African power market a 'new frontier'

Africa's power market is a “new frontier” to be exploited and unlocked, and can generate enormous growth for the continent once it begins to attract investment, a high-level speaker told the Pan African Power Congress yesterday.

Well-known South African businessman and former politician Cyril Ramaphosa pointed out that there has been renewed focus on Africa's developmental needs since the establishment of the New Partnership for Africa's Development (Nepad), which has placed much weight on the importance of improving the continent's struggling electricity sector.

Nepad's infrastructure priorities are important pillars that need to be set in place to develop countries on the continent, Ramaphosa argued, saying that energy generation is critical in terms of economic growth, and developing competitive enterprises.

The African power sector is characterised by institutional and legal framework problems, as most of the continent's electricity sectors are dominated by vertically-integrated State utility companies that have a monopoly of electricity businesses and are regulators of the industry.

But Ramaphosa expressed optimism about the future of this sector, saying that a new spirit is prevalent in Africa, with a new generation of leaders who are prepared to work for the upliftment of the continent's citizenry.

“The private sector is also looking at Africa anew, as many have realised that there is money to be made in Africa,” Ramaphosa commented, adding that many African countries have realised that growth is possible through peace and stability - a climate that is conducive to attracting investment.

Nepad, he stated, has set out clear energy objectives which require much support. These include an increase in reliable electricity supply of 10% to 25% over the next ten years, as well as economic growth of 6% a year across the continent, which can be achieved through increased access to electricity.

While Africa should develop and exploit its abundant energy resources, such as hydropower and oil, and establish transmission grids for cross-border electricity flows, these initiatives would require major investment and funding for infrastructure.

“Most African countries cannot afford this and need the help of the private sector,” Ramaphosa stated.

Thus he called on the public sector on the continent to look more closely at public-private partnership models for the development of infrastructure.

He added that most African power utilities are unable to keep up with electricity demand and often struggle to survive – a fact that highlights Nepad's call for electricity interconnection across sub-regions.

A need exists, he suggested, for the removal of all international barriers for power generation, with regional structures that would give rise to power pools, independent power distributors and private investment.

“If this could be achieved on a regional level first, it would lead to enormous economic development in Africa, which would be a great attraction for investors,” Ramaphosa said.