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Africa needs Sh36 trillion to connect homes to power grid

By Fox Benjamin | January 25th 2015

Sub-Saharan African countries need to work together to meet their growing energy needs, the UN’s energy chief explained, as he launched an expert group tasked with driving investment projects.

The Africa energy leaders project, is the brainchild of Kandeh Kolleh Yumkella, the UN special representative for sustainable energy, and is aimed at building public/private partnerships to drive energy infrastructure projects, encourage renewable technologies and meeting the continent’s target of universal access to electricity by 2030.

Around 620 million people live without electricity across the continent, while 800,000 premature deaths per year are due to household air pollution.

Speaking on Friday (January 23) at the World Economic Forum in Davos, Switzerland, Yumkella said that the advocacy group would help increase energy availability and access. “There are millions of Africans who see that energy is available but they have no access. It is not possible for individual African countries to have energy security from their own resources...we have to have regional co-operation,” he added.

Despite surging economic growth and rapidly increasing demand for electricity, nearly $400 billion (Sh36.4 trillion) of investment will be needed to achieve universal access to electricity across Africa by 2030, according to the World Energy Outlook.

Being led by Daniel Duncan, the prime minister of Cote d’Ivoire, and Nigerian entrepreneur Tony Elemulu, the group will initially focus on projects in West Africa. However, Yumkella has signalled that he is anxious to bring East African leaders on board as quickly as possible.

“We have spoken to leaders in East Africa as well,” said Yumkella, pointing out that “Tanzania and Mozambique have as much natural gas as Kuwait but they are making plans to ship the LNG to Asia.” “Water brings life but energy drives growth and prosperity”, Duncan told delegates at a debate earlier in the day.

The entire installed generation capacity across Sub-Saharan Africa’s 48 countries totals 68 gigawatts, equal to Spain. Meanwhile, more than 30 African countries regularly experience power shortages and regular interruptions in service, leading many to rely on very costly leased generating plants as an emergency stopgap.

“Every single African country is experiencing energy shortages and power outages...costing the continent 2 percent of GDP,” said Donald Kuberuka, President of the Africa Development bank, and other member of the group. “We are a continent of miracles...we are growing by 5 percent a year without having enough electricity,” he added, “think of what we could do if we had electricity for all”.

Each advocacy group will be composed of a handful of politicians, captains of industry who are investors in the power sector and bankers.

The World Bank expects the region’s oil prospecting countries to be among the main beneficiaries of the recent slump in oil prices for the next two to three years, although a prolonged price slump will make it harder for Kenya to attract investment to exploit its newly-found oil reserves.

Market analysts have suggested that sub-Saharan African governments could utilise their foreign currency reserves to drive investment in energy infrastructure and offer incentives to foreign investors to fund projects.

According to the International Energy Agency more than 30 percent of new oil and gas discoveries made in the past five years were in Africa, including Kenya and Tanzania. Elemulu called on governments to be “more supportive” of the energy sector, urging them to consider giving energy investors incentives such as tax holidays.

For his part, Kuberuka said that governments could use the low oil prices as an opportunity to reform their subsidies for utility firms. “It is the time to reform the subsidies everywhere...that would be the way to ensure that public utilities are sustainable,” he commented.

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