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Energizing Africa

ELHAM MAHMOUD AHMED IBRAHIM
Commissioner for Infrastructure and Energy, African Union Commission

Energy is at the heart of development, and, providing it, is a prerequisite for reaching the Millennium Development Goals. Indeed, meeting energy needs is one of the main challenges of the 21st century.

We Africans, supported by the whole world, must work hard to realise the goals of the United Nations' Sustainable Energy for All Initiative – to achieve by 2030 universal access to modern energy services, doubling the global rate of improvement in energy efficiency, and doubling the share of renewable energy in the global energy mix. Indeed, the universal access objective must be addressed as an utmost priority by the international community.

Worldwide 28 per cent of people in developing countries lack access to electricity. In Sub-Saharan Africa the proportion is about 70 per cent. Only nine African countries have access rates of over 50 per cent.

Africa is well endowed with energy resources. These include crude oil, natural gas, coal, nuclear, tar sand, hydro-electricity, geothermal, biomass, solar, wind and other renewable energy. But their exploitation is very limited. This, in turn, constrains the socio-economic development of the continent.

The African Energy Vision and Objectives, articulated by the African Union since 2000, aims to develop an efficient, reliable, cost effective and environmentally friendly infrastructure for the continent's physical integration, and to enhance access to modern energy services for the majority of the African population.

Its main objectives and policy initiatives are, among others, to: ensure energy security for economic and social development; achieve energy integration by increasing regional and continental energy trade; lower the cost of energy to improve access to basic energy services for Africa's population; create a welcoming climate for direct investment; and reduce greenhouse gas emissions and address climate change issues.

Despite a variety of initiatives on the ground, regional investments in energy in Africa have not performed well in terms of attracting resources or supporting regional integration. The discrepancy between the economic attractiveness of regional projects, on the one hand, and their modest performance in mobilizing, financing and developing a regional market, on the other, is the main challenge that needs to be addressed by suitably empowered African continental and regional institutions. Innovative approaches for structuring regional investments in a commercially viable manner are now required.

The 12th Assembly of Heads of State and Government requested the African Union Commission formulate the Programme for Infrastructure Development in Africa (PIDA) to address these challenges both for energy and for all infrastructure. Launched in 2010, PIDA provides new analysis and insights to bring existing or previous continental infrastructure initiatives together, under one coherent programme. It fills in gaps and - based on previous lessons - affords proper weight to the value of local ownership, the necessity of both hard and soft interventions, and the need for diverse financing. Its programme was adopted by the African Union Summit in January 2012. This is now being implemented.

The programme yielded a macro outlook for infrastructure demand in energy, transport and trans-boundary water up to 2040 and information and communications technology up to 2020. It is organized for the short and medium term - 2020 and 2030 - with a long-term view to meet demand to 2040. Given Africa's urgent infrastructure needs, PIDA also has a Priority Action Plan (PAP) for projects and programmes to be implemented in the short term. This details the immediate way forward by presenting actionable projects and programmes that promote sound regional integration between 2012 and 2020. Its 51 projects include 15 in the energy sector

The capital cost of PIDA's long-term implemen tation through 2040 is currently estimated at $360 billion. The overall capital cost of delivering the PAP from 2012 through 2020 is expected to be nearly $68 billion (or about $7.5 billion annually) of which $40.3 billion is designated for energy projects.

All the PAP's projects and programmes include accompanying soft measures to unlock the necessary investment requirements. The capital investment required for 2020 is far below 1 per cent of African GDP. And some of the actions carry almost no financial cost but require political will, and willingness to act.

Under business-as-usual scenarios, funding sources for infrastructure for the PAP could optimistically amount to about $30 billion by 2020. But $68 billion is needed. Countries will have to mobilize their own public and private domestic resources, attract foreign private investments, and ensure a competitive market based on clear legislation and regulations. And, as well as bringing in more private sector funds, African countries must embrace new and innovative sources of financing such as infrastructure bonds, loan guarantees, and community levies. The African Union Commission is mandated to strengthen regional and continental cooperation for sustainable development and the efficient use of energy resource. Its programmes to facilitate energy access and energy security for Africans includes:

  • The Africa-EU Energy Partnership. This aims to bring access to modern and sustainable energy services to at least an additional 100 million Africans by 2020, within the renewable energy cooperation programme.
  • The Hydropower 2020 initiative, which promotes the development and exploitation of the hydropower potential of the major rivers basins in Africa.
  • The Regional Geothermal programme, which aims to accelerate the development of the huge geothermal resources in the East African Rift System countries. So far a 50 million euro Risk Mitigation Facility has been established in cooperation with the German Government and the EU Infrastructure Trust Fund, to support the geothermal projects' developers in the drilling processes.

Accelerating progress towards sustainable poverty reduction and energy access improvement also requires addressing such adverse environmental impacts land degradation, deforestation, desertification and global warming at the same time. Although Africa's greenhouse gas emissions are the lowest in the world, strategies for energy poverty reduction should be environmentally friendly because Africa is extremely vulnerable to climate change. The continent should also have a fair share of climate finance.

Africa is open, welcoming cooperation and investment on a win-win basis with all interested partners.