Private-sector players have called on African governments to be reliable and predictable in their energy policies and programmes.
“Investors want to know that the rules won’t change in the middle of a project,” Power Africa coordinator Andrew Herscowitz told delegates at the recent Africa Utility Week event.
He said the main objective was to take an energy deal to its conclusion. Many projects were abandoned before they reached the end point.
Some countries had notched up a good reputation. “Everyone wants to invest in Kenya even though the market is saturated. That’s because it’s predictable. You can get the deal across the finish line. Nothing is perfect, but you just need to get things done.”
Power Africa is a five-year Presidential initiative that was launched by former US President Barack Obama during his visit to Africa in July 2013. It has 50 advisers working with power companies on 400 power generation projects across Africa. It aims to add 60-million new home and business connections and over 30 000 MW of cleaner electricity generation capacity.
Despite challenges, Herscowitz said, the project had made great strides since starting four years ago.
James Stewart, the global head of Major Projects (Power and Utilities) for KPMG UK, said deals needed to be “de-complicated”.
“We’ve got risk mitigation measures available to governments and agencies. We need to use these and get deals done quicker. Once you get a deal done, you start to build a record, and then the next one is easier.”
Stewart was speaking during a plenary at African Utility Week, in Cape Town, which was partly looking at some of the key trends impacting on project finance in regional energy markets.
He said that there was some reluctance on the part of governments to take a little more risk in the early stages of deals.
Panellists expressed concerns about the “skyrocketing” costs of development as a percentage of construction.
GE Energy Connections sub-Saharan Africa CEO Lazarus Angbazo said progress in energy on the African continent was pivo- tal.
“If there is no power, there is no future, not for the country or the leadership either. Most elections in Africa are a referendum over the ability to access power.”
He said access to electricity was still a huge problem on the continent, with 600-million people still without access. The reliability of power was also not assured, with 22% to 25% [fed] into the grid not reaching the consumer.
He also called for “investible” projects.
“The money is not going to come here until we have projects that are fully developed.”