AfDB pushing for improvement of power sector regulatory environment in Africa

AfDB pushing for improvement of power sector regulatory environment in Africa Power transmission lines in Kenya (source: flickr/ aaron.knox, creative commons)
Alexander Richter 10 Mar 2017

The African Development Bank is pushing forward on discussions regarding improvements on the regulatory environment to attract investment to energy development in Africa to help fuel an ever increasing power demand.

Officials of the African Development Bank Group (AfDB) and the African Forum for Utility Regulators (AFUR) held discussions with some 50 power regulators from across Africa during the 13th Annual AFUR and Annual General Assembly (AGA) Conference, which took place from February 27 to March 2, 2017 in Abidjan. The meetings focused on the regulatory environment required for the development of power infrastructure, the improvement of quality service and supply, and the promotion of access to energy in Africa.

The meetings were timely as global investors are showing strong interest in burgeoning African power sector, but with very small investments being realized due to transparency and regulatory environment issues.

Power regulation is a key flagship of AfDB’s New Deal on Energy for Africa. According to Wale Shonibare, AfDB’s Director of Energy Solutions, Policy and Regulation, Africa’s energy potential is enormous. He added that Africa has vast solar potential (10 TW), abundant hydro resources (350 GW), wind (110 GW) and geothermal energy sources (15 GW). “Africa currently holds more than 8 percent of the world’s proven oil and gas reserves. However, lighting and powering the continent has been a challenge,” he added.

“AfDB has, for instance, supported initiatives in Angola –update of cost reflective power tariff; Tanzania – reinforcement of regulatory capacity; and Egypt – establishment of a legal framework for the liberalization and regulation of the gas sector,” Shonibare said.

He said that AFUR is a valuable partner of the New Deal, and there is need to focus on setting up appropriate tariffs and regulations as well as on increasing the efficiency of the national electricity companies.

For his part, Moctar Touré, Director General of Mali’s Commission de Régulation de l’Electricité et de l’Eau (CREE) and AFUR Chairperson, said, “AFUR has key role to play in coordination of support to regulatory agencies and has requested financial support to public service regulatory agencies.”

AfDB and the New Deal on Energy for Africa

Africa constitutes only about 16 percent of the global population, but 53 percent of the global population is without access to electricity. Per capita consumption of energy in Sub-Saharan Africa (excluding South Africa) is 180 kWh, compared to 13,000 kWh in the United States and 6,500 kWh in Europe. Over 700 million Africans do not have access to clean cooking energy, and 600,000 African women and children die annually due to indoor air pollution arising from use of carbon-based fuels (e.g. charcoal) for cooking. This situation has to change if Africa is to realize the SDGs.

The African Development Bank is implementing the New Deal on Energy for Africa, to Light up and power Africa, with the aspirational objective of achieving universal access to energy by 2025. The Bank will invest US $12 billion in the power sector over the next five years and aims to leverage US $45-50 billion from the private sector. Recent developments in the off-grid sector are promising, but an effective and relevant regulatory environment is needed to coordinate the rollout of decentralized solutions and grid expansion.

Source: AfDB