An energy infrastructure road map for Africa

Posted on 17 October 2013

Although sub-Saharan Africa is well endowed with fossil fuels and renewable resources, they are largely untapped due to institutional and infrastructural barriers to efficient use, the World Energy Congress was told on 17 October.

The region’s limited ability to improve its energy system and related services significantly affects social and economic development, as seen in a poor quality of life and low standards in health, education, and economic competitiveness. But things are starting to change. “People are interested, people are engaged, people are passionate; there is a spirit of wanting to make things happen,” said Brian Statham, Chairman of the South Africa National Energy Association (SANEA). “The Africa of today is not the Africa of 5 or 10 years ago. The opportunities are there for those who have the courage to be the first movers.”

Many problems remain, said Pedro Egbe, Managing Director of the Nigerian engineering and construction firm Weltek. “Africa has all the resources,” but infrastructure and quality of life lag. Resources are extracted, and then sent to the developed world for processing. Egbe cited as one promising development recent plans for developing a Niger Delta Energy Corridor, supported by the leaders of 6 Nigerian states who have banded together in a group called the BRACED Commission after the initials of each state.

“Over the years leadership has been a major challenge,” said Joe Keshi, Director General of BRACED. Decision makers “have allowed population to grow faster than development. The last time we built a power plant in Nigeria was in the ’90s. Since then the population has doubled.” “We now have in place new, democratic leaders with clearly defined visions,” Keshi said. Privatization is helping: “African governments are pulled out of the business of business. No one will pay 300 million pounds for a power plant and not maintain it.”

To keep such change going, said Abel Didier Tella, CEO of the Association of Power Utilities of Africa (APUA), “we need real political will and commitment of the decision makers” to build the needed infrastructure. “We have to combine the mining industry and energy. The two sectors cannot keep developing apart.”

“Investment for us is the key,” Keshi added. “When you have a company like Chevron investing $14 billion in Nigeria, it is because investment risks are becoming less.” However, any hopes for relaxed standards on the part of lenders like the World Bank and African Development Bank are misplaced. “Nobody’s going to give you resources on the basis of Father Christmas,” said Keshi. “Africa is a tough sell because perceptions die hard,” Keshi said. “We need to learn to tell our own story. I’m beginning to see a number of Africans show up on the Forbes list. If you cannot get investment facilities from the Western world, you’d better look at some of the African billionaires,” he added. Tella observed that Kenya issued $300 million in bonds to finance a project and they were totally subscribed by Kenyans.

Getting investment is “not a short-term fix,” Statham said, and enterprises should start by seeking smaller, less risky investments, while building relationships. “How do you eat an elephant? One bite at a time.” He had similarly pithy advice for outsiders considering ventures: “If you want to come to work in Africa, don’t think of it as a date. Think of it as a marriage. The rewards will be very significant if you build those relationships.”

 

This news story is based on the Regional Crossroads session, “An energy infrastructure road map for Africa”, at the 2013 World Energy Congress.