential. The success of this latest step largely depends on a system of guarantees that lowers investment risk, especially for private individuals; the integration of the private investment sector into the public sector, or that deriving from development banks, is important in this sense.

African demand

Demand is fueled by helping #Africa to improve its condition @StandardBankZA

“Focus on Demand‘. This seems to be the prescription given by the WEC, which emphasizes that investments in the country’s energy sector cannot be considered appealing when African demand accounts for just 4% of the global demand. Only a month ago, USAID announced that $1 billion from private investors had been allocated to fund an infrastructure network called ”Power Africa’, a 10,000 MW production program, from which 20 million new customers would benefit, i.e. people who currently have no access to energy. A few days before the start of the congress, the government of Tanzania announced an aid package of $1.6 billion from the World Bank, to eliminate the energy insufficiency problem.

Mustapha Baba Shehuri, Nigeria’s Minister of Power, Works and Housing, after having recalled the democratic explosion of the continent, the population of which has increased, in 10 years, from 900 million to 1.2 billion inhabitants, reiterated the need to focus precisely on consumers.

“Making energy accessible to them, creating jobs with infrastructure, improving living conditions in general, can only be attractive to investors‘.

Shifting the attention instead to Sub-Saharan Africa’s dramatic energy scenario was Suleiman Jasir Al-Herbish, Director General of OFID, according to whom, under current conditions, the regional markets are unable to ensure an improvement in the situation, which can only be carried out by working on a global level. Al-Herbish hopes for the creation of a global database, from which all producers, investors and importers can draw information deemed necessary.

Mansoor Hamayun, co-founder and CEO of Bboxx, did not mince his words. He said ''the time has come to give electricity to Africa''. Again, the hope is that subsidies, political choices and exemptions encourage savings and support the construction of infrastructure links, with positive effects. Regarding the living conditions of the potential users of the service, he said: ''If the standard of living improves, demand will rise''. Once again coming under the spotlight is cooperation between public and private investments, since it is unthinkable that a continent such as Africa does not focus on renewables, more so after the investment boom that in 2015 involved $348 billion, half of which came from governments of developing countries.

Making energy to become accessible, creating jobs with infrastructure, improving living conditions in general, can only be attractive to investors

Governance

The Congress has proposed an energy mix that can reach the rural areas of the continent and lower the risk resulting from the uncertainty of wind and solar production. Bruno Bensasson, Executive Head of the Africa Business Unit of Engie, declared: ''Good governance reduces the need for capital'', sending out a message to the representatives of the African governments present in Istanbul, invited to establish a system of rules encouraging dialogue between the public and private sectors. David Humphrey, Head of the Department of Energy and Infrastructure at Standard Bank, identified storage systems as the core of the problem. According to Humphrey, the implementation of the latter allows more long-term issues to be addressed. Humphrey pointed out that the oil crisis has affected the financial capacity of many African governments and has blocked investments. ''Demand is fueled by helping Africa to improve its situation''. Another session focused on the continent’s untapped potential, that is, on the possibilities of focusing on the resources already present in African territory. It starts with the certainty of the huge potential, both in terms of hydrocarbons and renewables, but an unfair distribution of resources is encountered there, along with the situation of underdevelopment in which the reserves are often located. Bonang Mohale, General Manager of Shell Commercial South Africa and Vice President for Africa at the World Energy Council, presented the results of a report commissioned to McKinsey, according to which, it was the Arab spring and the collapse in oil prices that blocked investments in the energy sector, which would have allowed a better interconnection between different areas of the continent. Andrew N. Kamau, Secretary of Petroleum Kenya, outlined the plan devised with the government. ''In 2030, everyone will have electricity because they need it''. From 1912 to 2012, 2.2 million Kenyan consumers obtained access to energy and 2.6 million obtained access between 2012 and 2016. To achieve this, the Kenyan government exploited volcanic activity and geothermal energy sources in the country. A leap forward in the use of renewables which are ''much cheaper than gas, which we do not have''. The Union of African States has drawn up a plan that provides for the implementation of 15 projects, including nine hydropower stations, a gas pipeline, an oil pipeline and infrastructure links, some of which could become operational in a few months. The aim is to interconnect rural areas to production and distribution centers, attracting capital through the development of new technologies. Thomas Duveau, Head of Business Development at Mobisol, approves the model of infrastructure links. However, particularly in the short term, he proposes solutions based on decentralization. ''Rural areas have no access to electricity, but we can use solar panels sufficient to meet family needs. It is a solution that works and has circulated widely''.