Africa’s energy infrastructure is vastly inadequate

In Africa’s Power Infrastructure: Investment, Integration, Efficiency, the facts have been stated bluntly and honestly: Africa’s energy infrastructure is vastly inadequate compared to its requirements.

Anton Eberhard

The book is based on extensive data collected between 2006 and 2008 by the Africa Country Infrastructure Diagnostic.

Commenting on the data, lead author Anton Eberhard, director of the Management Programme in Infrastructure Reform and Regulation at the Graduate School of Business, said that “Africa’s inadequate generation capacity, and inadequate and unreliable transmission and distribution networks, constrain economic growth – drastically limiting the social benefits of electricity use.”

The research undertaken by Eberhard and co-authors Orvika Rosnes, Maria Shkaratan and Haakon Vennemo shows that the total investment requirement for the power sector in sub-Saharan Africa over a 10-year period is an estimated $40.8 billion a year. About half of the investment cost is for development of new generation capacity.

Current spending aimed at addressing power infrastructure needs is an estimated $11.6bn, leaving a funding gap of $29.2bn.

Eberhard suggests that, “The gap is so significant that it requires the ideological debate of public versus private be set aside and that all mechanisms and resources to reduce the gap be mobilised.”

The book outlines six primary areas that require focus in order for Africa to make headway in correcting its energy and power deficiencies.

Firstly, current under-pricing must be corrected and subsidies more effectively targeted. Secondly, new electrification strategies need to be more nimble
and smarter.

Thirdly, inefficiencies within the current delivery mechanisms – dominated by state-owned utilities – need to be substantially reduced through
governance reforms.

Fourthly, sector reforms must be deepened to allow for greater private sector participation within a clear regulatory environment, contributing private equity and debt finance as well as management and technical capacity.

Fifthly, new private generation capacity must be encouraged and facilitated through the careful management of hybrid power markets.

Lastly, regional integration must be pursued aggressively to reduce overall costs and realise other economic and political benefits.

“Now that the issues have been identified, hopefully they can be handled with proper consideration for the extent of the crisis,” said Eberhard.

He has worked in the energy industry for more than 25 years and has been elected recently to sit on a panel of experts for The Programme for Infrastructure Development in Africa. This initiative is undertaking significant planning exercises to deal with the issues outlined in this research.