Professional Documents
Culture Documents
PIECES
2015
from African INDUSTRY
Ministers of LEADER
Energy & ARTICLES
Infrastructure, from OPIC,
utilities and IFC, FMO,
regulators Norton Rose
Fulbright
& more
RECIPIENT
OF THE
ENERGYNET
LIFETIME
ACHIEVEMENT
AWARD:
Featured power H.E. Hon. Dr Salvador
projects and Namburete, Former
directories of power Minister of Energy,
technology providers Mozambique
In assiciation with
EnergyNet - Africa Investors Portfolio 2015
EnergyNet Ltd. organise a global portfolio of investment meetings, conferences and infrastructure events focused
specically on the power and industrial sectors across Africa. Proven to engage the decision makers and technical
directors behind Africa's most exciting economies, EnergyNet places economic development at the heart of
industrial solutions, helping to generate a more stable and viable investment option for our partners in Africa.
Our up-coming meetings in 2015 include:
PA: SERIES
POWERING AFRICA: GHANA 17 18 September 2015 | Accra
The Powering Africa: Ghana summit will provide a platform for investor insights on the future direction of the power sector in Ghana. The agenda
will focus on the country's electricity landscape following the division of the energy and power ministries, the critical issues facing the government
G H A N A and investors, and the future project pipeline which is rapidly growing under the leadership of the Minister for Power. Meet with 250 decision-
makers including DFIs, banks, developers and EPCs to discuss what is needed to fully support and enable the transformation of Ghanas electricity
sector in the medium to long term.
17-18 SEPTEMBER
ACCRA www.poweringafrica-ghana.com
PA: SERIES POWERING AFRICA: FINANCE OPTIONS 5 6 November 2015 | Cape Town
The 9th Annual Powering Africa: Finance Options meeting is an executive briefing designed for CEOs and senior-level directors active in
the energy, finance and consulting sectors and focused on the financing of projects across Africa. The meeting will get to the heart of the
issues and opportunities surrounding project nance, allowing participants to directly engage with key decision-makers over the course of the
concentrated 2 day retreat. This meeting is restricted to two delegates per company to preserve the roundtable format and high quality
networking opportunities.
5-6 NOVEMBER
CAPE TOWN www.poweringafrica-finance.com
PA: SERIES
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WASHINGTON CAIRO LONDON
www.energynet.co.uk
WELCOME
Dear Colleagues
A warm welcome to the ninth annual edition of the Africa Energy Yearbook, the official publication of the Africa Energy
Forum, hosted in Dubai this year for the first time in its 17 year history.
In the chapter Investing in Africa, Elizabeth Littlefield, CEO of OPIC, reflects on the renewables projects that have come
online through the support of OPIC and their collaboration with the U.S. Government partner agencies, and discusses the
vast growth potential of the continent.
In the chapter Policies and Best Practices for Africa, Angeli Hoekstra and John Gibbs of Management Consultancy firm
PwC look at the global megatrends currently influencing business models and utilities within Africas power sector and the
need for sector transformation in order to adapt accordingly.
Sustainable Solutions for Africa sees the IFC debate the merits of solar as a viable option for power generation, presenting
its Scaling Solar initiative as a potential solution to the bottlenecks which currently exist within the industry.
The 2015 Yearbook also features opinion pieces from industry leaders from the public and private sector, who reflect on their
experiences and set out their aspirations for the future. Respected contributors include Honourable Dr Salvador Namburete,
Former Minister of Energy, Mozambique, H.E. Cheick Taliby Sylla, Minister of Energy and Hydro-Power, Guinea, H.E.
Ambassador Henry Macauley, Minister of Energy, Sierra Leone, Vinod Kumar Khare, Chief Executive Officer, Ethiopian
Electric Utility, Ethiopia, Dr Mima Nedelocovych, President and CEO, Initiative for Global Development (IGD), Simon
Currie, Global Head of Energy, Norton Rose Fulbright and Rumundaka Wonodi, Managing Director and Chief Executive
Officer, Nigerian Bulk Electricity Trading Plc (NERC).
A sample of featured power projects from EnergyNets Powering Africa: Hub can be found in the middle of the book, as well
as directories of conventional and renewable technology providers at the end of the publication.
We hope you enjoy reading through these articles and opinion pieces which hone in on the opportunities for the development
of Africas power sector. The individuals who contribute span a diverse range of backgrounds and experiences, but share the
common goal of increasing Africas access to electricity to bring about the positive transformation of the continent and the
prosperity of its people.
Best regards,
Amy Offord
Editor- Africa Energy Yearbook
EnergyNet Ltd
you to support
We hope that during the meeting you will be able to connect
with them.
INVESTING IN AFRICA
NIGERIAS ELECTRIC POWER SECTOR
converting potential to reality
ABIODUN AINA, SENIOR INVESTMENT OFFICER, IFC
FEMI AKINREBIYO, PRINCIPAL INVESTMENT OFFICER,
IFC 21
www.energynet.co.uk
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AFRICA FINANCE CORPORATION 8 GLOBELEQ 58
AFRICAN REVIEW 40 GROUPE JEUNE AFRIQUE 20
ANDRITZ HYDRO OUTSIDE BACK COVER HERBERT SMITH FREEHILLS 56
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ENERGYNETS COMMITMENT TO MANITOBA HYDRO 12
EAST AFRICA 122 METKA 84
ENERGYNET AFRICA INVESTORS NEDBANK 68
PORTFOLIO Inside Front and INSIDE back Cover
POWERING AFRICA: MOZAMBIQUE 146
ENERGYNET POWERING AFRICA: HUB 80
POWERING AFRICA: SUMMIT 102
ENGERATI 150
RAND MERCHANT BANK 42
ENERGYNET STUDENT ENGAGEMENT
INITIATIVE (ESEI) 2 SIEMENS 88
ESI AFRICA 39, 151, 158 TCQ POWER 142
2015 Africa Energy Yearbook 5
CONTENTS
Projects
ANGOLA 81 MOZAMBIQUE 86
BOTSWANA 81 NAMIBIA 87
EGYPT 82 RWANDA 89
GHANA 83 TANZANIA 91
KENYA 85 UGANDA 91
MALAWI 85 ZAMBIA 92
DIRECTORIES
CONVENTIONAL THERMAL POWER 159 HYDROPOWER 170
USING DATA TO
SUPPORT
INVESTMENT
STRATEGIES
In The Africa Energy Sector
Michael Hodgson-Hess is Head of Business Development for African Financial and Economic
Data. Michael has an excellent knowledge of Africas commercial, financial, political, geopolitical
and security ecosystems, having spent a significant part of his working life strongly engaged with
emerging markets, but particularly Africa.
Africa : 12% of world population, 4% of world energy 45% of the 90GTW total is coal, 22% hydro, 17%
demand, 2% of world trade, 1% of global GDP oil, 14% gas
Economic output of 82 million Germans significantly 33% of Africas natural gas production is flared off
exceeds the 940 million people of SSA Since 2009, 30% of world oil and gas discoveries made in
Six of the worlds ten fastest growing economies are in SSA
Africa 18% of world uranium supplied from South Africa
13% increase in 2013 of capital investment into Africa, Solid Biomass accounts for 70% of SSA final energy usage
Africas share of global foreign direct investment 5.7% Africas largest economy is Nigeria, with no grid access for
SSA energy use up by 45% since 2000 55% of the population
SSA - only 290 million out of an estimate population of Ghana 70%+ on grid, Central African Republic <3%,
940 million have access to electricity Chad 4%
SSA access rate for electricity has grown 10% since 2002 IEA estimates renewables will make up 44% of SSA
to 32% today power generation by 2040
Estimated Capex to move the dial from 32% to 70% China invests 14% of GDP in infrastructure; Africa 4%
access - USD$205 billion Annual per cap energy usage (KWH) Liberia 82, Kenya
SSA - 90GW on Grid power generation 150, Ghana 342, USA 12,461
50% of which is in South Africa World Economic Forum country Global Competiveness
Index of the 25 lowest ranked, 68% are African. The and must, influence both the business strategy adopted, and
infrastructure deficit remains profound. the quantum of investment deployed. Effective investment
in Africas energy space is not a generic, one size fits all
Data driven empirical evidence shows conclusively that in play, but will need sensitivity balanced with logic, research,
emerging markets, structural transformation is closely linked analysis, instinct and intuition. You cant always measure
to an economy with a meaningful natural resources sector. the politics, but you can always measure the outcomes they
Commodities push infrastructure development, which in influence. Look to the data.
turn pulls economic progress, which in itself has become the
catalyst for Africas current (and effective) decoupling from The next phase of development for the energy sector in
resource dependency, the commodity roller coaster and the many of Africas countries is well under way. Infrastructure
resource curse, something its worth noting that Russia has and energy investments have long paybacks. In mature
so far failed to do. economies enjoying stable government (frequently with
a regulator not unsympathetic to the sellers view) this
The data, the statistics, the trend evidence, the Africa Rising makes them attractive investments with a predictable
narrative, all point surely to only one conclusion. Africa, income stream derived from an essential cant live
the next Eldorado for generators, extractors, transmission without commodity. Assess each African country or
& distribution providers, renewables, the attendant region individually based on its own characteristics,
and necessary consultants, engineers, lawyers, funders, then decide whether your organisation commits to
bankers.happy times. But we know its not as simple as increased involvement, or pull back, or indeed first time
that. Lets unpack the reality. participation. Despite the difficulties of drilling down
through layers of political nuance, deploying a data
First up, the meaningless phrase We are doing business strategy will reveal risk and clarify its mitigation. Once
with Africa. Africa is not a single place working to a outcomes have been plotted, these can be mapped back
monocultural set of rules, regulations, customs and practices. to the project fundamentals. Now are you in or out? Not
Africa is immense. The entire land-masses of India, China, sure? Then an Africa precondition investment check list
the United States, Japan and Europes main sovereigns can should at least include the obvious basics, such as:
all be accommodated within this continent of 55 countries,
itself a confusing mix of regional, political and trading blocs The projects high priority for government (political)
that at times appear to have the domestic policy of member The capacity of government to deliver against their
States set at ninety degrees to that of the blocs own grain. commitments (political, economic, commercial)
A clear implementation time line not subject to
The opportunity for business in Africa can more than match interference (political, economic)
the sheer magnificence of the continents size. Remember A sovereign where political stability is not a recurring
the cell phone explosion - the leap over legacy copper issue (political)
wire networks that, in a matter of only years, linked up Revenue certainty (commercial, political)
a continent of over 1 billion people; the transformation
to mobile banking; the sheer innovation that Africans can So, how do African countries stack against this base line?
bring about? Watch renewables follow this path. However, There is now real belief that the Africa Rising narrative
the diversity of Africas cultures, ethnicity, faith, people and has robust foundations. This is a real story of countries with
language (1,250 are spoken in Africa) requires a respectful growing local production and consumption, a fresh, young,
acknowledgement that these highly individual factors will, pan-African middle class comprising discerning consumers,
Unsure what to do or what to Each piece of data builds the picture, makes the case and
leads to a decision underpinned by evidence, either for or
think? Then start by following against. But as the Google analogy shows, at times you will
have to base the call on the person and the politics, and not
the money; foreign direct just the numbers. And that can be brave. Or indeed the most
natural thing in the world.
investment into Africa continues As Ive written before, every Africanologist will confirm that
to increase. those who succeed on the continent first judge weather, wind
and currents, look up to the horizon, and then accept what is
beyond it. Even Google cant bend visible light yet.
TAPPING
AFRICAS ENERGY
LION SHARE
Elizabeth Littlefield, CEO, Overseas Private Investment
Corporation (OPIC)
Since 2010, Elizabeth L. Littlefield has served as President and CEO of the Overseas Private
Investment Corporation, the U.S. Governments Development Finance Institution. OPIC
mobilizes private capital to help address critical development challenges and in doing so,
advances U.S. foreign policy and national security priorities.
Prior to OPIC, she was CEO of the Consultative Group to Assist the Poor, a policy and
research center dedicated to advancing poor peoples access to financial services housed at the
World Bank. Ms. Littlefield has also served as JP Morgans Managing Director in charge of
capital markets and financing in emerging Europe, Middle East and Africa and as well as the
Boards and Executive Committees of the MasterCard Foundation, Calvert Foundation and
Womens World Banking, among others.
She also spent 1989 1990 in West and Central Africa providing banking consultancy to
several start-up microfinance institutions.
Ms Littlefield is a graduate of Brown University and also attended Ecole Nationale de Sciences
Politiques in Paris.
These are extraordinary times for Africa and for Africas power sector. Were seeing unprecedented international
commitment and collaboration to address the energy poverty that has long constrained business activity, quality
of life, food production and overall economic growth. On a continent of nearly one billion people that is expected
to add one billion more by 2050, access to electricity is quite literally the key to a brighter, more prosperous, more
secure and more connected future.
Bruce Onobrakpeya | Gala Day Under The River I | 2006 | Plastograph on paper | 107 x 79 cm
For price contact Aabru Art / art@aabru.co.uk/ +44 7847 244 217
power sector. Heres an example. OPIC and other U.S. Government agencies
collaborated on a document outlining the 10 Elements of a
Bankable Power Purchase Agreement (PPA) to help give both
OPICs work bringing more electricity to Africa spans Kenya, power producers and their bankers enough confidence to
where we provided financing to support the expansion of a commit to a large power project. A PPA, or long-term agreement
major geothermal power plant, to Togo, where we supported between the power producer and the power offtaker, is needed
the construction of a major power plant, to Nigeria, where to ensure the viability of the project. The 10 Elements
we are supporting the first independent power plant to be document outlines what every bankable PPA must contain
built in 10 years, and Free State, South Africa, where we are to give private investors and their lenders the confidence to
supporting construction of a 60 megawatt solar power plant. commit large amounts of funding to projects, while helping
African governments ensure that the contracts they enter are
Weve also effectively collaborated with our U.S. Government written in a way that brings value to the African people.
partners to help jumpstart more innovation in the renewable
power sector. Together with the U.S. Trade and Development Africa is a region brimming with youth, talent, natural
Agency and the U.S. Department of State, we provide resources and potential. Many African countries are today
early stage support to promising renewable energy projects enjoying rapid economic growth as well as population
through the Africa Clean Energy Finance (ACEF) program. growth. According to the International Monetary Fund,
Through ACEF, weve supported many off-grid projects that Africa will account for 80 percent of the population growth
are empowering the people of rural Africa with home solar expected by 2100. Increasingly these people will be living
kits, rooftop solar and other tools to generate electricity in and working in urban areas and demanding more power. To
remote settings. Earlier this year, a major solar power plant support the growth forecast, Sub Saharan Africa will need to
in Rwanda that received initial funding support through the install 7 gigawatts of new power generation per year enough
ACEF program came online powering 8.5 megawatts and to power an additional 7 million homes a year. And we need
becoming the countrys first utility-scale solar facility. to get started today.
OPIC brings some powerful tools to help investors in the Im looking forward to working with many of you as we
sorts of power projects that can require large investments of journey on to this exciting and pivotal moment in the
time and money. We can provide loans of up to $250 million continents development and growth.
Born in the southern Mozambican province of Inhambane, Salvador Namburete speaks Portuguese, English, French (fair), as well as
some national languages. Salvador Namburete holds a Masters Degree in International Trade and Finance from Lancaster University,
UK, and a Masters Degree in Corporate Finance from American University, Washington, DC, United States of America. He holds a
Licenciado Degree in Economics from Eduardo Mondlane Univesity, in Maputo, Mozambique, where he later taught International
Economics, including a module in Trade Policy in the Masters in International Trade Law Programme, at the Faculty of Law. He
also holds a Bachelors Degree in Economics from the same University. He was Minister of Energy from 2005- 2015. Before his
appointment as Minister of Energy he held the position of Deputy Minister of Industry and Trade.
QUESTION. How has Mozambiques renewable sources of energy (especially of the investors. The first three solar
power sector changed over the past 20 solar photovoltaic) has allowed access photovoltaic power plants were
years? Which of these developments to electricity for more than 5 million commissioned in the country, and
have made the biggest impact on the Mozambicans in the rural areas over are currently generating 1.3MW. The
population as a whole? the past 8 years; 201 small villages and first large scale gas fired power plants
towns were electrified along with 669 were commissioned in the country,
ANSWER. The power sector was rural schools and 623 rural clinics. 77 currently generating 418MW. In
basically dominated by off-grid systems rural public administration buildings the power distribution segment, the
fuelled by diesel generation sets with also benefitted. prepaid power metering system was
a few exceptions, namely the Maputo expanded from around 15% to 85%
City (Countrys Capital), and a few In 2013, the first solar panel assembly of domestic power consumers in the
provincial capitals, especially in the plant was commissioned with the aim same period, and its operating online
southern part of the country - despite of expanding access to these sources throughout the country. In the fuel
the fact that Cahora Bassa, a 2075MW of clean energy in rural areas given sector, 48 new gas stations were built
hydropower plant, already existed in their lower prices, and to replace by the public sector in areas which the
Mozambique. It generated hardly any the unhealthy wood fuels. The first private sector find unattractive, and
power because the transmission lines mapping of renewable energy sources the fuel storage capacity was expanded
had been knocked down during the in the country was performed and from 430 to 830 billion litres between
war. The rate of access to electricity was the first Mozambique Renewable 2005 and 2014.
around 2% to 3% at that time. The Energy Atlas was published. The
tremendous national reconstruction aim was to determine the renewable The first infrastructure to receive
efforts after the war made it possible energy potential of the country and imported LPG by sea was built,
to rapidly improve the situation. By facilitate the decision-making process including a 3.5km pipeline and a 3.000
2004 the rate of access to electricity
had risen to around 7%. It was indeed
over the past decade, between 2005
and 2014, that an exponential growth
was witnessed. In 2004, only 51 of 141
District headquarters had access to
power. Today, 134 District headquarters
have access to electrical power.
QUESTION: In your opinion, what is 92.7% of the 2075MW Cahora vii. Successful establishment of the
the single biggest obstacle facing new Bassa Hydropower Station by the National Atomic Energy Agency
investors and developers looking to Government of Mozambique, a (ANEA); the signing of the first
enter Mozambique in 2015? process known as the reversion of Country Framework Programme
transfer of control over Cahora Bassa (CPF) for technical cooperation
ANSWER. It is combination of many from the Portuguese government between Mozambique and
factors. These range from lack of to the Mozambican Government, the IAEA; the elaboration and
financial capacity to fund bankable which comprises the political approval by Mozambique Cabinet
studies for the presentation of business negotiations and raising the funding of the draft Atomic Energy Law
and investment opportunities to for the payment of the project. This (awaiting consideration by
investors coming from other countries, has been a tremendous success as one Parliament);
some degree of bureaucratic behaviour of the best performing loans in the viii. Chairing of the Forum of Energy
on the part of civil servants which country and possibly worldwide; Ministers of Africa (FEMA), 2007-
leads to higher transaction costs with ii. Raised the rate of access to electricity 2009;
a negative impact on investors and in Mozambique, from 7% in 2004 ix. Chairing of the Conference of
the investment process, shortcomings to 45.3% in 2014; Energy Ministers of Africa (CEMA),
in integrated planning which lead to iii. Increased the role of renewable 2010-2012;
the misalignment of strategic projects energy in Mozambique from x. Chairing of the Second Assembly of
or to the misuse of scarce resources, almost zero in 2004 to 18.5% in the International Renewable Energy
stringent labour laws and regulations 2014, benefitting more 5.0 million Agency (IRENA) in January 2012,
which discourage investors coming to Mozambican citizens, in addition to being the first African Minister to
the country, and limited skilled labour the electrification of schools, clinics, hold that position;
for some technical areas. In sum, the teachers and nurses homes, and xi. Construction and commissioning
single biggest obstacle is shortage of public buildings in rural areas; of the first natural gas fired power
human capital. iv. Construction and commissioning station in Mozambique, located
of the first solar panel assembly at the town of Ressano Garcia,
plant in Mozambique, with aim to Maputo, Mozambique, with a total
QUESTION: Can you share with the disseminate the use of these devices capacity of 175MW;
readers of Africa Energy Yearbook some in replacement of wood fuels and xii. Introduction of natural gas fuelled
of your career highlights during your other unhealthy sources of energy vehicles in Mozambique, and the
illustrious tenure as Energy Minister? in the rural areas; initial expansion of this business
v. Successful conclusion of the mapping through the construction of the
ANSWER. I was appointed Minister of renewable energy resources, and first 3 fuelling stations, benefitting
for Energy for the first time in 2005 and the subsequent publishing of the more than 3,000 vehicles, including
reappointed in 2010, and some of my Mozambique Renewable Energy Atlas; buses and public transportation
career highlights include: vi. Accession of Mozambique to the units;
i. Successful conclusion of the International Atomic Energy Agency xiii. Introduction and development of
acquisition from Portugal of (IAEA) in 2006; renewable energies in Mozambique;
QUESTION: What do you hope QUESTION: What do you hope the QUESTION: Which projects are you
your legacy will be from your time new Minister of Energy will bring to excited to learn more about at this
as Minister for generations to come? the table for the country considering years Africa Energy Forum?
his financial background?
I am of the view that I will be remembered ANSWER. I expect to hear new
as the Minister who: ANSWER. It is believed that his developments about the following
i. Accelerated the expansion of access to knowledge of how the financial sector projects:
electricity, particularly in the rural areas, operates and the difficulties that energy i. Grand Inga/Inga 3 (44.000MW/
covering 134 District headquarters, sector investors are confronted with will 3.000MW), in the DRC
from 51 in 2004; enable him to better assist those who ii. Morrupoule B in Botswana
ii. Increased the rate of access to electricity are willing to invest, being prevented (600MW);
from 7% in 2004 to 45.3% in 2014 only because the financial sector rules iii. Medupi (600MW) in South
iii. increased the share of renewable are sometimes two stringent. Africa
energies from nearly 0% in 2004 to
18.5% in 2014;
iv. Promoted the construction of Projects in Southern Africa that Added New Generation
5.700km of power lines, 12 new large Capacity in 2013 and 2014
capacity substations, and associated
infrastructures throughout the country; Many projects in the SADC region were planned to be commissioned or begin
v. Successfully conducted the reversion operation between 2013 and 2014, but the vast majority of them did not
of Cahora Bassa in favour of the live up to the expectations created. From the planned 1.477MW for 2013,
Government of Mozambique, which only 807MW came into effectiveness, basically because Morupule (coal) in
brought about a new impetus in rural Botswana for 600MW and Komati (coal) in South Africa for 202MW did
electrification and the expansion of not pass though the tests. Now the contributors of the 807MW are as follows:
access to electricity in the country,
especially in rural areas;
vi. Promoted and monitored the Mozambique (Ressano Garcia, Natural Gas): 232MW (28.7%);
construction of the first solar panel Angola (Lobito and Futila, both thermal): 70MW (8.7%);
assembly plant in the country, which Zambia (Ndola Energy, HFO): 50MW (6.2%);
was commissioned in 2013: Zambia (North Kariba, Hydro): 180MW (22.3%);
vii. Conducted the mapping of D.R.Congo (Inga 1, Hydro): 55MW (6.8%);
renewable energies in the country, Tanzania (Mwanza, HFO): 60MW (7.4%);
and the subsequent publishing of the South Africa (Grootvlei, Coal): 40MW (5.0%);
Mozambique Renewable Energy Atlas South Africa (Koeberg, Nuclear): 30MW (3.7%);
in 2013: South Africa (Solar): 26MW (3.2%);
viii. Promoted and monitored the Malawi (Kapichira, Hydro): 64MW (7.9%);
construction of the first large scale gas Total 807MW (100%)
fired power stations in the country,
generating currently in Ressano Garcia For 2014 an additional generation capacity of 2.894MW was planned, but
418MW; only 440MW came into the system for same reasons as pointed out above.
ix. Introduced the use of natural gas in Of this total added capacity, 175MW (39.8%) was the contribution of
vehicles; Mozambique with the natural as fired power plant in Ressano Garcia. The
x. Conducted the construction of the remaining 265MW are distributed as follows:
first natural gas distribution network
to households in Maputo and Mozambique (Ressano Garcia, Natural Gas): 175MW (39.8%);
Marracuene; Angola (Lomaum, hydro): 50MW (11.4%);
xi. Led the construction of 48 gas stations Angola (Bom Jesus e Biocom, Coal): 100MW (22.7%);
in areas seen as unattractive to private South Africa (Sere, wind): 100MW (22.7%);
investors; Zambia (Kariba North, Hydro): 15MW (3.4%);
xii. Promoted the construction of the first Total 440MW (100%)
solar photovoltaic power plants in the
country; Yours sincerely,
Salvador Namburete
xiii. Conducted the accession of the country
to the International Atomic Energy
Agency.
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DITION INTERNATIONALE ET AFRIQUE SUBSAHARIENNE INTERNATIONAL EDITION
France 3,50 Algrie 200 DA Allemagne 4,50 Autriche 4,50 Belgique 3,50 Canada 5,95 $ CAN Danemark 35 DKK DOM 4 Algeria 550 DA Angola 600 Kwanza Austria 4.90 Belgium 4.90 Canada 6.95 CAN$ Denmark 60 DK Ethiopia 75 Birr France 4.90 L 17263 - 49 - F: 5,90 - RD
DITION GNRALE Espagne 4 thiopie 65 birrs Finlande 4,50 Grce 4,50 Italie 4 Maroc 23 DH Mauritanie 1 100 MRO Norvge 45 NK Pays-Bas 4 Germany 4.90 Ghana 7 GH Italy 4.90 Kenya 410 shillings Liberia $LD 300 Morocco 50 DH Netherlands 4.90 Nigeria 600 naira
Norway 60 NK Portugal 4.90 Sierra Leone LE 9,000 South Africa 30 rand (tax incl.) Spain 4.90 Switzerland 9.90 FS Tanzania
France 6 Algrie 350 DA Allemagne 8 Autriche 8 Belgique 6 Canada 11,90 $ CAN Cte dIvoire 2500FCFA DOM 8 Espagne 7,20 Portugal cont. 4 RD Congo 5,50 $ US Royaume-Uni 3,50 Suisse 6 FS Tunisie 3,30 DT USA 6,50 $ US Zone CFA 1700 F CFA ISSN 1950-1285
6,500 shillings Tunisia 8 DT Uganda 9,000 shillings UK 4.50 United States US$ 6.95 Zimbabwe US$ 4 CFA Countries 3,500 F CFA
thiopie 95 birrs Grce 8 Italie 7,20 Maroc 40 DH Mauritanie 2000 MRO Norvge 75 NK Pays-Bas 7,20 Portugal cont. 7,20
RD Congo 11 $ US Royaume-Uni 6 Suisse 11,80 FS Tunisie 6 DT USA 13 $ US Zone CFA 3200 F CFA ISSN 1950-1285
INVESTING IN AFRICA
NIGERIAS
ELECTRIC
POWER SECTOR
converting potential to reality
Abiodun Aina is currently a Senior Investment Officer with Femi Akinrebiyo is currently a Principal Investment Officer
IFCs Infrastructure Africa team based in Washington DC. with IFCs Infrastructure team based in Washington, DC. He
Abiodun focuses on identifying, promoting and investing has been with IFC for nine years and spent the last two years
in Public Private Partnership opportunities in Infrastructure on Nigeria leading the implementation of the Joint World Bank
projects in Sub Saharan Africa. Prior to IFC, Abiodun spent 6 Group (WBG) Energy Business Plan for Nigeria - an initiative
years in the Energy Financial Services arm of GE Capital, where that is mobilizing WBG resources to support the Government
he worked on equity and debt investments in various energy- of Nigeria to accelerate reforms, attract private investment, and
industry projects, with particular focus on thermal, renewable fast-track key projects. In his current role, Femi is responsible
energy, and midstream oil and gas projects in North America. for business development in Nigeria, including building
Abiodun began his career at Andersen / KPMG, as part of the partnerships with key stakeholders. He has led structuring and
Assurance & Business Advisory team focused on Energy clients negotiation of investments for IFC in Asia, Latin America and
based in Lagos, Nigeria. He holds an MBA from the Yale School Africa. Femis background includes working for ExxonMobil
of Management, an MPA in Economic Policy Management and other multinational companies, including Philips Projects
from Columbia Universitys School of Public and International and Spar Aerospace. He holds an MBA from the Kellogg
Affairs, and a B.Sc. in Economics from Obafemi Awolowo Graduate School of Management at Northwestern University,
University in Nigeria. He is also a CFA Charterholder. Illinois, USA and a Bachelor of Engineering from the University
of Ilorin, Nigeria.
Per-capita electricity consumption from the grid in Nigeria is currently less than 150kWh per year basically
one dim light bulb per person.
THE FUTURE - HOW DO WE GET sector losses), defeating the purpose of its very establishment.
THERE? Something had to give for the electricity market to function
as designed. This led to a 40% increase in the retail tariff
While the progress made in the last 5 years has been in February 2015 (from US$ 0.11/kWh to US$0.15/kWh),
remarkable, the journey ahead for the incoming government ignoring exchange rate effects. While there was recently
remains daunting. Privatization is not an end in itself the a partial reversal of this tariff increase, market participants
concept only works if market signals are robust enough to expect that the retail tariff will be set at sustainable levels in
attract investment and expertise of new sector entrants at scale. the future. This reflects a simple truth the market simply
However, apart from a few cases, foreign direct investment cannot sustain significant cash deficits over time. At these
(FDI) into Nigerias power sector has not been significant to levels, no market can weaker companies will run out of
date the privatization of the GENCOs and DISCOs was capital quickly, and, without periodic palliative measures,
largely financed with debt from Nigerian banks, with most of even the strongest players will face a non-trivial risk of failure
the equity from Nigerian sponsors. Cash shortfalls in the sector, over time.
insufficient gas molecules to power the existing and expected
generation fleet, and a still weak electricity transmission grid Azura - a marathon, not a sprint: As the first IPP to emerge
have slowed progress, especially in the past 18 months. Absent from the FGNs power sector reform, the Azura-Edo IPP
a clear pathway to resolving these issues, foreign investors will sponsors and lenders have had to be very innovative in
continue to sit on the sidelines, perceiving the ratio of risks to structuring solutions to the complex sector challenges. An
rewards as too high to justify investment. unmistakable aspect of the transaction is the complexity of the
contractual structure (see Figure 2, overleaf ). While project
1. CASH SHORTFALLS IN THE SECTOR, LEADING finance structures are no strangers to complexity, due to the
TO TRANSACTION COMPLEXITY nascent institutional arrangements in Nigeria and absence of
Prior to the review of the MYTO tariff in January 2015, the precedent transactions, the Azura-Edo deal required an even
estimated sector cash shortfall (cash required for all sector more dizzying array of contractual innovations and project
participants to earn a return on, and, of their invested capital, participants than is typical of emerging market IPPs. A lot of
LESS cash inflows into the sector) was approximately US$ these elements were put in place to structure around the lack
700 million a year, mainly due to high technical and non- of a track record of positive cashflows in the sector. A good
technical losses, particularly at the distribution companies. example of this is the credit enhancement that Azuras gas
At these deficit levels, had NBET started performing its suppliers required. This added approximately US$ 50 million
role as the single buyer and seller of power, it would have to the projects cost, and, led to higher overall complexity of
eroded its capital base in 1 year (assuming no improvement in the transaction documents.
Way forward Simple is Beautiful: Working towards 2. INSUFFICIENT PROCESSED GAS MOLECULES
simpler documents and project structures, will increase Nigeria has abundant natural gas reserves 180 Tcf but
the number of new IPPs (follow on projects to Azura), to grossly insufficient gas processing capacity. Nigerias current
the benefit of all stakeholders. However, you cannot wish installed power generation fleet is 11GW 4GW existing
risks and issues away sustainable simplification cannot thermal plants, 2GW hydroelectric power plants, and 5GW
be achieved without first addressing the underlying sector new NIPP plants. Approximately 6GW of the thermal
challenges and headwinds going forward. To be sustainable, plants are currently not producing power due to insufficient
the sector badly needs a fully cost reflective tariff, proper processed gas molecules. This is largely due to historically
incentives to distribution companies to reduce their low levels of investment in the domestic gas to power sector,
technical and non-technical losses, and an increase in actual where prices were below US$1/mmbtu until the last 2 years.
power generation. Alongside increasing the availability of Low prices were a disincentive to gas companies looking
gas to existing and new power plants - a low hanging fruit to invest in the domestic gas sector. The recent increase in
(more on that next) - progress on these items would set the the domestic gas to power price to approximately US$ 2.5/
stage for plainer sailing for IPPs in Nigeria. mmbtu basically export parity prices should increase
Credit Enhancement in the gas sector is another lingering issue. Impact on Azura: Again, Azuras sponsors were smart on this
Until recently, gas producers have insisted on up to 12 months issue. The plant will be located close to an existing substation,
of letters of credit from power generators, which slowed down which reduces the cost of linking the plant to the grid
the finalization of a number of gas sale agreements. 12 months significantly.
of gas LCs translates to US$ 600 million for the current
installed portfolio of gas generators and an amount that is Way forward: All of the above: US$ 9 billion is a lot
required to be cash-backed by issuing banks when not counter- of money. While TCN can potentially secure all of the
guaranteed by creditworthy entities such as the World Bank. required financing, getting creative could reduce the need
This issue is shaping up to be a temporary but serious one, due for transmission capex. For example, aggressively pursuing
to the sectors poor payment track record. Once there is a track distributed generation, through project-financed utility-
record of positive cashflow in the power sector, gas suppliers scale solar power plants in off-grid locations, could alleviate
should no longer require such long-tenored and expensive - some of the capacity constraints, and reduce the need
credit enhancement tools. for new transmission lines and substations. Separately,
Impact on Azura: Azuras sponsors were smart on this point having a clear Public-Private-Partnership program for the
the plant will be located 1km from a gas transmission transmission segment, where specific new transmission lines
pipeline, and, was able to secure long term gas supply at a are competitively awarded to transmission construction
negotiated price. However, the letter of credit to be issued companies/ infrastructure investors on a time-bound
by Azura to the gas supplier (addressed earlier) has increased concessionary basis, with clear return thresholds, should ease
the overall complexity of the transaction documents. part of the current transmission constraint.
Rumundaka Wonodi is the pioneer Managing Director/Chief Executive Officer of the Nigerian Bulk Electricity Trading Plc (NBET), aka
the Bulk Trader. Prior to his appointment, in August 2011, he led the Regulatory & Transactions Monitoring team of the Presidential
Task Force on Power (PTFP), mandated with driving the power sector reform roadmap of the Federal Government of Nigeria (FGN).
He led the team of Bureau of Public Enterprises (BPE) and PTFP experts in establishing the Bulk Trader. Under Rumundakas leadership,
NBET has received N104 billion capitalisation from the FGN. NBET has executed Vesting Contracts with the 11 privatized successor
Distribution Companies for the onward sale of purchased electricity. NBET has also executed nine Power Purchase Agreements. Six are
with the privatized successor Generation Companies; with Egbin Power Plc Nigerias largest power plant with an installed capacity of
1320MW; with Olorunsogo Power Plc, which was sold in a Debt-Equity swap deal with the FGN; and with Azura-Edo IPP, which is
NBETs first greenfield project.
NBET is in negotiations with multiple Independent Power Producers (IPPs) for new generation capacity valued in excess of $6 billion.
These are projects with a variety of energy sources: natural gas, coal, wind and solar. For the creation and development of an effective
transaction environment for power investors, Rumundaka steers NBET with the core values of integrity, transparency, professionalism and
teamwork. Rumundaka is the current and inaugural Chairman of the Initial Stakeholder Advisory Panel of the Nigeria Electricity Market;
the highest ranking consultative panel in the industry. Rumundaka has an MBA from Yale University School of Management, USA and
was a J. Olin Research Fellow at Yale University.
QUESTION: Why is Nigerias and GENCOs bankable how is the QUESTION: Your role as [effectively]
electricity market still the hot topic gap going to be bridged? Nigerias off-taker is critical for both
in Africa considering all the challenges public and private sectors; what are the
being faced in privatising the sector? The current wholesale tariff for hydro biggest hurdles youve had to overcome,
plants are N6.35 per kwh while thermal and what challenges lie ahead for the
It is still the hot topic because of its huge plants are 9.86 per kwh but this is bulk trader?
market potential. Teething issues were subject to change as the new gas price has
expected but investors have confidence not taken effect. The energy component The biggest hurdle the bulk trader has
they will be resolved. Recently, Nigeria that makes up the wholesale price for had to overcome are:
has taken over from South Africa as the thermal plants will change when the new Communicating that NBETs
largest economy in Africa even with its gas price is effected. New Independent working capital is NOT a subsidy for
poor electricity supply. Nigeria with its Power Projects (IPPs) and Generation the industry and is only a temporary
population of over 160 million generates Companies (GENCOs) have the option bridge which it expects to fully recoup
only 4,000 MW of electricity and South of accepting the benchmark tariffs or can from the distribution companies.
Africa with a population of 52 million choose to go through an open book tariff Streamlining the process for the
generates 40,000MW. This capacity gap setting process. evaluation and engagement of viable
demonstrates the investment potential potential IPP projects.
in the next ten years for instance. QUESTION: Having just entered Financing - NBET will do more with
Nigerias government has an economic the transitional electricity market in public and private financing to enhance
transformation agenda that seeks to Nigeria, how does this change the near our ability to meet our obligations in
create more opportunities for local and term bankability of the sector? the market as a critical off-taker.
international investors. Privatization of Continued investment in the grid
the sector has opened it up for foreign Active contracts provide comfort to to enhance better transmission and
investment, and further the recent investors that the flow of funds will be as reduce loss.
peaceful conclusion of the elections has expected and not arbitrary as contractual With the privatised distribution
also boosted investors confidence in the obligations are legal and binding. The companies, the DISCOs lack of
stability in the nation and the market. framework for the market provides for investment in power infrastructure for
a tight coupling of contracts and an electric power distribution to increase
QUESTION: What is todays average alignment of incentives that is expected performance and payment settlement
electricity price in Nigeria and what to yield positive results at every step of which the CBN intervention fund
does it need be in order to make IPPs the value chain in the power sector. has encouraged.
FINANCE OPTIONS
5-6th november 2015
The Vineyard
The Vineyard Hotel,
Hotel, Cape Cape
TownTown
NAVIGATING THE
CHALLENGES
of delivering IPPs in Africa
Ashwin is responsible for originating potential deals, analysing, Paul is responsible for the structuring and development of AIIMs
assessing, structuring and negotiating investment opportunities, managed funds as well as new business initiatives.
as well as the execution, performance monitoring and realisation
Paul led the structuring of AIIMs dedicated renewable energy
of investments.
investment vehicle, Apollo, focused on building out a portfolio
Ashwin has worked on infrastructure project finance deals in of investments in the South African renewables market. Paul
the thermal energy and renewable energy sectors, as well as the has also been involved in the selection and submission of bids
transport sector. Most recently, Ashwin was involved in the supported by the AIIM funds in the South African renewable
successful execution of the 350MW gas fired Kpone IPP power energy procurement programme and led the integration of these
project in Tema, Ghana. During 2011, he was involved in the projects into the AIIM portfolio. Paul represents the AIIM funds
successful execution of two renewable energy investments in on the board of the Cookhouse Wind Farm.
South Africa, namely the 139MW Cookhouse Wind Farm and
Prior to joining AIIM, Paul spent five years working on the
81MW REISA Solar PV investment, both of which reached
alternative assets structuring desk at Credit Suisse in London
commercial operations in 2014.
where he was responsible for the development, structuring and
Prior to joining AIIM, Ashwin spent 8 years with Aurecon. execution of alternative investment products for the pension and
Ashwins areas of focus were the large infrastructure, energy and insurance industries.
water sectors. Before joining Aurecon, Ashwin spent two years in
the UK working for Thames Water in project management and
management systems implementation and review.
It is a well-known and cited fact that sub-Saharan Africa (SSA) is desperately short of electricity, and, from an
access-to-electricity perspective, is considered to be one of the worst regions in the world. SSA has 13% of the
worlds population, but 48% of the global share of the worlds population without access to electricity.1
1 Castellano A, Kendall A, Nikomarov M, Swemmer T, 2015, Brighter Africa: 2 Non-OECD Energy Statistics, World Bank Group, 2013, World
The growth potential of Sub-Saharan electricity sector, McKinsey & Company Development Indicators, World Bank Group, www.worldbank.org
construction contractor, operations contractor and fuel compensation, and his children are not compensated directly. A
supplier, among others. Each of the stakeholder groups has well-considered and structured stakeholder engagement plan is
an active role to play in the development, construction and required to map out key stakeholders to be engaged, determine
operation of the project, and must be engaged appropriately. their level of interest and influence, to track when key stakeholders
have been engaged, and to plan all future engagements.
During the development phase, one of the wind farm projects
in South Africa was placed under pressure when, in 2012, in
the lead-up to financial close, the engineering procurement and CHOOSE YOUR LOCAL PARTNER
construction (EPC) contractor was forced to enter into a debt CAREFULLY
restructure programme, due to its inability to service certain The development of a large infrastructure project, such
debt obligations which fell due in mid-2012. ACED, the as a power project, requires numerous permits, licences,
equity investors and senior lenders to the wind farm, as well as exemptions and waivers from a range of government
the EPC contractor, were forced to adopt a pragmatic approach institutions prior to and during the construction process. A
in order to restructure the project and facilitate financial close. local partner who knows the processes in-country and has
Material amendments were made to the EPC contract to experience in undertaking the processes to obtain the various
rebalance the risk profile, which allowed the project to proceed. authorisations is key to the success of a project. Furthermore,
The ability to engage with the key project stakeholders, in this a local partner with stature in the industry and who has the
case the EPC contractor and the senior lenders, in an open and ability to raise the profile of the project is also helpful in
Community engagement is
required to be culturally sensitive and appropriate, in
order to avoid unintended consequences.
frank manner allowed for the necessary changes being brought ensuring that the project receives the necessary attention and
to bear on the contracts and the ultimate success of the project. support from government.
Engaging with the wrong members or structures in a Furthermore, it is critical to ensure that there is alignment
community, engaging too often or not frequently enough, of interest between local partners and international equity
and changes to the political structures are regular challenges investors, particularly when the project is under pressure.
for project developers in SSA. Community engagement is also In AIIMs experience, a local partner may have a variety of
required to be culturally sensitive and appropriate, in order to interests beyond the project in which you are jointly invested,
avoid unintended consequences. From our Kenyan experience, which may be dependent on maintaining relationships with
changes in the local governance and political structures in 2013 government or other stakeholders, resulting in differing
meant that local government stakeholders engaged during the priorities and divergent views. This can be problematic when
project development phase were replaced with new officials who needing to enforce contractual remedies against government.
were not adequately informed about the project at the time
of project implementation, which may have led to additional POST FINANCIAL CLOSE
hurdles needing to be cleared with local government officials CHALLENGES AND LESSONS
and the local communities. Furthermore, understanding and LEARNT
respecting cultural norms is critical; elders and chiefs are typically
consulted on project matters as the head of the communities
and households. However in certain communities it is only GETTING THE CONTRACTOR TO
acceptable for the household head to express an opinion, hence SITE
his family may not be afforded an opportunity to participate The achievement of financial close is a major milestone in the life
in a meaningful way. In such circumstances it is important to of an infrastructure project, which typically signals the start of a
engage affected youth separately to ensure they are afforded an multi-year construction process, often in remote or challenging
opportunity to represent their interests. This is particularly the environments. Completion of the construction works within
case in the family unit where the head of the household receives the negotiated project schedule is the best outcome for both the
investors and the contractor, by avoiding claims against delay (one to three months) to step into the running of the project
liquidated damages, loss of revenue and additional costs, such SPV and to hand over SPV operations to the key staff, once
as interest during construction. Mobilisation of the contractor appointed. No matter which model is chosen, it is important
to site and commencement of construction according to the to appropriately resource the project SPV as soon as possible,
project schedule is key to keeping the schedule on track. Before to ensure it is able to function and does not hamper or delay
a contractor can mobilise to site, there are several activities the implementation of the construction schedule.
that must be completed with respect to health and safety,
and local employment requirements, among others. From
our experience, international EPC contractors who have not DEVELOP A GOOD WORKING
partnered with local contractors or are undertaking work in a RELATIONSHIP WITH THE EPC
new jurisdiction require a longer period of time to mobilise to CONTRACTOR
site, which is typically not factored into their project schedule. The construction of a large scale, complex infrastructure project
The additional mobilisation time is spent modifying their is always challenging, and is never without unexpected hurdles.
existing plans and programme to be compliant with the local The EPC contractor has typically agreed to a fixed price, fixed
country requirements. AIIMs preference is to ensure that schedule project, and assures the quality of work is to the agreed
the EPC contractor is either established/experienced in the standard. Clarifications may however arise regarding the scope of
relevant jurisdiction, or has partnered with a local contractor, work or the project schedule. While the legal agreements between
for a more efficient construction process. Alternatively, ensure the EPC contractor and the project SPV seek to contract for a
that the project schedule includes additional time for site variety of outcomes, having a good relationship with the EPC
mobilisation. This has been particularly evident in the South contractor cannot be overlooked to unlock potential disputes,
African renewable energy market, where many international before having to revert to contractual remedies and measures.
EPC contractors have entered the South African market, with On our South African and Kenyan projects, having a good
varying outcomes and levels of performance. relationship with the key decision makers within the EPC
contractor allowed for the shareholders to apply pressure at
ASSEMBLE THE BEST MINDS TO the right times to minimise project schedule delays, accelerate
DELIVER A PROJECT components of the work (such as turbine erection) and to work
collaboratively on resolving on-site issues when they arose, rather
All of the investments we make are via dedicated stand-alone than reverting to the contractual remedies immediately.
special purpose vehicles (SPV) established to deliver a single
project. AIIM is regularly faced with the dilemma of when
to recruit key staff for the project SPV. The lenders typically CONCLUSIONS
require a resourcing plan and comfort that the key staff such Infrastructure investments by independent power producers
as a chief executive officer, chief financial officer and chief in SSA are not easy, with the hurdles dependent on the type
technical officer will be identified and employed by the time of project and jurisdiction. There are a set of key challenges
the project achieves financial close and funds are disbursed. that will arise on most projects, which in our experience, can
However, it can be challenging to attract key staff to a project often be mitigated.
SPV prior to financial close, given the level of uncertainty
in an employment contract at that point in time. AIIM has Large infrastructure developments typically require more
applied three models to overcome this challenge; namely time than initially anticipated to achieve full bankability
early recruitment underwritten by one of the shareholders, status. As part of the development process, identification
longer-term secondment of shareholder staff to the project and engagement with key stakeholders is a critical success
SPV and temporary step-in to executive roles. factor, and stakeholders must be mapped and managed
appropriately. Selection of a strong local partner is also a
In our experience, the best model is early recruitment, key factor for success but requires an alignment of interests
as it provides an opportunity for the key staff to immerse between all parties to ensure a productive relationship.
themselves in the project prior to financial close and are
fully prepared to run the project SPV following financial During the construction phase of a project, mobilising the
close. This does however require one of the shareholders to EPC contractor to site per the project schedule is helpful if
underwrite the employment contract for a reasonable period project delays are to be avoided. International contractors
of time, to ensure that the key staff are not left exposed teaming up with a local contactor may be the best solution
should the project not achieve financial close. An alternative to this challenge. Securing the project SPV resources to
to this model is the secondment of key staff into the project deliver the project as soon as possible should also minimise
SPV, from the shareholders. This works particularly well for construction delays. Lastly, develop a strong working
the power utility-type investors with specialist resources, relationship with the EPC contractor, to assist in resolving
geared towards project secondments. The last model is for minor disputes amicably, before reverting to contractual
the shareholders to provide resources on a short term basis remedies and protections.
THE CHANGING
LANDSCAPE
Moving the Power Sector Forward
As Global Sector Head, Power and Infrastructure David is responsible for developing Standard Banks
involvement in the growth of this core sector in Africa, and helping clients expand their activities into
or within Africa.
David has had a career in asset based deals in Europe and Africa, and has specialised in rail and
telecoms. As Global Head, David oversees industries such as conventional power, renewable energy,
construction and cement, as well as transport.
He was formerly employed at the Strategic Rail Authority and then Babcock & Brown (B&B) in the
UK, specialising in rail finance. He was involved in many of the major projects in the late 1990s and
2000s, including the West and East Coast Main Line developments in the UK, and investment in the
rolling stock market in Europe, including the purchase of Angel Trains from RBS in 2008.
actual progress in finalising the full technical solution and the developers. It will be fully underwritten by Standard Bank
procurement process that needs to follow. together with a development finance institution.
In West Africa, both Ghana and Nigeria are facing challenges Tanzania continues to struggle as parastatal Tanzania Electric
and opportunities, but for different reasons. In Ghana, Supply Company Limited (Tanesco) tries to improve access to
setting tariffs too low has required enormous subsidies that electricity for the population and to partner with the private
the Government has been unable to fund in full, leading to sector. We may see substantial investment in the following
backlogs in maintenance, plunging plant availability and years if the Millennium Challenge Corporation (MCC), which
severe black-outs. There is not enough gas offshore to provide provides economic assistance from the US government through
all the new base load requirements, so a liquefied natural gas a competitive selection process to developing nations, can sign
(LNG) solution is likely needed as the gas supply from Nigeria its compact with Tanzania this year. Uganda also continues to
is unreliable. There are numerous IPPs under development in make progress, with a sector that functions efficiently. The Get
Ghana - so if the country can solve its fiscal crisis and its base Fit small hydro schemes, sponsored by KfW, have allowed
load fuel supply, the future could be bright. It does make one a great deal of consistency and standardisation into the IPP
wonder if privatisation (if properly followed through) would model that is capable of being exported to other jurisdictions.
now be a better option for Ghana in the long term.
Opportunities include an undisclosed 35MW geothermal In this environment, the need for innovative funding
power project in Kenya. The project has the location and steam arrangements is becoming increasingly important, if deals are
field potential for up to 140MW of capacity and is currently structured well, the overall cost of an investment and overall
being developed by a consortium of local and international capital needs are reduced.
Investing in Africas energy sector does not come without The renewable sector will continue to play a more pertinent role
risks, however, and those that take the plunge need to go in in alleviating some of the energy shortfalls across a continent that
with their eyes wide open. But more workable and innovative is struggling to keep the lights on. While progress on the REIPPP
models for project finance are helping fast track projects and in South Africa has been slower than anticipated, recent bidding
bridge gaps that existed previously. rounds have shown some promising signs, like lower tariffs being
achieved due to active competition. The successes achieved can
The development of an environment more conducive to the certainly be replicated across Africa, where opportunities abound
growth of an IPP industry is beginning to take shape and for solar, wind, hydro and gas projects, but where only 20% of
bodes well for the future. The Triumph Power Generating people are connected to power grids.
Company Limited stands out as the first locally owned IPP
in Kenya. Its first project is the development of an 83MW Standard Bank has seen 13 of its projects connected to the
heavy fuel oil power plant and power produced by Triumph grid already, supplying 826MW into the grid. Successes
will be sold to Kenya Power and Lighting Company under a include the 75MW Solar Photovoltaic (PV) Solar Capital De
20-year Power Purchase Agreement (PPA). Aar (Pty) Ltd facility, which was awarded preferred bidder
Electromaxx Limiteds diesel power plant in Uganda, which status under REIPPPP. The project is located near De Aar
began operations in 2010 with 20MW and expanded by in the Northern Cape Province of South Africa and was the
30MW in 2012, is Ugandas only locally owned IPP and first phase of what could become a 300MW solar farm. The
power produced is sold to the national off-taker, Uganda company, which is chaired by Dr Mamphela Ramphele, says
Electricity Transmission Company Limited under a 6 year the De Aar development is part of the larger plan to deliver
PPA. Both the original construction and expansion phases 25 solar farms on 50 000 hectares of land in the Northern
were financed by Stanbic Bank Uganda. Since commissioning and Western Cape provinces. Standard Bank was mandated
in October 2013, Electromaxx Limiteds 50MW diesel power as lead arranger, financial advisor and provided senior debt
plant in Uganda has enjoyed 100% availability based on a funding and interest rate hedging to the project.
contracted capacity of 50MW.
While challenges remain, the upsurge in global interest
Exciting potential lies in hydro power. Mpanda Nkuwa, for to provide funding or to get involved in building projects
example, is a 1 500MW hydro power station situated in the directly, especially when combined with the correct structured
Tete province of Mozambique currently being developed products, is going to improve access to electricity for millions
by Camargo Correa, with offtakers likely to be Eskom and of people that are currently without. The future of the energy
Electricidade de Moambique. sector in Africa continues to flicker brightly as a result.
Standard Bank has a 153-year history in South Africa and started building a franchise outside southern Africa in the early 1990s.
Our strategic position, which enables us to connect Africa to other select emerging markets as well as pools of capital in
developed markets, and our balanced portfolio of businesses provide significant opportunities for growth.
The group has nearly 49 000 employees and over 1 200 branches, which enable it to deliver a complete range of services across
personal and business banking, corporate and investment banking and wealth management. Standard Banks Corporate
& Investment Banking division offers its clients banking, trading, investment, risk management and advisory services to
connect selected emerging markets to Africa and to each other. It has strong offerings in mining and metals; oil, gas and
renewables; power and infrastructure; agribusiness; telecommunications and media; and financial institutions.
Headline earnings from continuing operations for 2014 were R21 billion (about USD 1.9 billion) and total assets were
R1 907 billion (about USD 165 billion). Standard Banks market capitalisation at 31 December 2014 was R232,2 billion
(about USD20 billion).
The groups largest shareholder is Industrial and Commercial Bank of China (ICBC), the worlds largest bank, with a
20,1% shareholding. In addition, Standard Bank Group and ICBC share a strategic partnership that facilitates trade and
deal flow between Africa, China and select emerging markets.
Justin DeAngelis is a Director, responsible for origination, analysis, structuring, valuation and execution of investments for the Power Deal Team.
He joined Denham Capital in 2007. Prior to joining Denham, Justin was a Director at Waypoint Energy and worked as a Manager at Pace Global
Energy and PG&E National Energy Group, after serving as an Engineer at Delmarva Power. He is currently a member of the Board of Directors
of Endeavor Energy, Thesis Energy, and subsidiaries of Rio Energy. Justin received a Bachelor of Science from Drexel University and a Master of
Business Administration from LeBow College of Business at Drexel University.
QUESTION: Denham has garnered a they have reached commercial operations. with a high quota of skill, patience,
strong reputation in Africa with many Investors and strategics alike want to own discipline, experience and inter-personal
successful investments, so Im sure you these core power infrastructure assets communicative abilities.
would be reluctant to disclose your because once operating they provide
thoughts on the next hot investment reliable yield. QUESTION: Ten years from now,
opportunity for Africa. Taking a slightly once Africa has increased its access to
different tact then; what was the hot Thus, the opportunity we see in African
power is the development and construction electricity, what are going to be the big
opportunity in Africas electricity sector trends petrochemicals, housing and
in recent years, and do the rewards look of well-structured power generation assets
across the continent, which we will then construction perhaps?
set to track in line with the original
opportunity? sell to create private equity returns. To
execute on this strategy we have assembled I wont predict the next wave, but
what we believe to be the best teams to certainly access to power is the key to
ANSWER: First, Denham does not originate, develop and build high quality creating a sizeable middle class in Africa,
invest in momentum. That is, we power projects across Africa. which will open up a whole slew of
assess investment themes based on the investments. As evidence of that, the
fundamentals of the theme rather than WEO2014 estimates that $1 invested in
try to time the market. In Africa, its QUESTION: What made that
opportunity so compelling? the power sector in Africa will generate
clear that there is a need for all different $15 in incremental GDP.
types of power generation (e.g., gas fired,
solar, wind and in some instances hydro ANSWER: The need for power in Africa How has the price of oil impacted
generation). The World Energy Outlook combined with the advancement of Africas ability to raise capital for
2014 (WEO2014) estimates the capital financeable contract structures (e.g., long- renewable energy projects?
needs in power at $46 billion per year for term PPAs with government guarantees),
the next 25 years, where power generation the significant presence of an avid buyer
needs are nearly half of the total. So, the market with demand for top quality, The short answer is it has not impacted
power need today and well into the future well-structured power infrastructure-type Africas ability to raise capital for
is significant. projects that we develop and finance. renewable projects. First, unlike
developed markets, renewable energy
Denham Power also sees a tremendous Denham believes that the teams it can be economic, even under-cutting
appetite from investors to buy high has assembled are exceptionally well the marginal cost of power, in most Sub-
quality, well-structured power plants once suited to capitalize on the opportunity, Saharan African countries.
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What considerations should COP21 Beyond Africa, does Denham see qualities. For example, we are delivering
take into account this year when opportunities in other developing wind power at $50-$60/MWh in Brazil.
deciding on the future of carbon markets? In the Philippines, we helped to build
investments in Africa? a 600MW coal plant that delivers sub
$100/MWh power in a market priced
Absolutely! Africa is only one target at $140/MWh when it has equilibrium,
Anything that can help move power investment area of many to Denham. well above that when it doesnt. Solar
projects along more quickly will Denham Powers primary investment power can also be an economic power
help the continent. Thus, if carbon strategy focuses on the development solution, for example in Uruguay, where
offsets are available and this revenue of power projects in regions that are we previously delivered solar power at
stream relieves some stress from host expected to have high growth rates, under $100/MWh.
countries, offsets should be considered. require new-build power generation
To maximize the impact from carbon and where we can build projects with In all cases, it is Denham Powers
offset/credit sales, long-term sales long-term power purchase agreements goal to help increase reliability of the
contracts will be required to increase at a reasonable equity return. Many power system while reducing the cost
debt sizing. emerging markets globally exhibit those of power.
One of Powertechs key strategies is our expansion into the African markets.
For a number of years already we have partnered with ESI Africa to reach our
target audiences in Africa on their home soil. ESI Africa has proven to be the
publication of choice when it comes to building our brand in Africa. We will
definitely continue our relationships in the years to come.
Regula Niehus, Corporate Communications Client Manager
HTML WEEKLY
MAGAZINES WEBSITE WEBINARS
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ESI Africa allows you to reach your audiences in Africa on their home soil.
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RISKY BUSINESS?
Lower Oil Prices and Africa Energy Projects
Keith has been working on project finance and risk mitigation for investments in Africa and Latin
America for over 15 years. He currently advises the African Development Banks Initiative on
Risk Mitigation in Africa, which seeks to improve the availability and use of various mitigation
instruments to, in turn, support project finance for large capital projects.
Keith has also spent the past 8 years working in and with Brazilian companies, particularly in the
area of risk mitigation for their exports to and investments in Africa. From 2007 to 2009, he was
the Vale General Manager for External Affairs, with responsibility for all projects outside Brazil.
He has since also worked for Aon Brazil, heading its International Trade and Investment area,
as well as for the IFC, where he was responsible for a Brazil-Africa initiative. Finally, Keith held
various positions during his 7 years working at MIGA/the World Bank Group, including support
for investments in fragile and conflict-affected states.
Keith holds degrees from Georgetown University and McGill University. He also taught
International Risk Analysis and Management at Georgetown. He has widely published on
various topics related to risk mitigation, South-South investments and project finance, with a
special focus on Brazil-Africa.
1 The author is a consultant to the Initiative for Risk Mitigation in Africa, a donor-funded trust fund housed at the
African Development Bank. The views expressed in this article are strictly the personal views of the author and do
not represent those of the AfDB or IRMA. The author would like to thank Ms. Grace Gabala, who assisted in its
preparation.
The substantial and rapid decline of world oil prices over the past year and the prospect that they may remain
at lower levels over the coming years has focused attention on the winners and losers, in terms usually
linked directly to a given countrys position as an exporter or importer of oil and gas.
wanting to create or expand their hydrocarbon production All of this means that the collective bargaining power of
capacities will need to scale back or postpone their plans. In OPEC is significantly lower now than it was some years ago
Africa, there has hence been much discussion about countries with a tendency to become lower still. Furthermore, the
such as Angola, Ghana, Nigeria, Mozambique and Tanzania. impact on global prices that some politically-motivated supply
interruption in any given country could cause will be more
While this article will touch on this theme, our focus is on a limited. (Obviously, a broader regional conflict particularly
broader question: what will be the impact of lower oil prices on in the Middle East could still cause oil prices to spike; this
risk (and risk mitigation) for energy projects on the continent? is the one scenario under which prices are most likely to rise.)
Here, we refer not only to those projects linked directly to
production of oil and gas, but also to those in power generation Demand Side: While demand growth is expected to continue,
(from fossil fuels as well as renewables). I propose that the particularly from emerging markets and developing economies,
decline in oil prices both due to the decline itself and its newer predictions are that such growth will be slower than was
rapidity poses new challenges to governments in Africa as imagined before7. In particular, China is entering an era where
well as private developers and lenders for all types of energy growth of 7% or less will likely be the norm. Climate change
projects in Africa. The result is an altered risk landscape which and economic concerns are also likely to push China and
will require new thinking on the part of all involved and the other leading emerging economies to do more in the areas of
use of improved and expanded risk mitigation tools. energy conservation and renewables even if not to the extent
that many environmentalists would like to see8. In OECD
THE GLOBAL CONTEXT: countries, by contrast, demand is likely to be stagnant or even
decline, and concerted efforts are being made to both lower
LOWER OIL AND GAS PRICES ARE (MOST LIKELY) energy use and to switch to more renewables.
HERE TO STAY
Supply Side: The recent rapid decline in oil prices, as has WHAT DOES THE NEW REALITY MEAN
been noted elsewhere2, is due to several factors. Together, one FOR AFRICA IN GENERAL?
can term these the democratization of oil. By this, I mean
two separate but concurrent trends. On the one hand, an ever As elsewhere in the world, lower global energy prices are
increasing amount of production is (and will be) outside of producing winners and losers at national and sub-national level.
OPEC countries3. In addition to the emergence in the past In short, the most obvious winners are net energy importers and
decade of major producers like Kazakhstan and Azerbaijan, consumers, while those who depend on hydrocarbon revenues
and the rapid rise of production in the US, a growing number (mostly national governments and state-owned enterprises in
of African countries (Ghana, Mozambique and Tanzania), as oil-producing states) will face the greatest challenges, possibly
well as Brazil and Argentina, among others, are poised to add impacting energy projects (see below).
significant amounts of oil and gas to world production in the
coming years4. Finally, if sanctions on Iran are in fact eased or
lifted, increased production there would add more production
even within OPEC5. Separately, the hydrocarbon production
matrix is changing and increasing the flexibility of the market to
adjust: shale oil production is much more easily ramped up and
down (to reflect global prices) than are conventional oil wells6.
If the price rises too much, Canadas vast tar sands become more
attractive, as does more expensive deepwater production.
However, oil and gas prices have a ripple effect through the INCONVERTIBILITY AND TRANSFER:
entire chain of energy projects, as I will discuss in detail. In various countries Nigeria, Angola, Equatorial Guinea,
Specifically, they are likely to lead to a reconsideration of more Algeria, Libya and Gabon oil and gas exports are the
expensive renewable energy projects: when thermal power main source of revenue for the government. Hence, the
becomes cheaper, it is harder to argue for more expensive rapid and sustained fall in prices is putting great strain on
ones that use renewables. While climate change arguments national coffers. In some countries, local currencies have
carry some weight, governments in many countries are likely already come under pressure (e.g., Ghana and Nigeria)10.
to re-examine projects when the cost differential becomes too
great. This is particularly true in Africa for two reasons: more
dependence in most countries on fossil fuels for electricity
production; and less tax incentives (and fiscal room for them)
for solar and wind.9 Taken together, this may have wider
ramifications for the energy matrix in Africa: more thermal
power plants and less generation from renewable energy
sources.
Source: http://www.internationalpolicydigest.org/2015/01/30/african-energy-
10 In Ghana, the cedis 40% slide (related, in turn, to profligate government
producers-face-oil-price-pressure/ spending) led it to seek IMF support - http://www.wsj.com/articles/ghana-
to-seek-help-from-international-monetary-fund-1407075262 . The naira
slid below 200/US$ as S&P put it on negative watch in part (but not
9 On a global basis, there is no consensus on what the impact of lower oil only) because of the fall in oil prices. http://www.bloomberg.com/news/
prices will be on renewable energy prices. See http://www.carbonbrief.org/ articles/2015-02-11/naira-volatility-jumps-to-6-year-high-as-nigeria-currency-
blog/2015/01/what-falling-oil-prices-may-mean-for-the-future-of-renewable- slides
energy-investment/ for a detailed discussion. The US EIA predicts little 11 Nigeria similarly, and tentatively, imposed restrictions in late 2014 which
impact in the US but that is based on its assumption that tax incentives and even caused JP Morgan in January 2015 to threaten removing Nigeria from
pro-green regulation will outweigh the shift in oil and gas prices. See http:// bond indexes: http://www.bloomberg.com/news/articles/2015-02-05/nigeria-
www.theguardian.com/environment/2015/jan/28/low-oil-prices-wont-hurt- woes-deepen-as-jpmorgan-hits-emefiele-with-debt-warning
renewable-energy-says-us-eia . But Africa is likely to be a different story, even 12 For Ghana, see above. On Angola, which received IMF support during its last
if no detailed analyses are yet available. As an example, South Africa depends crisis in 2008, see the IMFs very direct advice: http://www.bloomberg.com/
on fossil fuels for 96% of its primary energy production. http://www.eia.gov/ news/articles/2015-02-06/angola-must-raise-taxes-cut-fuel-subsidy-as-oil-falls-
countries/cab.cfm?fips=sf imf-says
Also, allowing currencies to fall in value is likely to stoke EXPROPRIATION AND NATIONALIZATION
inflation in those countries. This will reduce the spending
power of ordinary people and may increase other risks In general, it is currently unlikely that falling oil prices will
(see above). lead to a spate of expropriations be it of oil installations
Finally, currency devaluation is not something covered or other foreign investments.
by political risk insurance (though hedges exist). This On the other hand, if private energy companies decide
means that as happened with Argentinas pesefication to alter their investment plans for example, cancelling
foreign lenders and investors may be severely impacted by planned deepwater exploration or production due to the
a sudden, sharp depreciation in the local currency, even if lack of commercial viability there may be pushback
they continue to exchange and repatriate currency13. from governments, and decisions to seize assets. In
Argentina, for example, the government expropriated
the largest private company oil and gas producer YPF
POLITICAL VIOLENCE (WAR, CIVIL WAR, amid allegations it was failing to invest enough15. (Most
TERRORISM, SABOTAGE, STRIKES AND CIVIL risks of this nature, however, are likely to come under
COMMOTION) breach of contract.)
Governments of oil-producing states are now facing In a context of more generalized political violence due to
stark choices. One measure to reduce spending usually increased poverty or removal of subsidies, governments
on advice of IFIs is to remove or decrease subsidies may seize strategic foreign assets in consumer areas such
13 Currency devaluation is considered by PRI providers (rightly or wrongly) to 14 Mozambique one example of many has seen repeated deadly riots over
be a commercial risk. It should be noted, however, that investors can write government attempts to remove fuel and food subsidies: 2008, 2010, 2012
a given exchange rate (or mechanism of adjustment) into their contractual See http://www.economist.com/node/16996835
arrangements with host governments (as often occurs in PPAs). In that case, 15 http://www.energytribune.com/20101/argentinas-re-nationalization-of-the-
the risk can be covered under breach of contract coverage. energy-industry-and-what-it-means-2#sthash.ccCqNIcP.dpbs
BREACH OF CONTRACT
Last but not least, in the current context, is the risk that
governments will breach undertakings with (foreign)
private investors. Note that government includes all
levels of government (federal, provincial or state, and Many projects currently in the
local) as well as SOEs.17
This risk becomes particularly heightened during times of planning stages will not be
change and uncertainty, such as the current ones. It is also
highly connected with all kinds of energy projects, which pursued: money spent on project
generally involve a deep and on-going (contractual)
relationship with one or more levels of government18. preparation, feasibility studies,
In energy-producing countries, based on past experience
in Africa and elsewhere, we can predict the likelihood of etc. will be lost.
four specific, heightened risks:
- As government revenues fall, there may be attempts
to renegotiate royalties, taxes and other income from downgrades from the rating agencies20, impacting their access
private (usually foreign) investors in O&G production to financing. A second is that many projects currently in the
- Those same investors may, themselves, seek changes planning stages will not be pursued: money spent on project
in PSAs (production sharing agreements) and other preparation, feasibility studies, etc. will be lost. Some countries
contracts to reflect declining returns from current and which had hoped to become energy producers but whose
especially planned (higher cost) production costs of production or of access to markets are high (including
- Governments are also likely to cancel, postpone or some landlocked African countries21) will have to rethink
renegotiate public works and PPP projects in other their national strategies potentially making it difficult for
sectors, including infrastructure (something that may them to find foreign investors willing to support their energy
well effect EPC contractors as well as investors)19 independence dreams. (On the other hand, some countries
- For new projects in all sectors, governments will be may continue with their plans for renewable energy projects
less likely to provide guarantees which compromise that reduce dependence on imported oil and gas and to diversify
their fiscal position and add to their debt burden their energy matrix even in the new cheap hydrocarbons
particularly those that approach the IMF for context.) For Africas coal exporters, these will be tough times;
support as experience in the US has shown, the lower price of oil and
In all states, there may also be efforts to change or cancel gas will make coal an even less attractive energy alternative
planned projects, based on the new economics of thermal than it already was22. Finally, lower electricity prices are likely
power plants. In other words, plans for wind and solar to have a knock-on effect on the (already precarious) financial
(and to a lesser extent hydro) may be affected. position of many state-owned electric utility companies.
In addition, there are several other risks that may impact energy One looming question for the medium and long term that
projects in Africa but do not directly impact the risks above. this paper does not address is: What of climate change? The
One is that energy producing countries will potentially face cumulative global effect of the above-mentioned changes
(even taking into account use of more natural gas) would be
16 In 2010, Hugo Chavez nationalized a Franco-Colombian supermarket chain.
More recently, Nicolas Maduro, his successor, has taken similar steps (including
forced price controls) against additional supermarkets. http://www.reuters.com/ 20 For Nigeria, see above. Fitch and Moodys have both recently changed
article/2010/01/19/venezuela-nationalization-idUSN1922545920100119 their Angola outlook to negative, while not yet changing their rating:
https://www.moodys.com/research/Moodys-affirms-Angola-Ba2-ratings-
17 In practice, insurers are reluctant to cover SOEs explicitly (on a stand-alone changes-outlook-to-negative--PR_318660 and http://www.reuters.com/
basis) unless they are directly and fully backed by the federal government. article/2015/03/27/idUSFit91780720150327
18 Several of the largest political risk insurance claims of the past 15 years involved 21 A prime example is Uganda, where $60/barrel oil is likely to cast a heavy cloud
breaches of contract in energy projects. These include the Dabhol thermal over its prospects for oil exploration and production: http://observer.ug/
power plant in India (over US$110 million) and the MidAmerican power plant business/
in Indonesia (over US$218 million); the amounts are only those of OPC, as 38-business/35918--low-global-oil-prices-could-affect-ugandas-prospects--
private market numbers are confidential. https://www.opic.gov/sites/default/ analyst
files/files/fy2012-claims-report-web.pdf 22 Even before the decline in oil prices, both thermal and metallurgical coal
19 During the 2008-9 crisis, for example, Angola accumulated US$9 were down 40% from 2011. http://www.carbontracker.org/wp-content/
billion in accumulated arrears, mostly with Brazilian and Portuguese uploads/2014/09/Coal-Financial-Trends-ETA.pdf . It is also one of the
reasons that Vale sold a share of its massive Mozambique operations to
construction companies. https://www.ihs.com/country-industry-forecasting.
Mitsui in December of last year: http://www.mining.com/vale-sells-stake-in-
html?ID=1065997697
mozambique-coal-project-to-mitsui-for-763m-34877/
more greenhouse gases, undermining efforts to limit climate may cover all risks (commercial and political). They can
change. If China, the US, and other major economies decide also provide financing that removes the risk for their EPC
to curb emissions more aggressively, this would again change contractors, for example. The main limitation here is that
the risk-return matrix on a global basis. However, such most ECAs use OECD ratings to determine pricing
a decision is not yet on the horizon a subject for further and most African countries continue to be rated as high
discussion and speculation. risks (5 to 7 on the OECD scale, on which 7 is the highest
risk).
AND THE MITIGATION TOOLS OLD AND (It should be noted that particularly the private market
NEW TO DEAL WITH THEM is very sensitive to claims. So, a spike in claims from a
Investors and lenders have traditionally relied on a series particularly sector or country could lead to higher rates,
of risk mitigation tools for their foreign investments and shorter tenors and less capacity.)
financing (in Africa and elsewhere). These continue to be Involvement of Multilateral Lenders such as the African
available for most African energy projects at the moment Development Bank and the World Bank or IFC also
with some caveats. In addition, new tools have been added mitigates the risks to lenders and investors.
and existing ones modified to reflect new risk realities. The - The best-known product in this area is the A-/B-loan
tools include: structure, where commercial lenders participate in
Political risk insurance for the coverages mentioned lending to a project on the back of a loan from an official
above (as well as non-honoring of sovereign guarantees) financial institution. While this gives some protection
is available from both public sources (such as the World to commercial lenders, there are two limitations. First,
Bank Groups MIGA, the Islamic Development Banks beyond the implicit (halo) effect for the project, there
ICIEC, Africas own ATI and national investment insurers is no explicit risk mitigation for the equity investors
such as the USs OPIC and Chinas Sinosure), as well as themselves. Additionally, some commercial lenders
private insurers23. What has changed in this area recently (especially due to Basel III restrictions) may not find
is the willingness to specifically offer insurance against their risks adequately mitigated by the current structure.
the risk of breaches by subsovereigns (such as state and As a result, lenders and insurers are increasingly working
local governments) and SOES something particularly together to explore providing adequate coverage
relevant for many energy projects that may involve SOEs (through political risk insurance) for investors and
as offtakers in PPAs (power purchase agreements) or as B-loan participants. This process is made more difficult
joint venture partner in E&P contracts. Additionally, by the need for both lenders and insurers to have a right
the private market has become much more familiar with to the projects shares under a possible default/claim,
Africa and now can offer much longer tenors and greater but progress is being made on reaching a compromise
capacity for projects than 5 years ago24. that takes into account all relevant interests25.
- In addition, the African Development Bank and World
Export credit agencies may also provide similar coverage Bank, among others, offer Partial Risk Guarantees (that
for their nationals exports of goods and services and cover specific political and regulatory risks) and Partial
23 Private insurers include the London-based market around Lloyds syndicates, 25 For many years, the competing demands for unencumbered rights to
as well as US- and Bermuda-based insurers like Zurich, AIG, ACE and shares in the case of a claim/default have been an obstacle particularly to
Sovereign. cooperation between MIGA and other official lenders, both of whom have
24 In the past year, the private market has offered PRI for projects in specific a de facto or de jure preferred creditor status that they believe should have
African markets for up to 10 and even 12 years. precedence over all others. Recently, MIGA has moved to a more flexible
position that could result in more cooperation with official lenders.
26 See http://www.afdb.org/en/projects-and-operations/financial-products/ Those who are willing to adapt to the new context for Africas
african-development-fund/guarantees/ . The first AfDB (African
Development Fund) PRG was issued precisely for an energy project: the Lake
energy projects will undoubtedly flourish and find the
Turkana Wind project in Kenya. http://www.esi-africa.com/lake-turkana- necessary financing and risk mitigation. To this end, however,
wind-project-gets-adf-partial-risk-guarantee/
governments and investors alike will need to be flexible,
27 http://www.ft.com/cms/s/0/99d1ead0-9e9d-11e1-9cc8-00144feabdc0.
html#axzz3XnW4D7ZB creative and visionary for Africas pressing energy needs
28 For a detailed analysis, see: http://elibrary.law.psu.edu/cgi/viewcontent. continue to be just as great, whatever the current oil price
cgi?article=1003&context=jlia
may be.
INNOVATIVE
FINANCING FOR
THE LAST MILE:
Output-Based Aid Provides Power to the
Poorest Households
Sal E. Gonzlez, Communications, Global Partnership on
Output-Based Aid, World Bank
Sal E. Gonzlez has been working in communications with the Global Partnership on
Output-Based Aid (GPOBA) since December 2012, coinciding with GPOBAs ten-year
anniversary (beginning in 2013). In addition to organizing a conference to commemorate
this event, he helped produce a video titled 10 Years of Output-Based Aid Around the
World. Prior to being with GPOBA, he worked as a researcher in the guarantees and legal
departments of the Multilateral Investment Guarantee Agency (MIGA), the unit of the World
Bank that provides investors with political risk insurance. Sal is a former US foreign service
officer, having served with the United States Information Service: in Riyadh, Saudi Arabia
as the former Deputy Information Officer, and in Rabat, Morocco as a junior officer. Sal
pursued an MPA at the Lyndon B. Johnson School of Public Affairs, received a CONACYT
Fellowship for the Colegio de Mexicos Summer Institute for US-Mexico studies, and received
a BA in Spanish from the University of Texas at Austin.
Nearly half of the worlds population without access to electricity lives in Sub-Saharan Africa.1 The current
energy deficit will worsen without massive new investments and threaten long-term economic growth and
competitiveness.
reliable energy compared to 40 percent in other low-income As donor countries demand greater accountability and
countries. Generation capacity is the lowest, with South Africa efficiency in development aid, and developing countries
alone making up nearly half of that capacity. Service delivery face budgetary constraints, OBA is considered a viable
is unreliable, and rolling blackouts and power outages hurt alternative to traditional aid. OBA provides payments linked
businesses, averaging 56 days per year. Private companies to the delivery and independent verification of outputs. For
often purchase diesel generators to guarantee energy security, example, payments to providers will not be made unless
which doubles and sometimes triples the power costs with a connection has been installed and in working order for
harmful effects to the environment. Average tariff rates per a defined period of time. While OBA provides incentives
kilowatt hour are the highest in the world; rates in countries for private sector financing, it does not exclude supporting
relying on diesel-based systems are higher still.4 commercially viable state-owned enterprises. While OBA is
not applicable in all cases, it can provide notable advantages
over traditional development aid.
OUTPUT-BASED AID
Output-based aid (OBA) is an innovative, results-based The World Banks 2002 Private Sector Development
financing mechanism designed to address the problem of Strategy included OBA as a key element to motivate
connecting the poorest in developing countries to basic the private sector and leverage private capital through
services. OBA works with service providers to bridge the gap subsidies targeted to the poor. In 2003, the World Bank
between the cost of service provision and the beneficiaries and the UKs Department for International Development
ability to pay. As private sector companies are profit-driven, (DFID), established the Global Partnership on Output-
they often overlook the poor as viable consumers. The main Based Aid (GPOBA) as an advisory body for OBA, and in
obstacle in most cases, however, is the prohibitive cost of 2005 approved direct funds to pilot projects to test OBA
connection -- even though most households incur greater approaches and evaluate lessons learned.5
monthly costs by using alternative energy sources such as
firewood, charcoal, batteries, kerosene, diesel and others
compared to an electricity bill. 5 Subsequent donors include: the Netherlands Directorate-General for
International Cooperation, the International Finance Corporation,
the Australian Agency for International Development and the Swedish
4 World Bank, Fact Sheet: The World Bank and Energy in Africa. International Development Cooperation Agency.
Africa, almost three times the cost of the average power first time in Liberias power sector, along with establishing
tariff in sub-Saharan Africa and six times more expensive regulation by contract in the absence of a regulatory agency
that the typical cost in other developing countries. Small (eventually to be established as part of the energy sector
businesses cost for power alone consumed up to 57 percent reform).
of their operational costs.
GPOBAS ROLE
LESEP GPOBAs involvement was a crucial building block in the
To remedy this situation, the World Bank in November reconstruction of Monrovias electricity distribution network.
2010 committed US$10 million through IDA credits to GPOBAs participation ensured the inclusion of the poor in
the US$53 million Liberia Electricity System Enhancement the reconstruction and extension of the electricity network,
Project (LESEP), a program specifically designed to as the market would tend to first connect wealthier areas,
support expanding Monrovias distribution network either due to their ability to pay full costs or to the relatively
and enhance associated power generation facilities. The less expensive connection costs the existing networks. The
World Banks Africa Renewable Energy Access (AFREA) investment to connect the poorest households is entirely
also contributed with a US$2 million grant. Partnering donor-funded, with the service provider not investing any of
with the World Bank was the Norwegian Agency for its own resources, making GPOBA an essential element to
Development Cooperation (NORAD, US$29 million) the success of the project.
and USAID (US$2 million).
The Liberian governments National Energy Plan (NEP),
In December 2011, GPOBA committed to funding LESEP adopted in 2009, aims to provide universal access and
by signing a US$10 million grant agreement. This subsidy affordable, reliable energy to rehabilitate the countrys economy
targeted 16,806 poor households (approximately 80,000 and lend to its stability and social cohesion -- all essential
beneficiaries) in identified priority areas for on-grid electricity elements in a post-conflict situation. The subsidy provided by
connections. The objective was to ensure an inclusive and GPOBA helps meet the goals of extending access to power to
broad-based electrification expansion in the capital city households that would otherwise be the last to be connected,
by providing access to the poor and not just those wealthy if at all, at an affordable price while contributing to the
enough to afford a connection. Until the GPOBA subsidy adoption of international best practices in the electricity sector.
could disburse, NORADs US$29 million pre-financed The households in the 21 identified areas have demonstrated a
LECs investment costs and procured the necessary resources willingness and ability to pay for a monthly electricity bill, as
to implement the connection program. the costs incurred in the other sources of energy are higher still
and consume from one-half to one-third of their disposable
The subsidy per household connection was estimated at income. As an integral part of LESEP and NEP, GPOBA not
US$595 (=US$124/person), equal to 63 percent of the only helped expand the electricity distribution network to
total cost of US$951. This is a comparatively high figure as reach low-income households that demonstrated a willingness
it reflected investments in new connections rather than the to pay but also helped meet the Government of Liberias
usual financing of connection fees for customers; that is, (GoL) objective of reducing tariffs for beneficiaries, leading
the subsidy is to offset the cost of the provider rather than to households saving on energy costs and reallocating limited
supplement the connection fee charged to customers. Eighty disposable income to other important needs.
percent of the subsidy would be disbursed to LEC upon
independent verification of connections, with the remaining PROJECT UPDATE
20 percent disbursed upon independent verification of three
months satisfactory service delivery. New, low-income While LECs goal was to connect 3,000 households per
customers were charged a US$50 upfront connection fee, to quarter, the utility struggled to generate enough capacity
be paid in five monthly installments of US$10. to meet the demand of the reconstructed and expanded
network, leading some households to still not enjoy full
Through a competitive bidding process, the Liberian access to power. In some of the areas, it was discovered that
government selected the Canadian power company some of the connected beneficiaries were unaware of their
Manitoba Hydro International to take operational control newly acquired access, demonstrating the need for a public
of LEC via a five-year management contract to bring the awareness campaign.
utility to a level of full functionality with professionally
trained staff. One important feature of this management While the original grant agreement was set to expire in
contract is the participation of the private sector for the June 2014, the project received an 18-month extension
to allow sufficient time to complete the remaining
connections, and conduct an independent verification to
9 Foreign Policy. Lets Power Africa by President Ellen Johnson Sirleaf. August ensure the delivery of three months service. A preliminary
29, 2013.
GPOBA report indicates that about 45 percent of the
RANKED TOP FOR Our energy experts are internationally recognised as market leaders in the power,
AFRICA-WIDE nuclear, renewables and oil and gas sectors. Together they provide the broad range
PROJECTS & ENERGY of legal expertise required by clients across the globe and through every stage of the
CHAMBERS GLOBAL energy project life cycle.
2009-2015
We have a long-established practice in Africa, where we have acted on countless
matters across the whole of the continent over the past three decades and more than
200 in the last year alone. We are consistently ranked top for projects and energy
work in Africa by industry benchmarks and we have also received the highest rankings
in relation to power work.
Contacts
HERBERTSMITHFREEHILLS.COM
POLICIES AND BEST PRACTICES FOR AFRICA
planned connections were made by the end of the 2014 of Monrovia. GPOBA can continue to support the poor in
calendar year, with 4,000 of these connections facilitated Liberia by facilitating access to electricity services through
by a reallocation of US$7 million in IDA funds for pre- projects in the governments national energy plans, both in
financing and to speed up the procurement of necessary scaled-up on-grid projects as well as in those involving the
material. Another factor responsible for the slowdown in introduction of renewable and off-grid solutions.
connections was the Ebola crisis in mid-2014, as extension
work was slowed in the poorer areas and independent 10 Donors include the World Bank Group, the Inter-american Development
evaluators were unable to interview households and verify Bank, the European Bank for Reconstruction and Development, the Asian
the connections. Development Bank, and the African Development Bank.
CONCLUSION
OBA has played a vital role in revitalizing the
Liberian electricity sector while the country
recovers from a decade and a half of an
internecine stress, both on its people and its
quality of life. In this post-conflict scenario
GPOBA has played a part in helping the
GoL design the reconstruction of Monrovias
electricity distribution network. OBA has
demonstrated its viability in promoting
the GoLs goal to re-introduce power to its
capital city, anticipated to reach an 8 percent
connection rate by projects end. While there
have been unanticipated but temporary
obstacles to fully adhering to goals as planned,
ie the generation capacity not keeping pace
with consumer demand, mechanical issues,
the need for consumer awareness/education
campaign, and the Ebola virus, efforts are
ongoing to make up for lost time and to raise
the robustness of LEC to more efficiently
deal with setbacks as they occur. Massive
investments still need to be undertaken to
achieve the GoLs goal to connect 35 percent
of the urban and peri-urban households by
2030. In 2013, Liberia was estimated to still
have the lowest nationwide electrification
rate of any country 1.6 percent. Liberia is
one of the eight pilot countries taking part
in the multilateral donor initiative Scaling-
Up Renewable Energy Program,10 which
seeks to expand access to electricity outside
Since 2002, Globeleq has been a leading developer, owner and Jeffreys Bay Wind Farm
138 MW, South Africa
operator of independent power projects in the emerging markets
and has participated in nearly 14,000 MW of generation capacity
in 27 countries. The company develops economically sustainable
businesses that support the continued development of the electric
power sector in Africa.
Droogfontein & De Aar Solar Power
50 MW each, South Africa
Award winning expertise:
ACQ Magazine International Energy Business of the Year (Emerging Markets) 2014
Infrastructure Journal Power Deal of the Year 2013 - Azito Expansion
Project Finance African Power Deal of the Year 2013 - Azito Expansion
ACQ Magazine International Energy Business of the Year (Emerging Markets) 2013
Azito
430 MW gas fired (of which 139 MW
is under construction), Cte dIvoire
www.globeleq.com
2 More London Riverside, London, SE1 2JT, United Kingdom
T +44 (0)20 7234 5400 F +44 (0)20 7234 5486 E info@globeleq.com
Songas
190 MW gas fired, Tanzania
Kribi
216 MW gas fired (expansion to 330 MW
under development), Cameroon
Dibamba
88 MW oil fired, Cameroon
Tsavo
75 MW oil fired, Kenya
POLICIES AND BEST PRACTICES FOR AFRICA
Paul Kunert is responsible for coordinating all business development activities in Africa. As a member of the Executive Committee, Paul is
fully involved in the strategy and planning of Globeleqs growth and development.
With 15 years experience in developing, financing and managing power and other infrastructure projects he has been with Globeleq since
its inception. From 2003-2007, he was Vice President for East Africa and the Managing Director of Globeleqs Songas project, managing its
construction, operations and two expansions. Prior to this Paul successfully led the companys power acquisitions for both Tanzania and South
Africa and the acquisition and development of the electricity distribution business in Uganda.
Paul was with CDC Group from 1999-2002 where he developed, financed and managed power projects in India and sub-Saharan Africa.
Prior to 1999, he held positions in project and corporate finance, advising investors and off-takers in UK and European PPP schemes.
QUESTION: What has been the most Songas is special in so many ways. the abundance of domestic coal to
rewarding or memorable project that Its a large project in a smaller generate majority of its power. South
Globeleq has been involved in in Africa economy, so we can see really clearly Africas government realized that it
to date? the massive difference we make; its needed to diversify its energy mix and
saved Tanzania over $4.5billion in introduced a revolutionary renewable
ANSWER: Thats a hard one! Every avoided costs of imported oil; and energy program which during its first
one of our projects is rewarding its its catalyzed gas exploration in the two rounds mobilized $9.5 billion
hard to choose. Every time we bring a region, the use of gas in Tanzanian of private sector capital. Globeleq
project online we know were making a industry from cement to brewing is proud to say that we were a part
real difference in hundreds of thousands to hotels and of course has been of this and we now provide a clean
of peoples lives. Our business is about the back-bone of the electricity source of generation to the South
providing new power generation to generation sector, generating up to African energy grid.
markets where supply is continually 40% of Tanzanias electricity in some
outstripped by demand, so the new years, with world class reliability. And QUESTION: From a developers
generation capacity we add means faster its cost effective: at 6.5 USc/kWh perspective, what are the key
economic development in that country. nothing else in the region comes components required to ensure a
close. successful experience when working
If I had to single out specific projects, I The 50 MW De Aar, 50 MW in a developing country?
would say Songas, with its 225 km gas Droofontein solar and 138 MW
pipeline and 190 MW Ubungo power Jeffreys Bay wind power plants in
station in Tanzania; and, of course, the South Africa were some of the first ANSWER: There are a lot of things that
South African solar and wind power renewable energy facilities to be built need to fall into place to make a project
projects: in a country which always relied on happen policy stability, broad-based
factory, get a decent education, conference is the key event for all those
involved in the African Energy sectors
run hospitals, light and heat or and so there are many opportunities
to network with old and new players
Angeli started her management consulting career at PwC in John is an Advisory Partner based in Johannesburg where
the Netherlands in 1991 and moved to South Africa in 1998. he has particular responsibility for PwCs Capital Projects &
In South Africa she led the Technology Practice for 11 years and Infrastructure Power & Utilities business across Africa. In addition
was part of the Global Technology Leadership team and the PwC John leads the Deals Infrastructure Finance team in South Africa.
Global Emerging Leadership team.
Across a 25 year career in infrastructure John has worked for
Angeli is leading the Power and Utility practice for PwC in Africa public and private sector clients across the globe. A specialist in
and is the Client Relationship Partner on South Africas major the Power & Utilities sector. John brings particular experience in
utility, Eskom. She was the PwC partner responsible for a wide the development of major infrastructure in Africa having worked
range of Power & Utility projects within Africa. extensively in Southern and Eastern Africa. He is currently one of
the lead advisers to the Department of Energy in South Africa on
the Renewable Energy IPP programme, now in its fourth round
of competitive capacity allocation.
A series of megatrends and markets disruptions are creating opportunities for increasing supply and access to
affordable and reliable electricity in Africa. Both countries and companies need to make the right moves in order
to ensure that they can take advantage of these opportunities. To do this will require a clear vision of the new
market and an understanding of which business models will deliver the required success.
2. Local energy systems markets in which there is significant and legal frameworks and sector institutions. Perhaps for this
fragmentation of existing transmission and distribution reason, major super-grid projects such as ZIZABONA in
grids and local communities demand greater control over Southern Africa are being implemented slowly.
their energy supply, or markets in which a local approach
is adopted for serving remote communities; The introduction of new business models and market models
(such as the introduction of IPPs) may have major impacts
3. Regional supergrid(s) markets which are pan-national on existing power utilities. For example, existing generation
and designed to transmit renewable energy over long assets could be left stranded as local energy systems and self-
distances, requiring large-scale (renewable) generation, generation by customers eat away at the traditional command
interconnectors, large-scale storage and significant levels & control model with its emphasis on a centralised grid and
of transmission capacity; and large-scale generation. This leaves integrated state-owned
utilities with high fixed costs associated with additional
4. Ultra-distributed generation markets in which generators complexity of managing the transmission grids and
have invested in distributed (renewable) generation, with increasingly stranded assets.
investment decisions based on policy incentives and/or
economic business cases. It is therefore conceivable that sector transformation could
shrink the role of some power utility companies to providers
In Africa, the traditional command & control model of back-up power. Alternatively, where existing grid and
remains the norm although there is an increasing network systems cannot evolve to meet the needs of the new
recognition that change is required if the continent is to decentralised models, countries may be unable to take full
unlock its full potential and bring its power sector up to advantage of advanced technologies.
the standards required to compete in a 21st century global
economy. The disruption taking hold in the power sector is just
the start of a fundamental transformation in the energy
In recent years, local energy systems and ultra-distributed industry. Its not a question of whether new market models
generation market models have gained traction as they offer will be adopted- this is already happening around Africa-
particular potential to increase both quality/reliability of but which business models will most widely be used in the
supply and coverage/access to underserved populations using sector, what steps governments, regulators and other players
affordable and geographically appropriate technologies. will take to achieve structural change and whether existing
The Renewable Energy Independent Power Producer power utilities will be able to adapt with sufficient speed
Programme (REIPPP) in South Africa is a particular and flexibility.
success story that demonstrates how the private sector can
be incentivised to develop a substantial programme of new, About PwC
ultra-distributed generation assets located on a geographical
basis to take advantage of high wind speeds or insolation PwC helps organisations and individuals create the
levels. Power is then evacuated to population centres though value theyre looking for. Were a network of firms
the primary transmission grid. Interestingly the REIPPP in 157 countries with over 195,000 people who are
has been implemented by the Department of Energy whilst committed to delivering quality in assurance, tax and
Eskom, the power utility, remains firmly in state-ownership. advisory services. Tell us what matters to you and find
A feature of the local energy and ultra-distributed models is out more by visiting us at www.pwc.com.
that they can be developed in a scalable manner that may
facilitate both financing of initial investment and recovery of
2014 PwC. All rights reserved.
such investment over time. This contrasts with the regional
super-grid model which, by definition, requires major capital PwC refers to the PwC network and/or one or more of its member
firms, each of which is a separate legal entity. Please see www.pwc.
investment on projects that require close co-operation between com/structure for further details.
countries, often with divergent power systems, regulatory
Simon Currie is the Global Head of Energy at Norton Rose Fulbright. He advises clients across the globe on strategy and the development,
acquisition and financing of assets in the energy, natural resources and infrastructure sectors.
Simon has worked on ground breaking and innovative transactions in over 50 countries.
Over the last 15 years he has advised clients on the development of energy projects across Africa. He has worked on several first in country
projects in Africa and understands the changing dynamics and opportunities in the energy sector. He has experience across the entire value
chain, ranging from upstream oil and gas to electricity and gas transmission and distribution.
Simon is a keen supporter of AEF and, in particular, the local content and the student engagement programmes.
QUESTION: I notice youve recently west and north and south, wherever the the opportunity to develop several more
moved to Australia. Surely the move client is located. LNG projects in the future. For now, the
cant purely be a personal one? producers are focusing on getting mega-
Australia has recently reduced the projects like the 3 Gladstone projects and
ANSWER: I was very fortunate to live number of LNG projects under the Gorgon project in Western Australia
in London for 17 years. At the beginning development- what led to this decision? into full production.
of 2015 I relocated to our Sydney office
to help drive our Asia-Pacific (APAC) We are seeing a focus on developing
practice. Australia will soon be the No.1 exporter of low cost LNG projects globally at the
LNG globally. When I left New Zealand moment where field development and
The energy markets in the APAC region in 1997 for London this wasnt just liquefaction plant costs will be controlled.
are of critical importance to the global optimistic but completely unthinkable. The best example right now is Papua New
economy from a supply and demand It shows to me the ability of countries to Guinea which is continuing to see the
perspective. I am working with our global harness their resources and swing towards development of new projects, on the back
clients and our network supporting new markets and customers. of the success of PNG LNG.
the growth of inbound and outbound
investment for the region. However, Australia is now in the position Australia is competing with these countries
where new projects dont make sense as an investment destination. This
I continue to be the global head of our to develop straight away at current gas competition is also facing other new LNG
energy team and I will also continue prices and due to the high construction producers like Mozambique and Tanzania.
focus on the development of the energy costs for the existing projects. As many
industry across Africa. international companies have said about Another interesting trend is focusing
Australia, you can ruin the resources on what can be done with existing
Over the next decade we are going to see story if you dont control labour costs LNG plants which are not running at
APAC-Africa trade grow exponentially. and labour market flexibility. capacity. The push to utilise the almost
We believe it is critical to have our idle Egyptian LNG plants with gas from
leadership team sitting across the globe Australia is lucky to have conventional offshore Israeli and Cypriot fields is a
and enabling clients to look east and and unconventional gas resources and has good example.
delivery and logistics systems and The alternative is to end up with I have only been in Australia a few months
doesnt require the level of specialised white elephants in a range of countries but I am already a growing supporter of
labour of something like, a large gas which are not competitive. This hurts the Japan-Australia initiative pushing the
fired power or an LNG liquefaction everyone as it adversely affects investor merits of clean coal.
project. confidence.
- Ground mounted solar: We continue We are transitioning to a cleaner and
to see more and more utility scale And from a politicians perspective there greener fuel mix globally. And by fuel
solar projects being deployed is nothing worse than promising 100s mix I mean fuels for all sectors - not
globally. The opportunities for local of jobs and then seeing them evaporate just electricity.
involvement are across the value in a few years when the industry wasnt
competitive and the plants had to close. I dont support the view that Africa cant
chain, including site selection and have coal-fired power while the rest of us
development, resource validation, Countries like Morocco have many of drive our gas-guzzling SUVs and push
permitting, civil and electrical works the right ingredients to encourage the renewable energy only solutions for the
and, in the right environment, solar development of a solar PV manufacturing developing world.
module assembly. industry. South Africa has shown the
- Energy efficiency: Many energy way with the development of a local We have the technology to make a
efficiency projects are quite labour renewable energy supply chain. But this difference.
intensive - such as upgrading street cant be replicated everywhere. It helps
lighting. I believe there will be My hope for COP21 is that the US,
to have scale and the potential to export Europe and other OECD countries
increasing opportunities for African beyond the local market.
companies to be seen as leaders in accept the need for rapid transition to
energy efficiency deployment across I do believe that you can impose quite electrification of the transport industry
the continent. We need more African strict requirements on the skills transfer and continuing investment in clean
countries and large industrials with aspects of the industry and require coal technology.
facilities in Africa to get behind very high levels of local participation The reality is likely to be more investment
energy efficiency initiatives. We also in operations & maintenance and and support for renewables. The good
need more entrepreneurs to recognise management. thing for Africa (and anywhere else with
the potential. decent weather) is that solar PV is now
Local content rules must be sustainable
and the best ones take a long term view. competitive with almost every other
Weve talked previously about whether form of power generation. If you look
a local content law would support the As we have seen most recently with
Brazil, you also need to avoid creating an at the lifecycle costs of coal-fired power
electricity sector at this early stage, in markets who dont have ready access to
or perhaps add another hurdle for environment where a few people benefit
and the country loses out. cheap mine-mouth solutions the LCOE
investors that may add additional (levelised cost of energy) for solar PV is
risk. What are your thoughts on this now beating coal in many situations.
a year later? Norton Rose Fulbright is a global
firm advising pretty much across all Solar PV is not the answer to all our
I am generally supportive of local content sectors, including climate change. problems. It may be more dependable
rules in order to make industries do What do you hope decision makers than wind energy but it cant deliver
what they should be doing as a sensible at this years COP21 meeting will baseload power, at least until storage
business. consider when deciding on climate technology is scaled-up and is cheaper.
change policies that will affect That is why I believe that clean coal
I also believe that we must look to Africas ability to raise finance against should be seen as a viable option in the
develop regional hubs of excellence. resources such as coal? countries where is makes sense.
MAKING
RENEWABLE
ENERGY
HAPPEN
STREAMLINING
POWER PROJECT
DEVELOPMENT
IN AFRICA by Promoting
Standardized Power Purchase Agreements
Dr. Nedelcovych is the President & CEO of the Initiative for Global Development, a nonprofit
organization that engages corporate leaders to reduce poverty through business growth and
investment in Africa. Prior to joining IGD, Dr. Nedelcovych was the Chairman of Schaffer
International, where he led the development of a number of agro-industrial concerns throughout
Africa, including the Markala Sugar Project in Mali.
Dr. Nedelcovych served in the Administration of President George Bush from 1989 to 1993 as
the U.S. Executive Director to the African Development Bank (AfDB) in Abidjan, Cote dIvoire.
He was instrumental in formulating the private sector initiative at the AfDB, the African
Business Roundtable and the African Export-Import Bank.
Dr. Nedelcovych presently sits on the Boards of Schaffer International, International Green
Structures, the Partnership to Cut Hunger and Poverty in Africa, Afriland First Bank SA
(Cameroon) and is a past Director and President of the CCA and Member of EXIM Banks Sub-
Saharan Africa Advisory Committee.
Power plays an important role in fostering inclusive economic development. While standardizing power purchase
agreements (PPAs) will help accelerate negotiations for independent power projects, its up to all stakeholders
involved to create an environment that will ultimately facilitate greater access to power for both urban and
rural communities.
USING POWER TO CLOSE THE Outside of urban areas, there is little access to power due to
EQUALITY GAP poorly designed, inadequate or often missing national grid
The growing population in Africa will play a driving role in systems, or simply not sufficient power generation. The central
the continents development narrative. The overall population power grid often fails to reach out to those in rural communities,
is expected to double to over 2 billion inhabitants in the next and, in areas where it does reach, many countries lack sufficient
35 years. More than half will be living in urban areas and be generation capacity to provide reliable power year-round. As late
eager for jobs. As such, Africas urban centers can become hubs comers to industrialization, African countries can take advantage
for manufacturing and industrialization. To turn this potential of more recent innovations in technology to incorporate
into reality, there is a need for access to reliable, competitively renewable energy and point of use power generation into their
priced power. Without it, many African countries may face power supply mix and bank on off-grid solutions to bring
social unrest and political instability as they are unable to meet power to rural areas. With the addition of and mini- and off-
the rapidly growing employment demand. grid systems to the often frail national grid networks, electricity
can reach underserved, hard to reach communities and drive
Ethiopias new Grand Renaissance Dam is an example of inclusive growth where there has been virtually none.
one nations efforts to develop the infrastructure necessary to
meet the demand for industrialization. The $5 billion project
is funded by the Ethiopian government with support from THE CASE FOR STANDARDIZED
Chinese banks and will generate around 6,000 megawatts POWER PURCHASE AGREEMENTS
of electricity to meet domestic and regional demand. Once Private investment in the electricity sector in Africa will be
completed and on line, the World Bank estimates Ethiopia fundamental to increasing access in the region. Because any
could earn $1 billion a year in electricity exports, making it Independent Power Project (IPP) must be based upon a
the largest exporter of power on the continent. This project is Power Purchase Agreement (PPA) between the IPP and the
also expected to drive economic development along the Nile off-taker, it will be necessary to facilitate the negotiation and
basin in countries such as Sudan and Egypt. Increasing electric finalization of bankable PPAs.
power in the region will provide Ethiopia and its neighbors
the ability to power homes and businesses, ultimately driving In many African countries, PPA negotiations can take 5-10
regional economic growth. years more than two to three times longer than in other parts
of the world. The result? Fewer projects are successful and
These kinds of projects are necessary to make Africa a ones that are completed can be more expensive due to these
competitor in the global economy. As China moves up the costly delays. Ive been on the four sides of the negotiating
industrialization ladder, the manufacturing jobs that have table: representing the developer, financier, the government,
driven Chinas growth will ultimately move. How can Africa and now an NGO. One of the major initial challenges
compete with Southeast Asia or other regions with low hindering power projects is overcoming a lack of trust and
labor costs for those jobs? Access to reliable, competitively understanding for the perspectives of the other stakeholders.
priced power is the major pre-requisite. That, along with The developer wants profits and the government wants cheap
Africas abundant natural resources and a large, young and power. Without compromise, it can take 2-3 years just to
increasingly urban population, should make it an attractive settle on a minimum price for the power even before any
destination for those manufacturing jobs. further discussions about terms and conditions.
The complement to rapid urbanization is a decreased number A new PPA handbook, Understanding Power Purchasing
of farmers feeding the growing population. At present, Agreements, was produced by IGD in collaboration with
agriculture is the largest employer and major economic the US Department
driver in many African economies. For African economies of Commerce, OPIC,
to take advantage of its vast, arable resources, smallholder USAID, and the African
subsistence farmers must transform to support sustainable Development Bank
productivity. This means expanding the agro-allied industry through the African
to include the full complement of services along the farm Legal Support Facility.
to fork value chain, including provision of inputs and farm The handbook translates
services, offtake of product and aggregation, warehousing, knowledge and best
processing, packaging, branding, wholesaling and retailing practices on PPAs into
food products. Very efficient links along the value chain will an accessible primer on
create higher paying jobs as well as more competitively priced this often complicated
food to the consumer, and will drive sustainable economic and misunderstood legal
growth. But again, these added efficiencies in value addition instrument. It brings
to raw food products will require reliable and affordable more structure to the
power in rural areas. process by increasing
Dr. Nedelcovych is the President & CEO of the Initiative for Global Development, a nonprofit organization that engages corporate leaders to reduce
poverty through business growth and investment in Africa. Prior to joining IGD, Dr. Nedelcovych was the Chairman of Schaffer International, where
he led the development of a number of agro-industrial concerns throughout Africa, including the Markala Sugar Project in Mali.
Dr. Nedelcovych served in the Administration of President George Bush from 1989 to 1993 as the U.S. Executive Director to the African
Development Bank (AfDB) in Abidjan, Cote dIvoire. He was instrumental in formulating the private sector initiative at the AfDB, the
African Business Roundtable and the African Export-Import Bank.
Dr. Nedelcovych presently sits on the Boards of Schaffer International, International Green Structures, the Partnership to Cut Hunger and
Poverty in Africa, Afriland First Bank SA (Cameroon) and is a past Director and President of the CCA and Member of EXIM Banks Sub-
Saharan Africa Advisory Committee.
QUESTION: What are the main aims QUESTION: What is IGDs rela- plants; the issue is simplifying the way
and objectives of the Initiative for tionship with the US Governments and this is where our PPA Handbook
Global Development (IGD)? Power Africa initiative? Were there will hopefully make an impact.
any important outcomes to take away
from the Powering Africa: Summit in QUESTION: The handbook
ANSWER: Our main aims are to provide Washington this January?
private sector solutions to the challenges Understanding Power Purchasing
of inclusive economic growth in Africa. Agreements (PPA) should drive forward
To do so we draw on our leaders ANSWER: We are the NGO partner the development of independent power
experiences worldwide in applying the to Power Africa, working very closely projects and provide clear guidelines
best practices and are convinced that the with the Department of Commerces for investors and governments alike.
right answers to any one country or region Legal Advisory Services, USAID and Can you tell the readers of the Africa
in Africa no longer emanate only from all the USG agencies involved in the Energy Yearbook a bit more about how
Washington, London or Paris, but are Program. Our Power Working Group, the idea behind the handbook came
often found in other recently emerging comprised of developers, lawyers and about, and what the catalysts were for
countries, not to mention other parts of financiers, worked very closely with DOC its creation.
Africa. So cross-sharing experiences is and the Africa Legal Support Facility at
very important to our leadership. IGD the AfDB to compile the document ANSWER: The idea came from our
brings together an influential network entitled Understanding Power Purchase Power Working Group, based on
of senior executives from sector-leading Agreements which offers up standard examples outside Africa where such
companies with the interest and capacity PPAs that countries can adopt as a way standard PPAs are more routine, to find a
to make strategic investments in high- of speeding up the development of new way to speed up the process and get badly
need, high-potential areas of Africa. power plants. The main outcomes from needed power generation into Africa.
Members of our Frontier Leader Network the Washington Summit were that there In fact, we started working on this idea
shape frontier market insights, promote is definitely a will both from developers even prior to the announcement of the
business-driven development, and create and government authorities to speed up Power Africa Program, so our interests
economic growth. the development of new power generation quickly aligned.
TRANSITIONAL
ELECTRICITY
MARKET (TEM)
and investor and stakeholder expectations for the
Nigerian Electricity Supply Industry (NESI)
Dolapo Kukoyi currently heads the firms Power Practice and has ample experience working on
Infrastructure and PPP Projects. She is well versed in the legal aspects of the power sector, and is
one of the leading Power lawyers in Nigeria, having worked for government agencies, regulators
and private parties on various power transactions. Her expertise in the power sector is supported by
years of experience advising clients on infrastructure broadly. The breadth of Dolapos infrastructure
experience cuts across the Gas infrastructure, Railway, Housing and Roads sectors. She was recently
part of a core negotiating team nominated by the Disco Roundtable, which negotiated with
the BPE, NERC and NBET on issues that affect the Bidders in the recently concluded PHCN
privatization. She is also currently advising clients on the ongoing NIPP Privatization.
A. WHAT IS TEM? These conditions included but were not limited to1:
One of the objectives of the electricity sector reform, which i. Development, implementation and testing by the System
commenced in 2001 with the National Electric Power Operator (SO) and the Market Operator (MO), of the
Policy, is to create efficient market structures, within clear systems and procedures required to implement the Grid
regulatory frameworks, that encourage competitive markets Code and the Market Rules;
for electricity generation and trading. In line with this ii. Formalization of the trading arrangements - Vesting
objective, the Electricity Power Sector Reform Act 2005 Contracts (VCs) and the Power Purchase Agreements
(EPSRA) provides for a phased and strategic implementation (PPAs) between the companies that will participate in the
of the power sector reforms until optimal capacity generation Transitional Stage Market;
and a full competitive market is achieved. Implementation of iii. Publication of the Initial Transmission Usage Charge by
the competitive electricity market will be through a gradual NERC;
process of increasing competition designed as four market iv. Constitution of the initial Dispute Resolution Panel
stages, namely: Pre-Transition, Transition, Medium Term (DRP)2; and
and Long Term. v. Constitution of the Initial Stakeholder Advisory Panel (SAP)3.
1 See Appendix 2 of the draft Market Rules for all conditions precedent to
The Pre-Transition Stage kick started the end of the monopoly declaration of TEM
in the power sector and the commencement of the unbundling 2 The DRP is the panel responsible for arbitrating or otherwise resolving disputes
and privatization of the Power Holding Corporation of between (1) the SO or MO or Transmission Licensee and any Participant (2)
the MO and any person who has been denied certification as a Participant;
Nigeria (PHCN). The Transitional Electricity Market and (3)Participants to the extent that such disputes are in accordance with the
(TEM) was initially due to commence immediately upon the Market Rules of the Grid Code.
handover of the PHCN assets on the 1st of November 2013 3 The SAP is a panel constituted by NERC, responsible for reviewing the
Market Rules, Grid Code and proposing and/or approving amendments on an
(Handover Date), but some of the conditions precedent to on-going basis and advising NERC on specific technical issues relating to the
the declaration of TEM were yet to be fulfilled at the time. operation of the MO Administered Market.
To illustrate the challenges being faced by the market II. RECOVERY OF AT&C LOSSES
Participants, the Discos are required under the applicable Aggregate Technical and Commercial and Collection Losses
vesting contracts to provide Letters of Credit (L/Cs) as (ATC&C Losses) is the sum total of technical, commercial
financial security to NBET for the trading of electricity in and collection losses due to the non-realization of total billed
TEM. However, even after the declaration of TEM, not amounts to electricity consumers.
all of the Discos have provided their L/Cs. As at 20th of
March, 2015, only 8 out of the 11 Discos had posted L/ As the recovery of ATC&C losses rests on the potential liquidity
Cs to NBET (Source: http://www.thisdaylive.com/articles/ of a Disco or Genco, this problem will continue to limit the
afdb-provides-200m-guarantee-for-nigeria-s-coal-to-power- desired effectiveness of TEM if not properly addressed. In
projects/204604/). tackling the problem of technical, commercial and collection
losses experienced by Discos, it is important that certain measures
NERC therefore deemed it necessary to issue a Supplementary are taken, such as: deployment of adequate and functional
Order (Supplementary Order) to provide for the effective metering systems; replacement of faulty parts, equipment
administration and operation of TEM in accordance with the and transformers; strengthening of preventive maintenance
relevant Rules, Codes and Orders in the NESI catering for the for effectiveness; and zero tolerance for non-payment of bills
market participants at their varied levels of readiness for TEM. and vandalism of power installations. All these will require a
substantial amount of funding which could potentially be raised
Highlights of the Supplementary Order include: where there is a clear path of revenue recovery.
i. The power plants under the National Integrated Power
Project (NIPP)5 whose privatization transactions are yet Although NERC has issued the MYTO 2.1 Tariff Order
to be completed will enter into short-term PPAs with to provide a feasible ATC&C loss reduction trajectory, the
NBET for an initial 6 months which may be renewed recent discount of collection losses from the ATC&C loss
subject to NERCs approval. reduction targets further casts shadows on the clear path for
ii. The NIPP Plants are required to meet their existing supply revenue recovery of the Discos.
obligations to international customers up to a maximum
of 300MW. The balance of energy from NIPP Plants III. SIX MONTH FREEZE ON RESIDENTIAL
shall be sold to the market through the respective Vesting TARIFFS
Contracts. However, this arrangement shall terminate on The MYTO 2.1 also introduces a six-month freeze on tariff
or before 31st December, 2015, after which all energy increase for residential consumers who constitute about 80%
shall be sold to offtakers through the Vesting Contracts. of electricity consumers in the country. To tackle the issue of
NBET will be responsible for any financial shortfalls that under-recovery, it is important that the projected shortfall
may arise from trading arrangements with international created by the six-month freeze be provided for through a proper
customers. cost recovery plan. NERC is to ensure that it creates a balance
iii. Gencos without effective PPAs shall be paid for their between the cost of investment, the quality of service and the
Delivered Energy and Delivered Capacity by NBET. tariffs that electricity consumers are willing and able to pay.
iv. Discos that have not provided effective payment
guarantees to NBET and the MO shall have their IV. SHORTAGE OF GAS SUPPLY
revenues escrowed for remittance according to a payment
waterfall to be approved by NERC. Although Nigeria has the 9th largest Natural Gas reserves in
v. Discos without payment security to activate their the world and the largest in Africa, the limited supply of gas
contracts 3 months after the commencement of TEM to power plants has continually hindered the generation of
shall attract sanctions except Kaduna Electricity electricity in Nigeria, as most power generation companies are
Distribution Company that has been granted an thermal and dependent on natural gas. One of the proposed
extension for 6 months from the commencement of benefits of TEM is the incentive created by the Gas Supply
TEM. Agreement to ensure that the Gas Suppliers6 deliver on their
gas supply commitments to the power producers. However,
The Baseline Remittance principle introduced in the Interim a major challenge in accessing gas still remains regardless of
Rules shall no longer apply. Full payment of quantities settled TEM creating an enabling environment and fiscal framework
by the MO based on invoices issued to Discos by NBET and that encourages further investment in the development of
service providers are now required by all participants; and more gas reserves; as well as processing and transportation
failure to comply will attract interest at NIBOR plus 10%. facilities. Power generation is also constantly affected by
5 The NIPP is a government initiative to add significant generation capacity 6 The current Gas Suppliers include Nigerian Gas Company, Shell Petroleum
to Nigerias electricity supply system along with the electricity transmission, Development Company Nigeria, Chevron Nigeria Limited, ExxonMobil
distribution and natural gas supply infrastructure required to deliver the Producing Nigeria Limited, Total Exploration & Production Nigeria Limited,
additional capacity to consumers throughout the country. Ten power plant Nigerian Agip Oil Company, PanOcean Oil Corporation, Seplat Petroleum
built under this initiative are currently being privatized. Development Company, and Nigerian Petroleum Development Company.
sabotage and vandalism of transportation pipelines used for the penalized / sanctioned in the event of a failure to deliver
transmission of gas and it appears that the declaration of TEM on their gas supply commitments to the power producers,
cannot directly resolve this situation. On 10th March, 2015, in line with the Gas Supply Agreements they have signed.
Vanguard Newspaper quoted the Nigerian Gas Company, who Failure of the Gencos to meet their supply commitment
had reported that Nigeria lost a minimum of N8.04 billion obligations will also be met with consequences as provided
between January and 10th March 2015, to the incessant for in their PPAs with NBET including non-payment for
vandalism of the countrys gas pipelines. Also the Minister energy not supplied NBET. NBET would not be paid for
of Power disclosed on the 6th March 2015 that Nigerias power not supplied to the Discos, who will ultimately lose
3,642MW of electricity dropped to about 3,000MW due to revenue for failing to supply improved electricity to the end
vandalism of the Escravos-Lagos Pipeline System (ELPS) Gas users.
Pipeline in Delta State.7
FULL COST RECOVERY
V. FUNDING CHALLENGE It is also expected by the Investors that there would be a fully
The Discos and Gencos will now need to commit to their cost reflective tariff in place that would ensure investor full
contractual commitments which include rehabilitation of plants, cost recovery and confidence for financing and investment
distribution networks, and ATC&C loss reduction; so therefore, in the sector. A lot of the determinants to ensuring a cost
long term funding will be required. The issues around achieving reflective tariff have been dealt with above.
a cost reflective tariff for the Discos need to be given major
priority to ensure that the Discos are able to access funding that CERTAINTY OF REVENUES
would make the rest of the value chain bankable. Related to enforceable contracts is the certainty of revenues.
The Letters of Credit required under the PPA, Vesting
VI. DEARTH OF NECESSARY MANPOWER Contracts and Gas Supply Agreements to backstop payment
There is the concern that power generation and distribution obligations under these agreements, are meant to serve as
will not attain its desired capacity due to a lack of adequately a form of guarantee of revenues for power supplied by the
trained human resources. Considerable financial and human Gencos to NBET and NBET to the Discos respectively.
resources will have to be utilized in order to recruit and
train individuals that would become experts in the field. The above expectations are desirable, however, in light of the
Although long term solutions have been put in place by the current realities particularly the need for a cost reflective tariff
government through the establishment of the National Power and gas supply challenges there is a need for a firm achievable
Training Institute of Nigeria (NAPTIN), more efficient strategy or plan to address these challenges highlighted.
short term solutions will need to be implemented by both Without cost reflective tariffs and sufficient supply of gas,
the Government and stakeholders in the Nigeria Electricity the value chain will be stunted, and power delivery to the
Supply Industry in order to reverse this dearth in skilled electricity consumers will be negatively impacted.
manpower.
E. CONCLUSION
D. EXPECTATIONS OF Following the privatization of the PHCN Gencos and Discos
STAKEHOLDERS FOR TEM in November 2013, the entry of the NESI into TEM has
The following are some of the expectations of stakeholders. become imperative to unlock the much needed funding
Stakeholders for the purpose of this article include the Federal and growth in the industry. In spite of the myriad of issues
Government, Regulators, Investors, Market Participants, plaguing the industry, steps are being made in the right
Service Providers, Investors and Financiers and Electricity direction by the Federal Government, relevant Ministries and
Consumers. Agencies in ensuring the stability of this very crucial industry
that is key to Nigerias economic growth. A lot of work, as
ENFORCEABLE CONTRACTS highlighted above, however still needs to be done by the
A fundamental expectation of TEM for all stakeholders is NERC, Market Participants and Service Providers to boost
that this phase will ensure strict accountability of the Market investor confidence in the NESI.
Participants. Under TEM, the Industry Agreements8 will
become effective and Market Participants are obliged to 8 Vesting Contracts, Transmission Use of Service Agreements, Grid Connection
commence full trading based on these agreements and will be Agreements, Ancillary Services Agreement, Power Purchase Agreements, Gas
Supply Aggregation Agreements and Gas Transportation Agreement
sanctioned for failing to meet their contractual obligations
to other participants. For instance, Gas Suppliers9 will be 9 The current Gas Suppliers include Nigerian Gas Company, Shell Petroleum
Development Company Nigeria, Chevron Nigeria Limited, ExxonMobil
Producing Nigeria Limited, Total Exploration & Production Nigeria Limited,
7 http://www.sweetcrudereports.com/2015/03/06/%E2%80%8Epower- Nigerian Agip Oil Company, PanOcean Oil Corporation, Seplat Petroleum
generation-drops-again-due-to-pipeline-vandalism/). Development Company, and Nigerian Petroleum Development Company.
Hon. James Musoni is the Minister of Infrastructure in the Government of the Republic of Rwanda. Before his present position, he has served
his Government in important positions, namely; Minister of Local Government (2009-2014); Minister of Finance and Economic Planning
(2006-2009); Minister of Commerce, Industry, Investment Promotion, Tourism and Cooperatives (2005-2006); Commissioner General of
Rwanda Revenue Authority (2001-2005) and Deputy Commissioner General of Rwanda Revenue Authority (2000-2001).
Hon. James Musoni is a leader and a motivator with an established personality on public management affairs. He has spearheaded and
guided a number of reforms in Rwanda that have contributed to Rwandas extraordinary performance in socio-economic transformation that
continue to make Rwanda a best practice show case for public management and good governance on the Continent and the Globe.
Hon. James Musoni has an MBA-Finance from Newport International University, California, USA and a BCom-Finance from Makerere
University-Kampala, Uganda. He also obtained other certificates in different areas including a Certificate in Public Finance Management
Executive Course from John Kennedy Harvard University.
QUESTION: What progress has been distribution networks for the power aware that limited access to basic,
made in terms of the development of sector? Are there any upcoming plans affordable and sustainable infrastructure
Rwandas infrastructure under your to improve or add to these networks? services is a factor holding us back
tenure? Can you take us through some from even stronger development. This
personal highlights? ANSWER: Presently, we have only a is no truer than today with a quickly
small network given that our generation expanding private sector, but is still
capacity is at 160 MW, although we are facing challenges in relation to good
ANSWER: Well, I have only worked in road transport access and high costs of
the Infrastructure sector since July last expanding, strengthening and upgrading
all the time as we roll out the grid across electricity and fuel.
year 2014 but I have joined the energy
sector at a very exciting time. The reform Rwanda and connect with other countries.
of the energy sector specifically former There are plans to have interconnections QUESTION: What are your
Energy, Water and Sanitation Authority with Ethiopia, Kenya, Uganda, Burundi, aspirations for the future development
(EWSA) that has three companies now Tanzania and DRC and work is already of Rwandas infrastructure- are there
in existence, a strong recruitment drive on-going in this area. At the same time, any key goals or milestones in place
and reorganisation of the companies to we currently suffer from 21% grid losses, to work towards?
promote the culture of excellence remain and the impact of this will only increase
among priorities. We are continuing to as our network does as well. Therefore a
grid loss reduction programme is being ANSWER: My aspiration is to see a
roll-out the electricity network under thriving business culture in Rwanda
our flagship programme Electricity initiated to reduce losses by 8%, saving the
equivalent of a 15MW power plant, and to a good road network, cheaper fuel,
Access Roll-out Programme (EARP), reliable and sustainable water services,
and developing an interconnection at a cost of $60m represents strong value
for money. The corporatisation of the and an affordable and quality supply
with Uganda this year which will of electricity to both households and
see us trading electricity all the way utility will add to the great work already
being done. businesses. This aspiration is achievable:
to Ethiopia. A personal highlight has steps we are taking such as the reform
been to attend the inauguration of the which is expected to be completed in
recent completed 28 MW Nyabarongo QUESTION: How important is the the new two years, the forthcoming
I hydro power plant,. It means that we development of infrastructure for the creation and adoption of the Least
can supply cheaper electricity and are overall economic growth of Rwanda Cost Power Development Plan, and
able to electrify more households, lifting and the development of a competitive the development of cheap renewable
them out of poverty. private sector? domestic energy resources and access
to cheap imports from the end of 2015
QUESTION: What efforts have been ANSWER: It is fundamental. Rwanda onwards, will all contribute towards
made by the Rwandan government to has experienced strong levels of growth developing a growth enhancing
establish effective transmission and over the last 20 years, and we are well infrastructure sector.
Source relevantrelevant
Source industry information:
industryininformation:
the form of industry-led
in the
form of industry-led articles, white papers,
articles,interviews
white papers,and
interviews and featured
featured powerpower projectsallallyear
projects
year round.
round.
How toHow
get involved:
to get involved:
Join us! To access the content available on the Hub and start interacting with your peers, contact:
at
Look out for an email invitation to join the Powering Africa: Hub from us once the conference has concluded. Alternatively, contact
Amy Offord at amy.offord@energynet.co.uk or call +44 (0)20 7384 8068
PROJECTS
ANGOLA
BOTSWANA
Project Name: Morupule B power station
Type of project: Conventional Power
Description: In October 2009 the World Banks Board of Executive Directors approved a US$136.4 million loan for the the Morupule B project and
also approved a Partial Credit Guarantee of US$242.7 million of commercial bank financing for the project. In a media release the World Bank stated
that the financing will help secure a reliable electricity supply for the countrys economic growth and poverty reduction programs. Financing will also
help Botswana prepare a robust low-carbon growth strategy (consistent with the current Tenth National Development Plan: 2009-2016), strengthen
management skills in the power sector, and establish a new, independent electricity regulator. Source: http://www.sourcewatch.org/index.php/Morupule_B_
Power_Station
Budget Size (USD): 100 - 500m | Fuel Source: Coal | Generation Capacity (MGW): 600 | Investors & Development Partners: World Bank
Offtaker: Utility | Project Status: Completed
CONGO (KINSHASA)
Project Name: Inga 3
Type of project: Renewable Power
Description: With support from the World Bank, the Democratic Republic of Congo (DRC) has proposed to develop Inga 3 on the Congo River. The
project will consist of a dam and a 4,500MW hydroelectric plant at Inga Falls. Inga 3 comes as the first phase of the construction of the Grand Inga
hydropower project, located 225 km from Kinshasa, and 60 km upstream of the mouth of the Congo into the Atlantic Ocean. Once completed, the final
project would have a generation capacity of 40,000 MW. Source: http://www.internationalrivers.org/campaigns/the-inga-3-hydropower-project
Budget Size (USD): 1Bn+ | Fuel Source: Hydro | Generation Capacity (MGW): 40 000 | Investors & Development Partners: World Bank
Offtaker: Utility | Project Status: Out to Tender
EGYPT
ETHIOPIA
Project Name: Ashegoda Wind Farm
Type of project: Renewable Power
Description: Billed as the biggest wind farm in sub-Saharan Africa, the Ashegoda wind farm features 84 hi-tech wind turbines and is capable of
producing around 400m KWh per year. It is located in Tigray state, about 475 miles north of Addis Ababa. The government of Ethiopia hopes that
projects such as these will drive forward the countrys plans to become a renewable energy leader, achieving a climate-resilient economy by 2025. The farm
has a generation capacity of 120 MW. Source: http://www.justmeans.com/blogs/africas-biggest-wind-farm-is-operating-in-ethiopia
Budget Size (USD): 100 - 500m | Fuel Source: Wind | Generation Capacity (MGW): 120 | Investors & Development Partners: Vergnet
Project Status: Completed
GHANA
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PROJECTS
KENYA
Olkaria II went on-stream in 2003 when Kenya Electricity Generating Company (KENGEN) commissioned two 35MW units manufactured and
installed by Mitsubishi Heavy Industries (MHI). In 2010, a third unit of 35MW capacity was installed, bringing the total capacity to 105 Megawatts.[4]
The project was co-financed by the World Bank, the European Investment Bank, KfW of Germany and KenGen. Designed and constructed with
an advantage of newer technology, this state-of-the-art plant is highly efficient in steam utilization. It works on single flash plant cycle with a steam
consumption of 7.5 t/h/MW. The turbines are single flow six stage condensing with direct contact spray jet condenser. The power generated is transmitted
to the national grid via 220 kv double circuit line. Source: http://en.wikipedia.org/wiki/Olkaria_II_Geothermal_Power_Station
Budget Size (USD): 100 - 500m | Fuel Source: Geothermal | Generation Capacity (MGW):105 | Investors & Development Partners: World
Bank, the European Investment Bank, KfW of Germany and KenGen | Project Status: Completed
Fuel Source: Coal | Generation Capacity (MGW): 1 000 | Investors & Development Partners: Gulf Energy, Centum Investment, Sichuan Electric
Power and Design & Consulting Company, Sichuan No.3 Electric Power Construction Company, CHD Power Plant Operation | Offtaker: Utility
Project Status: Out to Tender
MALAWI
Project Name: Kapichira Power Station
Type of project: Renewable Power
Description: The Kapichira Power Station is a hydroelectric power plant on the Shire River in Malawi. It has been designed for an eventual power generating
capacity of 128 megawatts (172,000 hp), enough to power over 86,000 homes[1] with 4 x 32 megawatts (43,000 hp) generating sets, however in Phase 1 only
2 x 32 MW generating sets were installed, with civil structures constructed for the later addition of the remaining two units. Phase I of the power station was
officially opened in September 2000. Each unit operates at a nominal head of 54 metres (177 ft) and discharge of 67 cubic metres per second (2,400 cu ft/s).[2]
Source: http://en.wikipedia.org/wiki/Kapichira_Hydroelectric_Power_Station
Fuel Source: Hydro | Generation Capacity (MGW): 64 | Offtaker: Utility | Project Status: Completed
MOZAMBIQUE
A large percentage of power produced by the hydropower plant is going to support the electrification and development of Mozambique, benefiting
the population and its economical activities. The surplus will be exported, reinforcing the role of Mozambique in the regional framework of energy
integration, enabling additional revenues that will help to balance the foreign trade of the country. Another benefit of the Mphanda Nkuwa Hydropower
Plant will be the contribution to the feasibility of CESUL - power transmission line that will connect the Centre of Mozambique to the South - through
the power production based on a renewable resource. Source: http://www.hmnk.co.mz/en)
Budget Size (USD): 1Bn+ | Fuel Source: Hydro | Generation Capacity (MGW):1 500 | Project Status: Under Construction
This large scale project will be developed in phases, starting with a 300MW integrated mine and power plant (300MW Project), expanding ultimately
to an 1800MW power plant. The Power DFS was conducted by Parsons Brinckerhoff and independently reviewed by STEAG, one of Germanys largest
electricity producers, from an operators perspective.
The power plant will be located about 90kms away from the local transmission network. Construction is planned for 2015, with the power plant targeting
commissioning in H2 2017 and commercial operations in H1 2018. The 300MW project is closely aligned to the Mozambican Governments stated
objective of accelerating the electrification of the country and expanding access to electricity. Currently only 20% of the country is electrified. The power
plant will help Mozambique maximise the potential of its resources in country and will be an important contributor to Mozambiques future development.
Read more: Source: http://www.ncondezicoal.com/power-project.aspx
Fuel Source: Coal | Generation Capacity (MGW): 300 | Project Status: Out to Tender
NAMIBIA
Budget Size (USD): 20 - 100m | Fuel Source: Oil | Generation Capacity (MGW): 120 | Investors & Development Partners: Arandis Power
Offtaker: Utility | Project Status: Under Construction
Fuel Source: Gas | 800 | Generation Capacity (MGW): 3 | Offtaker: Utility | Project Status: Under Construction
siemens.com/power-gas
siemens.com
PROJECTS
NIGERIA
Fuel Source: Gas | Generation Capacity (MGW): 140 | Investors & Development Partners: Aba Power | Offtaker: Captive Power
Project Status: Completed
Budget Size (USD): 500 - 1Bn | Fuel Source: Gas | Generation Capacity (MGW): 450 | Investors & Development Partners: Nigerian Bulk
Electricity Trading PLC, Federal Government of Nigeria (FGN), International Finance Corporation, FMO | Offtaker: Utility | Project Status: Under
Construction
RWANDA
Budget Size (USD): 20 - 100m | Fuel Source: Hydro | Generation Capacity (MGW): 28 | Investors & Development Partners: Export-Import
Bank of India, Bharat Heavy Electricals Ltd. (BHEL), Angelique International Ltd | Offtaker: Utility Rwanda | Project Status: Completed
SOUTH AFRICA
Grootvleis units 5 and 6 were the first test facilities for dry cooling in South Africa. Unit 6 has an indirect dry cooling system.
The station consists of six 200 megawatts (270,000 hp) units for a total installed capacity of 1,200 megawatts (1,600,000 hp). Design efficiency at rated
Turbine Maximum Continuous Rating is 32.90%. Source: http://en.wikipedia.org/wiki/Grootvlei_Power_Station
Budget Size (USD): 1Bn+ | Fuel Source: Coal | Offtaker: Utility | Project Status: Completed
Project Name: 75MW Solar Photovoltaic Solar Capital De Aar (Pty) Ltd facility
Type of project: Renewable Power
Description: Cape Town renewable energy company Solar Capital says its 75-MW, R2.1-billion photovoltaic (PV) project in De Aar, in the Northern
Cape, is the first phase of what could eventually evolve to become a 300 MW solar farm. Print Send to Friend 3 0 The project has been named along
with 27 other projects as among the Department of Energys (DoEs) initial batch of preferred bidders for its renewables independent power producer
procurement programme. Altogether a total of 18 solar PV ventures have been listed, with the De Aar project emerging as the largest such development,
along with the Kathu solar energy facility, which also has a proposed nameplate capacity of 75 MW. Source: http://www.engineeringnews.co.za/article/solar-
capital-says-75-mw-de-aar-project-is-first-phase-2011-12-12
Budget Size (USD): 1Bn+ | Fuel Source: Solar | Generation Capacity (MGW): 75 | Investors & Development Partners: South Africa
Mainstream Renewable Power De Aar PV (Pty) Ltd | Offtaker: Utility | Project Status: Out to Tender
The Kusile project will include a power station precinct, power station buildings, administrative buildings (control buildings and buildings for medical
and security purposes), roads and a high-voltage yard. Source: http://www.eskom.co.za/Whatweredoing/NewBuild/Pages/Kusile_Power_Station.aspx
Budget Size (USD):1Bn+ | Generation Capacity (MGW): 4 800 | Project Status: Under Construction
TANZANIA
UGANDA
Budget Size (USD): 20 - 100m | Fuel Source: Oil | Generation Capacity (MGW): 70 | Investors & Development Partners: Stanbic Bank
Uganda Utility | Project Status: Completed
ZAMBIA
E: amy.offord@energynet.co.uk
T: +44 (0)20 7384 8068
ANTI-
CORRUPTION,
DUE DILIGENCE
AND POWER
INVESTMENTS:
getting more from the process
Walter Courage is one of the founding members of The Risk Advisory Jonny is head of the Africa-focused business intelligence team
Group and is a Director. His career was spent in the army which he at Risk Advisory Group. He has over eight years experience in
joined from The Royal Military Academy Sandhurst in 1961. He the business intelligence sector and has conducted hundreds
retired in 1996 with the rank of Major General. Much of his service of investigations across sub-Saharan Africa. In this role he has
was spent in Germany, interspaced with postings to UK, Canada and travelled widely across the continent and developed up an in-
Libya. Whilst in Germany, he commanded his regiment, followed by depth understanding of the political, regulatory and commercial
the 4th Armoured Brigade. This was followed by a full tour as Chief environments in different countries.
of Staff of the United Nations Force in Cyprus and then back to Jonny is a regular speaker at Africa-focused events, recently speaking
Germany as head External Affairs Division. at a workshop on the Nigerian elections. He has also been quoted
He is a Transatlantic Board Member of British American Business in media articles, including on the subject of the challenges facing
Inc and chairman of the EMEA Forum, Chairman Future Digital companies transporting goods through African ports in complying
Footprint Limited, Director Courage Underwriting Limited, with the UK Bribery Act.
Director Weee Systems Limited and a trustee of Shotover Estate.
Anti-corruption due diligence is increasingly an established part of the investment process for power investments
in Africa. It is sometimes seen purely as a regulatory requirement and an extra cost burden, when if approached
with a broader perspective, can add real commercial value.
POWER SECTOR INVESTMENT IN across the region are such that the World Bank estimates that
AFRICA annual expenditure of $120 to $160 billion will be required
Governments across Sub-Saharan Africa are facing increasing to expand energy access to the whole region by 2030. Though
domestic pressure to increase power capacity in order to meet these sums have not yet been realised, domestic pressure has
the energy needs of their populations. The energy needs resulted in many African governments prioritising investment
in the sector. As a consequence, increasing sums of money interaction between a myriad of state and non-state actors,
are being spent to address the energy gap, while international often operating in an unclear regulatory context. Where vast
finance institutions have also provided significant funds to the public funds are being spent, decision-making in the sector
sector. Given the demand, there is no shortage of companies can be heavily influenced by domestic politics or geopolitical
globally competing to be involved in these projects. considerations.
However, a multitude of overlapping risks confront This risk can take various forms. The power sector is
investors in the power sector in Africa. In particular, there characterised by a significant degree of interaction between
is a widely held perception that the continent presents a companies and government. An obvious point, but one
uniquely difficult investment environment from a corruption where there is a lot of nuance. Government can have
standpoint. In Transparency Internationals 2014 Corruption multiple roles in any power project from the commissioning
Perception Index, a global comparative tool, 60 percent of of a project to its management, acting as partner and/or a
African countries fell outside the top 100 places. The region regulator. These roles can be fulfilled by different parties:
consequently appears on TIs map as a swathe of red and the executive, ministries, government agencies and state
orange, giving the impression that corruption is inescapable. companies. In some cases, the functions might all fall under
one roof, in others, the responsibilities might be dispersed.
ANTI-BRIBERY LEGISLATION In either case, there may be a lack of clarity over the mandate
The perceived level of corruption is a particularly important of these different bodies. There can also be differences in
challenge for investors given the reach and increasing roles as stipulated formally, and what happens behind the
enforcement of international anti-bribery legislation. The US scenes on an informal basis. This can create confusion and
Foreign Corrupt Practices Act (FCPA) was passed in 1977 as the opportunity for malpractice.
worlds first extraterritorial law to combat the bribery of foreign Moreover, an unclear regulatory environment frequently
officials. Over the past 15 years in particular the FCPA has been translates into limited transparency in relation to decisions
stringently enforced, with corporate penalties in 2014 totalling around the allocation of contracts, with all companies not
$1,566 million, the second highest on record. Many of the most always working to the same rule book. The result can be a
significant fines have targeted investors in African markets. preference for politically-connected companies; for national
In parallel, anti-corruption legislation passed in other contractors as a result of indigenisation policies; or companies
jurisdictions, has become more stringent and placed greater from countries providing development assistance. To
compliance obligations on companies. For instance, the compete in such an environment may create internal pressure
2010 UK Bribery Act created a new offence of corporate for companies to bend their rules to gain a competitive edge.
failure to prevent bribery, from which a company can Finally, consider also the diversity of actors in the private
protect itself by having adequate procedures in place to sector involved in bringing a project from inception to
prevent malpractice. completion. Delivering a project might entail a company
The emergence of an international compliance regime, which working with agents, consultants, contractors, intermediaries
demands zero tolerance of corruption in company policies and joint venture partners. It is a central, and growing focus of
and appropriate due diligence measures, combined with enforcement agencies, that companies will be held accountable
the seemingly ubiquitous nature of corruption, presents a for corrupt acts where they are an ultimate beneficiary.
particular challenge to companies investing in the region. Combined with the multiple layers of government interaction,
However, meeting compliance obligations should not be seen this can create a complex control and compliance environment.
as a purely tick-box exercise. Corruption is a deeply complex
phenomenon, shaped by local economics and politics, and THE TENDER PROCESS: A MEETING
manifesting itself very differently across countries and sectors POINT FOR RISK
in Africa. In practical terms, these vulnerabilities can lead to potential
Investors and actors in the energy sector therefore face distinct exposure to corruption and wider business risk in different
risks. If a business can also go some way to understanding ways. The public tender process can be a meeting point for
the driving forces behind corruption risk, the benefit can be all of the drivers of business risk, and more specifically, the
twofold: a deeper appreciation of the commercial context and drivers of corruption highlighted above. High-value, high-
a regulatory obligation fulfilled. stakes, and involving numerous government and private
sector actors, this is an area where the multitude of problems
can combine.
THE COMPLEXITY OF THE POWER
SECTOR AND BUSINESS RISK Working through a typical tender process, the graphic below
The power sector in Africa frequently represents a complex matches points in the cycle with possible corruption and
investment environment, marked by intense competition and wider business risk pressure points:
The potential for a company to be drawn into a difficult a goal in itself. A selection process which on the surface
situation can begin at the project conception stage. If is open, may have been pre-determined, such as through
the project is instigated for the wrong reasons, such as an collusion by bidding parties.
opportunity for personal political promotion, the dispersion
of patronage, or because of an attempt to provide energy to an If the risks at the project conception and bid phases have not
area constituting the governments support base, the risks will been adequately analysed and addressed, they will likely flow
likely be extended throughout the investment cycle. If the into the project execution stage. To illustrate this point, if a
project is conceived for the wrong reasons, the likelihood of change of government occurs, a wholesale review of major
the project being reviewed following a change in government contracts awarded by the outgoing government is likely to
is further significantly enhanced. occur. If a project is seen as too closely associated with the
interests of the outgoing regime then it is likely to find itself
While concerns from a corruption standpoint can under scrutiny. Similarly, if a company selects a partner or
often focus on contractor selection, that process can be agent with close connections to the outgoing government,
manipulated before it begins. Bias can be built into the then the identity of this company could prove an impediment
process in the preparation of technical specifications, or from the perspective of project execution.
in the selective disclosure of tender information, to favour
particular bidders.
A BROADER APPROACH TO
The selection process is a potential venue for malpractice. COMPLIANCE
Where multiple agencies have input in the decision-making
process, confusion over mandate and responsibilities Direct or indirect participation in a public tender process, or the
can create opportunity for influence-peddling behind provision of financing to projects formed around such processes,
the scenes. Similarly, the involvement of agents as can therefore pose a challenge from a compliance perspective.
representatives in negotiations, or where government How should companies approach managing these risks?
contact is handled by joint venture partners, might involve
wrongdoing without a companys knowledge. Transparency A typical, compliance-driven approach would consist of
in the selection process is a means to mitigate this risk, but well-developed internal anti-corruption policies, outlining
investors should be wary when transparency is held out as expectations and guidance for employees on corruption
issues, with due diligence on external parties. Appropriate Taking the major drivers of corruption risk discussed above,
due diligence checks on third parties such as agents and the table below illustrates where additional intelligence-
joint venture partners will focus on identifying potential gathering might be focused:
issues of concern, such as prior sanction by regulatory Getting insight on issues such as these will allow a business
authorities, indications of past involvement in malpractice, to place the core components of compliance work into their
or potential links to public officials. This is particularly proper context. Awareness of the problem areas can also prevent
important as under existing anti-bribery legislation, companies falling into potential pitfalls before they appear.
companies are potentially responsible for the actions
of agents or companies acting on their behalf. As such, These are also all questions which have clear commercial
adequate procedures must extend beyond the engagement relevance. Proper business planning centres on understanding
process. Anti-bribery training and continued monitoring the commercial environment and the actions of those around
of partners is also a key on-going aspect of compliance the business. Better informed about the local environment,
procedures. intelligence on these issues will help the business understand
their government and private sector counterparts and provide
These are the fundamentals of an effective company the competitive edge of inside knowledge. Knowledge of
anti-corruption programme, and an important part these areas will ultimately help companies make the right
of demonstrating to regulators that due care has been commercial calls.
taken. However, if undertaken in isolation from broader
research around the commercial, political and regulatory It can be the case that anti-corruption compliance is
environment, a purely compliance-driven approach may be approached as though detached from the commercial aspect
too narrow. As we have discussed, corruption risk for power of an investment: essentially a regulatory box to be ticked, and
sector investment is an issue shaped by a number of factors. a source of unwelcome costs. However, if properly integrated
If the business can develop a broader appreciation of these into business planning, treated as a collaborative process and
points, then it will ultimately be better protected against an investment of resources, then the commercial value of this
the risks. work is self-evident.
LESSONS LEARNED
In Implementing Off-Grid Electrification
Projects in Africa- Ghanas Example
Frank Yeboah Dadzie is an expert in off-grid and grid connected solar installation, marketing
and financing. He began his career in renewable energy as a trainer at the Deng Solar Training
Centre, Accra (an ISP certified centre).
From October 2008 to September, 2014, he served as Project Manager for Ghanas biggest off-
grid Solar Project which was aimed at financing solar systems for remote deprived rural dwellers
through an innovative microfinance system supported by the Rural banks. The project financed
over 16500 solar systems to the poorest households of Ghana. This project also stimulated the
market for Solar PV sales in the remotest districts of Ghana.
Frank Yeboah Dadzie is presently the Planning Engineer for the Ghana Energy Development
and Access Project. He is tasked with the supervision of the development of a computer based
GIS supported electrification master plan for Ghana and the Management of project activities
for the development of Ghanas first island based Mini-grid electrification project on four Islands.
Frank Yeboah Dadzie is passionate about his work and is eager to see the day where everybody in
Africa will have access to sustainable energy for all their energy needs.
Map of Islands along Volta Lake
Ghana, a country in West Africa with a population of about 25 million, has an electrification rate of about
72%. Ghana began its national electrification scheme in 1990 (when the electrification rate was 15%) with
an aim to achieve universal coverage by 2020.
for lighting). While output-based grants provided by GPOBA where preferred by beneficiaries although they were more
covered part of the cost of solar PV systems in eligible off- costly. The main drivers for the sale of the systems were the
grid communities, this was not sufficient to make the initial ability to watch television and charge mobile phones. There
costs affordable for most of the targeted beneficiaries. An is a surprisingly high willingness to pay for energy services
IDA line of credit was available for Rural and Community from solar home systems in remote, rural areas of Ghana.
Banks (RCBs) to refinance 80% of loans given for a three- All of the vendors participating in the project were surprised
year period. to find the size and depth of the market facing them once
they began serving the remote rural areas. This relatively
The ARB Apex Bank, a mini central bank for all Rural high willingness to pay is especially reflected in the high
Banks in Ghana, was designated as the implementing demand for large solar home systems that can supply or
agency for the grant and loan financing, to be handled at come supplied with an LED Color-TV, reflecting consumer
the retail level through Participating Rural and Community aspirations for modern energy services. Sales of these larger
Banks (PRCBs) that serve targeted communities and meet systems exceeded all targets and expectations established at
eligibility criteria. the beginning of the project.
It was expected that implementation of the project will
improve the access to electricity for about 90,000 rural 2. Affordability of Solar Equipment:
dwellers in about 15,000 households. However, the actual During the design stage, solar home systems being sold in
number of households that benefited from the project was Ghana were considered to be quite expensive when compared
16,822 which was estimated to benefit over 100,000 rural to similar products being sold in East Africa and Asia. While
dwellers. this was attributed to the incipient nature of the market, the
costs due to consumers fell (in absolute or US $ terms) over
According to the independent report of the Beneficiary the life of the project. These declines are attributed to the
Assessment of the GPOBA project undertaken by a increasing lighting output obtainable by deploying LEDs
research team from the University of Ghana, 93.8% of the in lanterns and solar home systems; continued declines in
beneficiaries under the project were satisfied with the solar the price of PV panels and the balance of system; and some
equipment provided. improvements in the quality and price of products being
supplied by local suppliers. Nevertheless, little progress was
The project clearly showed that with good management and made in the price reduction of batteries by the end of the
financing plan, it was possible to provide electricity to remote project.
rural dwellers through solar energy.
In delivering this successful project, many lessons were 3. No need to re-invent the wheel. New projects need to
learned and these include the following; learn from earlier project implementers to reduce the
possibility of project failure;
1. Rural off grid people need more than just lighting and In the first two years of the implementation of the project,
are willing to pay for it: less than 500 systems had been sold. This was largely due to
In designing most rural based electrification projects, project the project trying to start implementation from the scratch.
designers have mostly considered lighting as the main need Study tours to Sri Lanka and Bangladesh were undertaken by
of the rural people. In this project we found out that that the project team in the 2nd year and the information received
was largely not the case. Over twenty two (22) different from the tours were very helpful in refining the project and
products ranging from only lighting producing products to finding solutions to the challenges the project was facing.
products that allow you to watch a TV or use a radio were Application of the lessons from the tours led to a massive
provided. It was noticed that the products that provided improvement to sales which led to the achievement of the
more functionality (ability to watch TV or listen to radio) project targets.
5. Quality after sales service is essential 8. Re-payment plans must be well designed to meet the
to the success of such projects; cash flow pattern of the target people.
The provision of electrification through off-grid solutions In designing off-grid credit based projects for rural people it
does not end with the connection of the client. The client is necessary to design the repayment plans to meet the cash
will require education on the use of the products and quick flow of the expected beneficiaries. Most rural dwellers are not
response to faults when they occur. Supplying efficient off- monthly earners and therefore the application of monthly
grid systems without efficiently designing how after sales repayment plans used for formal salary workers will lead to
service will be provided to beneficiaries will lead to a failed low repayment rates.
project. Beneficiaries must be clear on the number of days it
will take for a fault to be repaired and what warranties they Repayment periods must be agreed on based on a careful
enjoy and this has to be provided as promised to make the study of the cash flow of the beneficiaries. It was noticed in
project successful. this project that repayment periods should be flexible and
beneficiaries must have the opportunity to choose which
Ensuring that repairs and maintenance are done correctly is repayment period best fits them.
key for the sustainability of the project. Non-working systems
will lead to poor repayments at the banks. 9. Eliminate all form of Direct Government interference;
One key lesson from this project was that to ensure the
6. Dedicated Project Manager and Rural Solar Project sustainability of the project and ensure high repayment rates,
officers were key in moving sales forward: the involvement of government functionaries should be
The engagement of a dedicated Project Manager with minimized. The project should be private sector led. Private
technical knowledge and experience in solar PV systems sector institutions should play all key roles in the project.
design, installation and marketing enabled the project team to
correctly anticipate the possible challenges and find suitable 10. Private sector players must be well screened and selected.
solutions quickly. The rural bank-based dedicated solar project The provision of electricity to remote off-grid communities
officers also made a strong, positive impact on the operation is not just a business but a social intervention and therefore
of the project. They improved sales, accelerated the processing all players in the project must be well screened to identify
of paperwork, enabled loan recovery and established working their willingness to make the sacrifices required to deliver
relationships with local dealer representatives. such projects. A mindset of using the project for only money
making will lead to difficulties in performing all the many
7. Beyond education, products must be designed to sacrifices required in delivering such projects.
prevent tampering
In designing off-grid systems, it is necessary to consider the
behavior and the abilities of the prospective beneficiaries. CONCLUSION
Beneficiaries must be well educated on the expected In conclusion, it is important to note that many ingredients
performance of the systems and all their roles in operating are necessary for the successful implementation of off-grid
the system. Systems should be designed to be very simple and projects. Project designers must therefore learn from other
require very minimal roles for beneficiaries in the operation of projects to prevent the pit falls and implementation delays
the systems. Preferably, systems must be designed to prevent most off grid project encounter.
the possibility of tampering by beneficiaries. Email: engineerfyd@yahoo.com
Mr Stephen Karangizi has been the Director of the African Legal Support Facility since October 2011. The African Legal Support Facility,
hosted by the African Development Bank, was established to support African Countries in negotiating complex commercial contracts and in
assisting them with creditor litigation.
Mr Karangizi is a lawyer with extensive experience in International Commercial and Trade Law. He was Deputy Secretary General
(Programmes) of the Common Market for Eastern and Southern Africa (COMESA) from 2008 to 2011. He was also the Legal Advisor for
COMESA from 1997 to 2008.
Over a 30 year career as a lawyer, he also served as a Legal Advisor for the Governments of Antigua and Barbuda (West Indies), Uganda and
Zimbabwe after starting off in private legal practice. He is enrolled as a Legal Practitioner of the High Court of Zimbabwe and an Advocate
of the High Court of Uganda.
QUESTION: Why was the Facility countries and the continents economic will reduce the needs for renegotiations and
originally established? Were there and social fortunes. create a more sustainable environment.
any key catalysts which prompted its The current interventions of the ALSF
existence? help to bridge the gaps in legal capabilities QUESTION: How is eligibility decided
leveling the negotiating playing field. With upon- what are the criteria for accessing
ANSWER: The African Legal Support the assistance of the ALSF, governments the services of the Facility?
Facility (ALSF or Facility) is a public can engage specialist legal representation
international institution hosted by the for negotiation purposes and participate in ANSWER: Any African country is eligible
African Development Bank (AfDB). We innovative capacity building programmes. to benefit from the services of the Facility.
were originally established as a response Governments are more informed and Transitioning states and ADF (African
to calls from African Finance Ministers cognizant of their contractual obligations. Development Fund) eligible countries
to assist African countries in vulture fund An informed government has the ability receive priority funding.
litigation. to plan strategically and formulate
development programmes that best fit The Facility is open to all sovereign nations
When establishing the Facility, it was their circumstance and need. and international organizations. Currently
recognized that one of the key reasons there are 59 signatories to the ALSF Treaty
for vulture fund litigation was poorly This will be measured by monitoring the including 52 countries and 7 international
negotiated and drafted contracts. The number of projects that are successfully organizations.
underlying reason for this was a lack completed on the continent, the amount
of capacity for contract negotiations. of benefits to local communities and
Addressing these key areas is why the governments, and the ability of governments QUESTION: What value is ALSF
Facility is established. to attract additional investments by having hoping to gain from attending the Africa
bankable project documentation in place. Energy Forum this year? Are there any
particular countries or private sector
QUESTION: ALSF has been partners you are hoping to meet?
supporting African governments QUESTION: Why is there a need to
in the negotiation of commercial provide support and advice to African The Africa Energy Forum provides an
transactions since 2010- a relatively governments when doing business with opportunity for the Facility to highlight
short lifetime. What are the long-term international investors- what are the the availability of this valuable resource, not
goals of the Facility, and how will these potential risks? only to member states but to investors who
be successfully measured? seek contractual certainty. We hope to have
ANSWER: Companies have shareholders, an open dialogue with investors to better
ANSWER: The long-term goal is to ensure and governments have stakeholders. understand the challenges they face when
that governments have the capacity to International investors should be interested negotiating with African governments.
negotiate fair and sustainable contracts that in getting a deal that will be fair and We also hope to increase awareness of
will benefit their countries. These contracts balanced; a deal that all shareholders and the pressures governments face in these
will in turn lead to improvements in the stakeholders will be happy with. Such deals negotiations.
POWERING
AFRICA: Small Steps, Giant Leaps
Niamh Kenny, Associate Consultant, Gas & Power, CITAC
Niamh Kenny is an associate consultant with CITAC, specialising in the African power and
gas sectors. Niamh has over 20 years experience as a journalist and consultant in the energy
sector, focused primarily on electricity, although she has also gained extensive knowledge of the
global oil and gas markets through her previous role as executive editor of Energy Intelligence
Groups research department. Prior to joining EIG, Niamh concentrated exclusively on
the power markets. She was a long-serving editor of Financial Times Energys influential
fortnightly newsletter Power in Europe, as well as a founding editor of Power in Latin America,
and consultant editor to Power in Asia. She has also worked with Argus Media, where she was
involved in creating and populating a power plant and utility database. She is a graduate of
Trinity College, Dublin.
Massive generation and infrastructure programmes have proliferated across Sub-Saharan Africa in recent years, as
national governments and international agencies look for rapid solutions to the immense development challenges
facing the regions power sectors - inadequate capacity, frequent outages, electrification and consumption rates
almost inconceivably low by developed world standards.
CHALLENGES
I n the longer term, the scale of Africas power requirements
will dwarf all but the most ambitious of these, but CITAC
argues that a more effective and less costly initial approach
On average, only 32% of people living in Sub-Saharan
Africa have access to electricity, a level that has barely
to boost African supply should entail a prosaic combination changed in a decade, compared to over 99% in North
of improvements to plant efficiency, maintenance and fuel Africa. Excluding South Africa, total installed capacity
supply, reduction in losses, especially in the distribution grids, across the continent at the end of 2013 was 44.2 GW,
and, above all, the establishment of strong and transparent which delivered roughly 172 TWh, an effective average
regulatory structures. Small steps that could deliver impressive utilisation rate of only 44%. Load-shedding and
results. unscheduled black-outs are a common occurrence, despite
STRONG GROWTH
Despite these headline figures, the power situation in Africa
has improved markedly in recent years power production
has risen by over 30% since 2009, more than twice the rate
of population growth and in line with GDP growth. And
critically, although actual gains have been small, electrification are proposed, but these are dominated by large hydro or
has gained a new political urgency with economic expansion integrated fuel-to-power projects, and it is questionable,
in the region. Boosting power supply is now one of the key if many of these will be underway, let alone completed by
priorities of almost every government, for a raft of political 2025. At present, only around 20 GW of planned capacity
and security reasons, in addition to the more obvious societal looks firm.
and economic advantages that widening access to power will
bring. Assuming committed and firm projects are completed on
time and have secure fuel supply a concern, particularly
Assessing exactly how much is needed in the short and for natural gas this will leave the industry short of 18
medium-term is open to much debate, but using a simplistic GW of capacity on the base case scenario, a level that
model based on historic power growth and projected GDP implies additional financing needs of at least $27bn for
growth indicates that capacity outside of South Africa generation, plus funding to install associated transmission
will need to rise by 26 GW by 2020 and by more than 60 and distribution infrastructure. Including South Africa, the
GW by 2025 just to cover an anticipated 10% per annum shortfall rises to over 20 GW by 2025.
rise in demand. Boosting electrification rates, absorbing
existing levels of suppressed demand and delivering healthy Moreover, this is a minimum shortfall, if ultimate
system margins would require far greater expansion, but it electrification goals are to be met. Even with an extra 45 GW
is questionable if many domestic or commercial consumers in place, Sub-Saharan Africa will still be languishing at the
would be able to absorb the tariffs that would be necessary to bottom of the global per capita power consumption league
underpin considerably higher levels of investment. table by 2025, with average rates of 360 kWh per capita.
Around 23 GW of this expansion is already underway This fact is one of the key motivations behind multilateral
(36 GW including South Africa) and scheduled to be infrastructure programmes and behind the 2013 US-led
operational by 2020, although 70% is concentrated in just Power Africa initiative. This programme aims to expand
four countries 6 GW in Ethiopia, 4 GW in Mozambique, capacity by 10 GW and electricity access by 20mn people
3 each in Nigeria and Angola. More than 70 GW of other across six partner countries. It will be financed by $7bn of
projects are also either in the pipeline or planned for aid and soft loans pledged by the US via various agencies, in
construction within the next decade, and further 100 GW addition to private sector investment.
OPERATIONAL
WEAKNESS
A close look at the power
situation in Africa shows that, as
necessary as additional capacity
is, exclusive focus on this misses
other priorities; notably, the
industrys pressing need to
address some fundamental
operational weaknesses, first
Transmission and distribution losses are also a major supply Much of the recent growth in SSA power has been in
constraint. Average implied losses in SSA are roughly smaller-scale, off-grid renewable generation, notably
20% compared to 12% in South Africa or Europe but solar. But, while renewables are a very effective means of
are considerably higher in some regions. There are many delivering immediate power to areas without grid access,
technical and commercial reasons for these losses, but some and are operationally CO2-free, ultimately these are an
of the most critical technical issues are lack of maintenance, expensive and often unreliable form of power. Enthusiasm
vandalism and cable theft. On the commercial side, the for renewables tends to focus on their minimal fuel costs,
critical problems are power theft, tampering with meters, rather than their capital costs, which are usually steep
inefficient and sometimes corrupt billing procedures. compared to conventional thermal plants.
About CITAC
CITAC Africa Ltd is a UK-based, independent consultancy founded in 1998 to focus on the downstream African
energy sector. It has extensive experience in projects relating to refining, storage, trading and distribution of petroleum
products in English- and French-speaking Africa, and has recently expanded the scope of its operations to cover African
gas and power market fundamentals and analysis. Its services include bespoke studies, subscription and retainer-based
products, including access to its award-winning African Downstream Database, as well as commercial, operational and
financial training courses in London and Africa.
For further information about this article or about CITAC, please contact Karen Chevalier, +44-207-343-0014,
karen@citac.com.
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l Tanzania Jordan
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l Morocco Dh 30 l Nigeria N 500 l Norway NOK 59 l Oman OR2.00 l Qatar QR 20 l Rwanda RWF 3000 l Saudi Arabia Rls 20 l Sierra Leone LE 20.000 Morocco Dh 30 Nigeria N 500 Norway NOK 59 Oman OR2.00 Qatar QR 20 Rwanda RWF 3000 Saudi Arabia Rls 20
06/02/2015 10:50 l Singapore $7,50 l South Africa R35.00 (inc. tax) l Other Southern African Countries R 26.30 (excl. tax) l Sweden SKr 33 l Switzerland SFr 8.70 19/03/2015 15:25 NA_COVER_0315b.indd 1
Sierra Leone LE 15000 Singapore $7.50 South Africa R35.00 (inc. tax) Other Southern African Countries R 26.30 (excl. tax) 19/02/2015 11:39
l Tanzania TShs 5,400 l Tunisia TD 4.50 l Turkey 10.00YTL l UAE Dh 20 l Uganda USh 8,700 l Zambia ZMK 25 Sweden SKr 33 Switzerland SFr 8.70 Tanzania TShs 5,400 Tunisia TD 4.5 Turkey 10.00YTL UAE Dh 20 Uganda USh 8,700 Zambia ZMK25
L E M A G A Z I N E D E L A B A N Q U E E T D E L A F I N A N C E E N A F R I Q U E
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POLICIES AND BEST PRACTICES FOR AFRICA
Franois Bangazoni is the Chief Executive Officer of ENERCA in Central African Republic, a position he has held since February 2015.
Before being appointed to this post, he has worked within ENERCA for over 32 years. An economist by training, he holds a diploma of
higher education with a specialization on energy economy from the University of Paris II, Pantheon Sorbonne. He has held several positions of
increasing responsibility; moreover he has had the honour of chairing the committee in charge of the development of the 2011-2015 five-year
plan. The implementation of this plan was disrupted by the crisis that hit Central African Republic, but which at the same time facilitated the
mobilization of funds for some projects currently in execution.
ENERCA is the principal energy company of the Central African Republic. Enerca stands for Energie Centrafricaine. The company enjoys a
monopoly on the production and sale of electricity in the country. It was founded in 1963 and is located in Bangui.
QUESTION: We are excited to welcome To share ideas and to build the development of the 2011-2015 five-
you to the Africa Energy Forum (AEF) relationships that can allow us in the year plan. The implementation of this
in Dubai this June. Can you tell the short and medium term to settle, in a plan was disrupted by the crisis that hit
readers of the Africa Energy Yearbook long-lasting way, the deficit problem our country, but which at the same time
a little bit more about the reason youre of the production capacities and the facilitated the mobilization of funds for
joining us this year? access to electricity in this country; some projects currently in execution.
To identify the technological
ANSWER: In the context of the evolutions in the power sector with QUESTION: What are the current
mobilisation effort of the different the aim of finalizing the 2016-2020 electricity projects in CAR and what
partners for relaunching the power sector five- year plan of the company. are the main sources of energy?
in the Central African Republic, I chose
to attend this Forum which includes QUESTION: What are your objectives ANSWER: Today, ENERCA is operating
not only the executive authorities of the and what should international investors several projects with the support of some
African energy sector, but especially the know about Central African Republic technical and financial partners of the
world actors of the energy industry. By before meeting you? Central African Republic. To name just
taking part in this Forum, our objectives a few:
are: ANSWER: Before being appointed to the - BOALI 3 Project for an amount of 187
To present the opportunities that the post of Managing Director of ENERCA, million RMB that aims at installing
Central African Republic offers as a I was in the company for over 32 years. I 10 MW at the foot of the dam on the
country endowed with considerable have held several positions of increasing MBALI, and at increasing the transport
potential in new and renewable responsibility; moreover I had the honour capacity of 25 MW. This project has been
energies; of chairing the committee in charge of financed by the Government of Peoples
Republic of China. Started in November hours. Lastly, it is also stated the existence The business environment
2011, it was suspended following the crisis of some sites for the geothermal energy characterized by a permanent
and will start again very soon; and a potential in brown coal estimated situation of political and judicial
- Project for the Emergency to be 23.000 tons. insecurity emanating some latent
Rehabilitation of the Hydroelectric risk of conflicts, high costs of
stations of Boali 1 and Boali 2 for production factors, a weakness of
an amount of 4,14 million Euros QUESTION: What is the government infrastructure and a limited and
financed by the French Agency for doing to encourage a welcoming expensive access to credit.
Development (AFD) aiming at environment for international investors
enhancing the reliability of power in the countrys energy sector? In the latest years, some reforms
plants and the existing transport have been promoted to simplify the
network. ANSWER: The Government, as a companies fiscal environment and to
- Emergency Project in response to part of its Emergency Programme of improve the procedures for creating new
the Energy Crisis for an amount of Economic Recovery, on its three first enterprises. The Government has also
10,5 million $US financed by the pillars which are, Pillar 1: Politics and implemented important investments in
World Bank (IDA and State and Governance; Pillar 2: Safety Restoration the field of Road Infrastructure, Energy
Peace Building Fund) that completes and Peace-building; Pillar 3: Economic and Telecommunications to facilitate
the actions to enhance the existing Recovery, emphasizes the improvement new business and the establishment of
installations and introduces the of the business environment with the new companies.
prepayment meters for the Company aim of restoring the macroeconomic
improvement cash flow; In addition to that, measures have
stability, securing the rebalancing of the been taken for the revitalisation of
- Project for the Interconnection of the public finances and strengthening the
Electricity Networks of the RCA and the Joint Committee in charge of the
capacities of public authorities. This is Improvement of the Business Climate
the RD Congo from the hydroelectric the reason why procedures for creating
system of Boali Phase 1, financed by and of the Permanent Consultation
new enterprises have been simplified. The Framework for Public-Private Sector.
the African Development Fund for registration to the Trade and Personal
an amount of 29,73 million UC. This Credit Register can be obtained in
project aims at the installation of 10 24hours. QUESTION: Which specific
MW to Boali 2, the interconnection technology providers are you looking
with RD Congo, the extension of The mobilisation of the investment for forward to meeting?
the distribution network and the the electric sector aims to improve the
popularization of the prepayment quality of the supply and, consequently, ANSWER: We would like to meet:
meters. This project was launched in reduce the cost of this essential factor for Companies specialized in
November 2014 and must complete every company. Finally, a revision of the manufacturing hydroelectric power
by 2018. Investments Charter provisions specifically plants from 5 to 30 MW;
in its range of application is in progress Companies involved in the
We can also quote the current discussions for a better definition of guarantee, rights implementation of power plants
with the Saudi Fund for Development and duties of the investors, and the role and solar public lighting network
(SFD) regarding the installation of a new of the private sector.
thermal power plant of 10MW and the
studies of the hydroelectric development of QUESTION: Is there a need for capacity
QUESTION: What have been the building with the electricity provider?
DIMOLI, financed by the Central African barriers to investment in the past and
States Development Bank (BDEAC). If so, what kind of support can the
how has the situation changed today? international community provide?
Regarding the main sources of energy,
the Central African Republic is endowed ANSWER: Among what was generally ANSWER: Our company deals with a
with a hydroelectric potential estimated indicated in the main reports in relation badly prepared generational transition.
to be more than 2000 GW, with several to the difficulties faced by the investors Therefore, we have a significant need for
identified convertible sites. The country we can quote: senior and high-level experts in the fields
also owns a high potential in traditional The enclosing country and the difficult of engineering, finance and especially
energy because of its exploitable conditions of transit, entailing an management of development projects.
important forestry resource. With regards average delay of the importation
to solar energy, the average irradiation period of more than 2 months. In conclusion, we need support for basic
is 5 kWh / m /j distributed on the The absence of marketing and training and for the junior executives to
whole national territory with an average promotion campaigns of the policy adapt their capacities to the companies
duration of daily sunshine from 10 to 12 concerning investment; needs.
Climatescope analyzes 55 emerging countries around the world, each ranked against
54 indicators defined by Bloomberg New Energy Finance analysts. We believe the
way forward is clear: the success of a cleaner future depends on transparent data and
collaboration with key decision makers like you. Thats why weve made Climatescope
free to access and free to download.
Explore global-climatescope.org for more information and learn how you can partner
with us for a cleaner future.
SCALING SOLAR:
Making the Sun Work for Africa
Despite the obvious potential for solar power in Africa, very little real investment is happening in most countries
on the continent. A new approach is needed to unlock the unique benefits of this technology speed to build,
long-term stable tariffs, energy diversification, neat matching of air-conditioning loads and to drive a massive
and rapid scale up in private solar power investment. IFC thinks it might have the answer with Scaling Solar,
a holistic, one-stop-shop solution for African Governments that are committed to catalyzing private sector
investment in solar power in the fastest and lowest cost manner possible.
PLENTY OF SUN BUT NO SOLAR developer interest in Africa. So this is certainly not the main
POWER bottleneck.
Everyone knows Africa has plenty of sunshine. Pretty much Are structural issues with African power markets the main
everyone knows that lack of access to affordable, reliable bottleneck?
power is one of the major bottlenecks holding back growth on
the continent. And anyone whos been paying some attention Less unequivocally, but still no. Indeed, there is no question that
knows that the cost of photovoltaic equipment has declined private investment in African power remains challenging on
dramatically over the past 10 years and that some countries many counts multiple, small and unique markets; insufficient
can now generate solar power at a cost below US$10 cents/ end user tariffs; nascent and inconsistent regulation; off-taker
kWh (an IFC client recently won a tender in Dubai with a credit risk; political risk; limited utility and government
tariff of US$5.8 cents/kWh). capacity; and long negotiated concession agreements.
Leveraging the continents vast resources to generate But these challenges are completely natural at this stage of
electricity should be a no-brainer: African countries could market development and over the years, solutions have been
generate clean, renewable, affordable power, lessen their devised to many of the challenges: from affordable political
reliance on imported fossil fuel, attract foreign investment, risk insurance to foreign currency risk management to off-
and generate much-needed jobs. PV is the quickest power taker credit guarantees (just as examples, though not the
generation technology to install and could rapidly respond only ones by far, the World Bank Group can arrange political
to the urgent need for more daytime power in many markets. risk insurance cover through MIGA, partial off taker credit
Solar developers, investors and financiers could tap into a guarantees through the Word Bank, and foreign currency
massive new market where solar penetration is still very low hedging through IFC).
and economic growth is high.
And the market is growing: since the first African IPP
This compelling story is attracting a lot of attention from in 1994, over 70 IPP projects have been financed in Sub-
developers, suppliers, donors and governments. But despite Saharan Africa (excluding South Africa) and the track record
the bluster, very little investment is taking place, except in remains reasonably good - all considered.
South Africa where the hugely successful renewable energy
procurement program has attracted more than US$3 billion WHATS MISSING THEN?
of investments and made it, quite literally, the shining
beacon of the region. Elsewhere? Nothing. Literally nothing. IFC has participated in many of the worlds most successful
Probably less than 50 MW in Sub-Saharan Africa, mostly solar programs, from Chile to South Africa to India and
demonstration plants or pet projects heavily subsidized by Thailand. To try and understand why Africa wasnt seeing
donors. such success, we performed an in-depth analysis of over 20
promising potential solar markets in Sub-Saharan Africa (i.e.,
Meanwhile, Germanys global lead - with an installed base of those where solar irradiation is good, and where the electricity
35GW - is about to be blown away by China, whereas Italy, systems economics are favorable to solar for example, when
Japan and the United States each have over 12 GW of PV diesel or HFO is dispatched throughout the day or solar can
capacity. Even notoriously rainy Great Britain now has over allow hydro to be stored for use in evening peak loads), and
3 GW installed. came to the conclusion that African countries need to take a
different approach to the ones they have used historically for
SO WHATS THE PROBLEM? thermal and hydro projects.
IS THERE A LACK OF INVESTOR INTEREST? With small and unstable grids, a Feed-In Tariff free-for-
Unequivocally no! On any given week, IFC is approached all will not deliver the right amounts of solar in the right
on average by 2-3 solar investors seeking equity, debt or locations. With so many vertically integrated industry
guarantees for projects they are attempting to develop in players (i.e., acting as investor, equipment supplier,
Africa. Furthermore, these investors cover the entire spectrum contractor and operator), dynamic equipment pricing and
of the industry: world-class leading utilities, established the relatively small scale of solar projects, direct negotiations
African power developers, smaller European and North are unlikely to deliver the most competitive tariffs. With the
American developers branching out into new territories, structuring challenges of African markets, a tender without
private equity funds and their newly established platform agreed project documents does not get the winner very far.
companies, and local investors. African countries and all the stakeholders within their
power sectors - need to give much clearer and consistent
Buoyed by the continents increasingly publicized growth procurement signals to create a vibrant market for willing
story (Africa Rising) and the slow-down in some developers and to reap the potential benefits of quickly
traditional PV markets, there is significant investor and installed, low cost solar.
Indeed, in most countries, even those where solar makes easily in a large system where the success or failure of one
sense, its actually very difficult and very risky for a given project bears little consequences. But in smaller
developer to figure out where to invest time and resources. grids, where available interconnection points are few,
In many cases (Senegal, Mali, Burkina, Kenyaetc.), grids are unstable and the medium term new capacity
developers have been hard at work attempting to develop needs dont justify multiple developments when only one
projects. But the combination of public procurement can be supportedmuch riskier.
rules, lack of a clear contractual framework, absence of 4. Mitigating risk perception by investors and financiers.
clear processes and rules for project awards, and industry Larger, investment grade countries with more credit
stakeholders (utilities, regulators and ministries) pulling worthy off-takers, and more liberalized markets with
in different directions, has proved, in most cases, to be a alternative buyers and markets for power, serve to
significant bottleneck. significantly de-risk investment in long-term capital
intensive assets. In most Sub-Saharan African countries,
In this context, the larger developers who have the greatest the credit quality of the one and only off-taker and
potential to lower tariffs by driving down installation costs political risk are valid concerns which feed directly into
and accessing lower costs of capital, are staying out of African higher tariffs via higher capital costs.
markets (its hardly worth a significant investment in time
and resources to develop the 1st solar IPP if its for 10 MW
or 15 MW only). A ONE-STOP-SHOP SOLUTION FOR AFRICAN
POWER MARKETS
SCALING SOLAR: A NOVEL APPROACH Put simply, Scaling Solar is a holistic, one-stop-shop
solution for African Governments that are committed to
Seeking to address these challenges, a new WBG solution has catalyzing private sector investment in solar power in the
been designed by an integrated team of IFC, World Bank, fastest and lowest cost manner possible.
and MIGA staff with support from Linklaters, Norton Rose,
Mott McDonald and with the precious feedback of a select It aims to provide Governments with speed of delivery (24
group of IFC clients interested in the solar market in Africa. months from start of World Bank Group engagement to first
electrons delivered to the grid), the most competitive tariffs,
In seeking to devise this new approach, we drew on IFCs PV reputable developers and contractors, high quality installations
investment experience globally and also from Africas home and certainty on delivery by a set date. In parallel, it aims to
grown success story. Reflecting back on what made South provide investors and developers with certainty of process,
Africa and other programs a success, we identified the key low transaction costs, a robust and bankable contractual
ingredients of scale, transparent competition, a bankable package and a de-risking of their African investments. Once
contractual framework, repetition. Together these delivered delivered across multiple markets it will give both procuring
radical tariff reductions (in the case of South Africa, nearly governments and market participants (investors, advisors,
70% between rounds 1 and 3) and remarkable speed of suppliers) the benefits and economies of scale of a larger
financing and installation. But in each case, success relied on regional market.
an approach that reflected the idiosyncrasies of the countrys
power sector, regulations, financial markets and legal systems.
HOW DOES SCALING SOLAR ACHIEVE THESE
Any solution for Sub-Saharan single-buyer markets with OBJECTIVES?
limited IPP track record needs to retain these core ingredients a) Initial feasibility studies, site selection and legal due
but be tailored in a way that recognizes the realities of these diligence fronted by the WBG (IFC, IDA) and other
markets: development partners as may be the case. This first
1. Acknowledging that not all Governments in Sub-Saharan phase would typically aim at identifying the desirable
Africa are willing (or have the capacity) to dedicate as solar capacity to put on the grid, suitable sites (available
much resources to a renewable energy program that high land, no environmental or social issues, proximity
middle income countries and BRICs can afford. Smaller to a suitable interconnection points, irradiation and
procurement needs may never justify the time and cost of geotechnical studies etc.), and conduct a detailed
developing a program from scratch. legal and technical due diligence as required. Speed is
2. Catering for the fact that many countries in Sub-Saharan achieved with template terms of reference and a bench
Africa do not have the deep financial markets and strong of high quality advisors.
banks that bigger economies do, limiting access to
long-tenor debt and creating significant uncertainty on Everything a private investor needs to know to
available financing terms and structures. refine his financial model and submit a competitive
3. Managing issues arising from smaller size grids. Indeed, bid would be clear: how many MW, where, what
in South Africa, India and Brazil, developers were free are the existing conditions at the sites, what is the
to select and develop the sites they chose. This can work fiscal regimeetc. no surprises.
But that was until now: Scaling Solar has been precisely
designed by IFC and the World designed by IFC and the World Bank Group to offer a ready-
made solution to this conundrum.
Bank Group.
For Governments, policy makers and their partners, the
advantages are clear: a holistic, integrated solution, low
How would it work in practice? First IFC would seek to get transaction costs, the support of IFC and the World Bank
mandated formally by a Government to roll-out this initiative Group, fast delivery and the certainty that the outcome will
in the host country, and from there, the process would work be quality projects, led by reputable investors and at the
as follows in 24 months from beginning to end: lowest cost.
A NEW ERA FOR SOLAR PV IN SUB- For private investors and financiers, the advantages
SAHARAN AFRICA? are equally clear: drastically lower transaction costs, a
transparent, robust award process with clear rules of
The renewable energy revolution is happening and is the game and a bankable contractual framework with
reshaping electricity markets worldwide: the pace of change, a comprehensive financing and risk mitigation package
the consequential impacts of such momentous transformation attached.
or the end state(s) may be a matter of debate. But no one
is disputing the fact that climate change and renewables Can we hope to see the dawn of a new era for renewable
continuously improving economics are two major driving energy in Sub-Saharan Africa, particularly solar PV, for the
changes that will continue to transform the electricity benefit of all stakeholders?
landscape across the world.
Time will tell: the road to travel is still long, but at least,
Can Sub-Saharan Africa, with its heartbreaking 30% Scaling Solar opens a path to get there. And as anyone whos
electrification rate but some of the worlds best solar resources, travelled in Africa knows, clearing a path may well be the
afford to stay behind? We think not. most arduous part of the journey
H.E. Hon Henry Olufumi Macauley is the Minister for Energy, Sierra Leone. He also serves as Sierra Leone High Commissioner to Nigeria,
accredited also to Republic of Angola, Republic of Benin, Republic of Cameroun, Democratic Republic of Congo, Republic of Equitorial
Guinea, Central Africa Republic and ECOWAS.
He holds a Masters in Business Administration from Knightsbridge University (2005), an Introduction to the Oil Industry Certificate
from Oxford, Princeton (2003), a Certificate of French Language from Alliance Francaise Paris, France (1985), a Bachelors of Engineering
Electrical (Hons) from Fourah Bay College, University of Sierra Leone (1984) and a WAEC School Certificate from Prince of Wales School,
Freetown, Sierra Leone (1979).
Previous positions include the Chairman of the Ecowater and Energy Services Company Ltd, Chairman of Staco Insurance Company Sierra
Leone Ltd, President of the National Association for Indigenous Businesses, Senior Trader at Partenaire Service a LIndusterie in France and a
Commodities Trader for Intraco Consultants Inc.
During his career he has visibly achieved a strengthening of the relationship between Nigeria and Sierra Leone. He was responsible for
creating the Sierra Leone Nigeria Economic Commission (SLENIG) and the NIGERIA SIERRA LEONE CHAMBER OF COMMERCE.
In addition, he has worked tirelessly and successfully to take Nigerian Companies to Sierra Leone, fostering trade and economic development
between the two countries. This includes the Leading of Business Club Ikeja to Sierra Leone on a Business visit. He has also participated in
various Government/Private Sector negotiations and programs.
QUESTION: Please provide the Our Energy Sector Strategy defines With ongoing industrial and
readers of the Africa Energy Yearbook our expected installed electricity manufacturing investments in the
with an overview of Sierra Leones capacity growth to 1000MW by extraction of iron ore, the processing
power sector in 2015. 2017/2018, with its associated of ore into steel as well as agro-
improvement in transmission. This processing businesses come on stream,
ANSWER: There has been significant is to provide for the anticipated there is need for complementary
improvement in electricity supply over the domestic and demand growth. thermal power generation. Medium-
last few years. However, the demand for term estimates for thermal power are
energy far exceeds supply and the sector projected at about 850MW to meet
is faced with the following challenges: QUESTION: My understanding is these requirements, with expectations
Outdated transmission and that Sierra Leone has huge potential to of increased demand thereafter.
distribution system resulting in high boost its economy through the tourism The production of bio-diesel and
line losses, estimated at about 40% sector. If this is still the case, what ethanol from palm oil and sugar cane
of units generated. opportunities are there for investors are investments that the Government
Insufficient generation capacity: Only in the power sector considering this offers additional incentives over and
about 10% of the population has approach and other targeted growth above general scope of incentives
access to electricity from the national areas in the country? in the country. The production of
power grid. bio-diesel may be integrated with
High seasonal variability in ANSWER: Sierra Leones energy state-owned oil palm plantations at
hydroelectric power production sector offers a number of investment Kambia and Mattru in the Bonthe
The Governance structure of opportunities in terms of direct investments District, which are available for
the entire energy sectors is being and public-private partnerships. private sector participation.
overhauled and reformed with: Harnessing Untapped Hydro Sierra Leone has ready access to export
- A recently unbundled utility Potentials of up to 2,000MW. markets for energy in the West African
(December 2014) Renewable energy potentials, market through the West African Power
A. Electricity Distribution with solar power generation. The Pool, an energy market created through
and Supply Authority, EDSA country boasts significant solar a regional infrastructure protocol of
B. Electricity Generation and power potential with 2, 187 hours ECOWAS. Favourable incentives in
Transmission Agency of sunshine a year with generation place for private sector participation
- A recently formed (December potentials estimated at between in the development of the countrys
2014) Regulatory Commission 1,46018/1,800 GWH per annum. segment. Potential external demand in
the immediate neighbouring countries Doing Business Report to reduce the dominating the market, providing power
of Liberia and Guinea is estimated at cost of doing business is used as a guide at competitive rates. Our Base Load power
over 2,3500MW. to reform all relevant sectors: will be renewable Hydro, supported by
There are opportunities for investing Initiatives to streamline procedures distributed Solar and thermal power. We
and operating a T&D network, as for starting a business, by rationalizing wold also have deployed off grid solutions
an unbundled component in energy municipal license fees; enabling for rural electrification hereby providing
generation and distribution: A online registration of companies; and electricity to the entire Country.
national network of almost 1,500Km decentralizing the work of the Office
of transmission and distribution. of the Administrator and Registrar QUESTION: What would your
General (OARG) by creating one- message be to prospective investors
QUESTION: Sierra Leone has been stop-shop in all District headquarter and developers entering Sierra Leone
very proactive about developing its towns. Business procedures applicable for the first time?
power sector. However, one of the major either within the country and/ or
barriers to investment is the speed with across borders, will be effectively
which projects are developed; what is disseminated through all available ANSWER: The EVD created a huge
the Ministry doing to speed up the channels. crises in the sub-region and led to
process of project development and For paying taxes, we have adopted waves of project staff being recalled and
how can investors rely on the data a small tax-payer regime; it will resultant project delays in all sectors.
available to them with regards to GDP simplify tax return forms to reduce Sierra Leone has endeavoured and pulled
and investor insights? time needed to complete them. We through. Prior to the crisis, our economy
ANSWER: We have streamlined the will also implement an electronic was one of the fastest and most robust
review process of proposals in the filing and payment system. in the region, and we are committed to
Ministry by the creation of an Energy A Fast-track commercial court has attaining those levels again.
Task Force. This group boasts a cross been set-up to expeditiously handle
section of all Government Stakeholders commercial disputes, and promote With the recognition that the energy
necessary for input and decision making use of alternative dispute resolution sector is the foundation of all development
on projects. With bi-weekly meetings, to enforce contracts. and access to reliable and affordable
projects are reviewed with increased An expedited procedure for the modern energy is an important catalyst
speed and full participation and buy-in. issuance of Construction Permits. for achieving high economic growth, we
Streamlining of export procedures at are resolved to attaining those growth
In addition, our Ministry employs the port and border posts. levels again and remain optimistic about
clear and transparent procedures for the future!
private sector participation in the
energy investments, through PPPs. QUESTION: Can you tell us about Sierra Leone is open for business and
The institutional capacity, institutional your vision for 2030 what does Sierra opportunities abound for investment
arrangements for issuance of IPP licenses, Leone look like then and how will the in all economic sectors especially in the
execution of PPP Agreements and general energy and industrial footprint of the bedrock of energy. We do not think of
regulation of the energy sector are being country have changed? this phase as a post-Ebola era, but as a
enhanced and streamlined. start of a new and welcoming era for
investment.
Our indicators are transparent as ANSWER: We believe that access to
Government continues to implement Electricity and Power is a basic right. Welcome!
policies that provide a conducive business By 2030 there will be full penetration Amb. Henry Olufumi Macauley
environment for the private sector by of power to all corners of Sierra Leone. Minister of Energy
enhancing institutional and regulatory Our power utilities and supply of www.energy.gov.sl
reforms. In addition, the World Banks electricity would have matured, with IPPS
A YEAR OF SOLAR
PV IN EAST AFRICA
Laura Kiwelu, Senior Associate, Norton Rose Fulbright
Tanzania
Laura Kiwelu is a Senior Associate at Norton Rose Fulbright based in Dar es Salaam, Tanzania
and specialises in renewable and conventional power projects in Sub-Saharan Africa. Laura
advised Gigawatt Global on all aspects of their 8.5MW solar PV project in Rwanda, which
reached financial close approximately a year after power purchase agreement negotiations
commenced. Laura is currently advising on a first-in-country 40MW solar PV project in western
Kenya, and is advising the developer on a second solar PV project in Rwanda. In Tanzania, as
part of a local team, she is advising renewable developers on wind, solar PV and hydropower
projects, including captive power projects, grid connected projects and off-grid projects. Laura
also previously advised the Zimbabwe Power Company on the expansion of the Kariba South
hydropower project and the Hwange coal-fired project. Prior to her move to Tanzania, Laura
was in Norton Rose Fulbrights energy projects team since qualifying in 2006 and spent three
years on secondment to European power generation company Drax Power as legal counsel.
On a daily basis the sun provides about 10,000 times more energy to the world than we consume. Africa has the
highest concentration of solar irradiation in the world and therefore the potential of solar energy by far exceeds
the potential of all other renewable sources on the continent (including hydropower).
O n these bare facts, one can only conclude that the potential
for solar energy in Africa is enormous. Now to focus on
East Africa, where solar irradiation is estimated at between
so is the risk that, if electricity infrastructure fails to keep up,
it will increasingly act as a ceiling on GDP growth. Climate
change has led to increasingly unpredictable rainy seasons in
4-6 kWh /m/day, while the region has the lowest access to East Africa, and with hydropower as the dominant generation
electricity and the smallest per capita generation compared to resource, this has meant load shedding and reliance on costly
all other regions of the continent. GDP in Uganda, Tanzania, emergency power solutions during periods of drought. At the
Kenya and Rwanda is accelerating at an increasing rate, but same time the cost of solar photovoltaic (PV) technology has
EnergyNets
Organised by:
EnergyNets to
commitment
commitment
East Africa: to
East Africa:
EnergyNet is an energy business looking to support the aspirations of Africa our objective is to aid the uptake of
electricity increasing economic development and job creation. Additionally, EnergyNets engagement with the East
EnergyNet is an energy business looking to support the aspirations of Africa our objective is to aid the uptake of
Africanelectricity
power transmission sector development
increasing economic enables us to:
and job creation. Additionally, EnergyNets engagement with the East
EngageAfrican power transmission
international sector
investors and enables
provide us to:
opportunities for the development of business partnerships leading to
increased electricity
Engage in East
international Africa.and provide opportunities for the development of business partnerships leading to
investors
increased electricity in East Africa.
Provide an environment in which open and transparent dialogue takes place supporting the uptake of energy projects.
Provide an environment in which open and transparent dialogue takes place supporting the uptake of energy projects.
Host forums in East Africa annually, enabling EnergyNet to invest over US$250,000 in the economy of the country
Host forums in East Africa annually, enabling EnergyNet to invest over US$250,000 in the economy of the country
Recruit local staff at all events and source and print all materials locally.
Recruit local staff at all events and source and print all materials locally.
Organisations we
Organisations wework
work with acrossthe
with across thecontinent:
continent:
Ministry of
Ministry of Minerals,
Ministry of Energy Ministry of Ministry of Ministry of Ministry of Ministry of
Environment
Ministry of Angola Minerals,&Energy
Water Affairs, Energy &
Ministry ofMines, Energy & Water
Ministry of Mines, Petroleum
Ministry of Water Irrigation
Ministry& of Energy & Minerals,
Ministry of
Botswana Burkina Faso Resources, Cameroon Resources and Energy, Energy, Ethiopia Tanzania
Environment Angola & Water Affairs, Energy & Mines, Energy & Water Mines, Petroleum Water Irrigation & Energy & Minerals,
Cote dIvoire
Botswana Burkina Faso Resources, Cameroon Resources and Energy, Energy, Ethiopia Tanzania
Cote dIvoire
Ministry of Namabia Power Utility Ministry of Ministry of Ministry of Public Utility Company, Energy and Water
Mines & Energy, Namibia Company Power, Nigeria Energy & Power, Sierra Public Enterprise, South Africa Utilities Regulatory
Leone South Africa Authority, Tanzania
Ministry of Namabia Power Utility Ministry of Ministry of Ministry of Public Utility Company, Energy and Water
Mines & Energy, Namibia Company Power, Nigeria Energy & Power, Sierra Public Enterprise, South Africa Utilities Regulatory
Leone South Africa Authority, Tanzania
Ministry of Foreign Ministry of Ministry of Ivorian Electricity Mozambique Electricity General Electricity National
Affairs, Ethiopia Energy & Water Energy & Power Production Electricity Supply Corporation Company of Libya Integrated Power
Development, Development, Company Company of Malawi Project, Nigeria
Zambia Zimbabwe
Ministry of Foreign Ministry of Ministry of Ivorian Electricity Mozambique Electricity General Electricity National
Affairs, Ethiopia Energy & Water Energy & Power Production Electricity Supply Corporation Company of Libya Integrated Power
Development, Development, Company Company of Malawi Project, Nigeria
Zambia Zimbabwe
www.energynet.co.uk
www.powering-eastafrica.com
www.powering-eastafrica.com
SUSTAINABLE SOLUTIONS FOR AFRICA
A STEP AHEAD OF
THE GAME
Site Selection and Constraints Mapping through
Geographical Information Systems (GIS)
Alan holds a BA Hons in Geography and Environmental Management Andrew has over 20 years experience in the environmental field.
and has 9 years experience in environmental consulting. Initially He has focused on the environmental planning and assessment of
Alan worked as a specialist in the field of biodiversity where he major capital projects. His experience covers power (conventional
developed core competencies in the following areas: biodiversity, and renewable), oil and gas, transportation and urban development.
GIS and remote sensing, environmental management; logistics; Andrew has led numerous assignments covering environmental,
monitoring; biodiversity off sets; and ecosystem goods and services. social and health impact studies, environmental management,
In the latter part of his career Alan moved into project management stakeholder engagement, due diligence and training and capacity
of environmental assessments on large capital projects. He has building. Andrew has worked in Europe, Africa, the Middle East,
worked on over 70 projects across 12 different African countries Asia and the Caribbean.
throughout the project life-cycle from exploration through pre-
feasibility to feasibility, to operation and closure.
Selecting a site that minimises environmental and social impacts can help to avoid unnecessary permitting
delays, costs and community conflicts and can help you to justify your preferred site(s) and build trust with
project stakeholders.
The data in each buffer zone for the AoI was then allocated an environmental or social constraint in the GIS dataset according
to the rating scale shown below:
Constraint Description
High Areas covered by Partial Protection Zones, and areas that have high level of
Environmental / Social constraints to overcome.
Moderate-High Areas not falling within any protection zones but still have a considerable level
of Environmental / Social constraints.
Moderate Areas not falling within any protection zones and have a moderate level of
Environmental / Social constraints.
Moderate-Low Areas not falling within any protection zones and have a moderate-low level of
Environmental / Social constraints.
Low Areas not falling within any protection zones and have a low level of Environmental
/ Social constraints.
To find out more about how GIS and remote sensing can enhance your project, please
contact:
Elvira graduated as an economist at Tilburg University in 1999 in the Netherlands. After having worked at the Ministry of Finance in the
Netherlands for five years, Elvira joined the International Monetary Fund in Washington D.C. where she worked as a senior advisor to the
governments of the Balkan and CIS countries. In 2007, she started her career at FMO as an investment officer in the Europe and Central
Asia division, focusing on corporate clients and financial institutions. In 2010, Elvira was appointed manager of the credit analysis team and
chairwoman of FMOs investment committee. In 2013 Elvira became manager of the Energy team, responsible for transactions in Latin
America and South and East Africa, and in December 2014 was appointed as Director of the Energy department.
Bernhard van Meeteren works with The Netherlands Entrepreneurial Development Bank FMO (Nederlandse Financierings-Maatschappij
voor Ontwikkelingslanden N.V.). Within FMO he and his team focus on providing financing for energy projects with an emphasis on the
Least Developed Countries and on Renewable Energy. The team is considered to be one of the main players in arranging and providing
financing for energy and infrastructure projects in Sub-Saharan Africa. In 2010 the FMO team received the Africa Energy Award for Best
Financial Support to the Power Industry in Africa, while Bernhard was runner-up for the 2010 Award for Leading Africa Energy Personality.
Mr. van Meeteren joined FMO in 2002 after working 16 years with ABN Amro Bank and ING Bank, mainly in Project Finance and Global
Relationship Management. He holds a MSc degree in Civil Engineering from Delft University of Technology in The Netherlands.
QUESTION: What has been the most QUESTION: In your opinion, what its success. Let me mention three of those
rewarding energy project you have been are the cornerstones of a successful critical features.
involved with in your career? public-private partnership in Africa?
Can you share with us an example It first of all starts with a government
of one? supported sector program in which a
ANSWER BERNHARD: Probably priority and clear vision is presented to
the most rewarding project has been boost the infrastructure- energy agenda
Bujagali. I remember the first meetings ANSWER ELVIRA: Tremendous of a country. Such a program would
on the PPA, a diner in a hotel where efforts are under way to address Africas include clear regulatory frameworks
we were the only guests, in the dark overall infrastructure challenges. But the and transparent practices, dealing for
as the electricity grid went down. needs on the ground are still immense. example with concessions. The roles
Thereafter more than 18 months of Infrastructure is one of the key challenges and responsibilities for public and
intensive meetings to get the financing facing policymakers in the region, and private players should be clear, whereas
documents agreed, with tough and when well organized and tackled, the the public bodies in this framework
difficult negotiations. Since the start benefits to the economy and growth need to be financially well equipped or
of construction there were monitoring of the countries concerned are clear. supported by the government to fulfil
trips with a large lender group which was Resources from governments and donors its obligations. Cost reflective tariffs are
always a nice way of meeting colleagues are insufficient to meet the overall important to allow these bodies to act in
from other institutions. Meanwhile challenges in this area. Hence, smart and a sustainable manner.
construction progressed, there were well-designed Public Private Partnerships
cost-overruns, additional financing was (PPPs) can make a significant contribution Secondly, in order for financiers to play
needed and the project took 14 months to Africas growth momentum. their role in the funding of any project,
longer than expected to complete. When they need strong and knowledgeable
I visited the Bujagali project two weeks Many examples in our portfolio, partners; sponsors that have a solid
ago, it was a smooth operation, the soft constituting energy transactions in Africa, track record and are familiar with the
humming of hydroturbines in a clean illustrate the successful workings of PPPs local context. Thirdly, financiers such as
power house. You could hardly imagine in Africa. Although every transaction development finance organisations like
that it had cost such an effort to move and environment requires a tailor-made FMO should aim to provide tailor-made
that project to where it is now. approach, some features are eminent for financing solutions, remaining innovative
and creative while including the necessary key sectors such as the energy sector, has spend time with project developers and
guarantees and arrangements to balance enabled us to build a strong knowledge government representatives to find an
the risks taken on board. base. We apply this knowledge to all our equilibrium between the various interests
activities and actively share our expertise that needs to be found in order to make a
with our clients and partners. We employ project happen.
QUESTION: Supporting private sector specialized and diverse staff who bring high
development in developing markets qualifications and credentials necessary
must mean you often encounter risky to work within risky environments and QUESTION: You have been coming
investment environments - how does structure transactions with necessary risk to the Africa Energy Forum for a
FMO adapt to this? mitigants. number of years now- what do you
consider to have been the most
ANSWER ELVIRA: For the last 45 years, BERNHARD: We support many significant changes in the sector
FMO has been investing in the private sector energy projects by providing financing. over this time? Have these changes
in developing countries. Our committed But providing the financing itself is not influenced the perspectives of those
investment portfolio totals EUR 8 billion as the main issue, as there is plenty available. coming to the Forum?
of end 2014. We have investments in more The biggest effort goes in understanding
than 85 developing countries, offering our the legal and operational framework in ANSWER BERNHARD: There
clients a variety of financial products as well any African country and finding ways are two significant changes to the
as expertise and access to our networks. to deal with the risks that are posed by first AEFs. The first is the number
That is how we feel we create value. Many such a legal and operational framework. of people. The second is that in early
years of sustainable investing in developing Those efforts require an understanding AEFs we were discussing projects that
countries, combined with our focus on of that environment and a willingness to could be realised, but there was in the
best years only one IPP transaction
realised. At this moment we can not
only discuss many projects that are in
the process of being realised, but we
can also celebrate those projects that
have been realised. The growing pace
of transactions happening is the largest
change of the scene.
POWERING
AFRICAS FUTURE
BY WIND
Kasper Dalsten, Director Global Business Development,
Vestas Wind Systems
Kasper Dalsten is Director of Global Business Development at Vestas Wind Systems. Based in
Madrid, Spain, he covers market entry planning and risk mitigation in emerging markets across
the globe. This includes risk mitigation as well as strategic planning of supply chain localisation
in new markets.
Kasper holds a masters degree in Finance and Development (London) and a masters degree in
Economics (Copenhagen). He started his career in the Danish Ministry of Finance where he
worked on renewable energy policies and competition in the energy sector.
He has significant experience from living and working in Africa. Before joining Vestas in 2011,
he worked in the World Banks Country Office in Uganda. Prior to that he worked as Economic
Attach at the European Unions Delegation to Zimbabwe and as Budget Officer in Ministry of
Finance in Malawi. He therefore has first-hand experience with the economic development and
power sector challenges in Africa.
Vestas estimates that at least 7 GW of wind power could be commercially exploited in sub-Saharan Africa (excl.
South Africa) by the end of the decade
AFRICAS ENERGY DEFICIT Even then, what is available for active generation is much
less. Thus, power generation in SSA (excl. South Africa)
Africas energy deficit is well-known; so is the relationship amounted to just 165 TWh in 2010, roughly the same as
between access to affordable and reliable electric power and generation in Sweden or in Poland (World Bank).
economic development. Nonetheless, the facts are so startling
that a few of them deserve repetition: Average per capita power consumption in SSA (excl.
South Africa) is only around 165KWh/year. This is
In sub-Saharan Africa (SSA) as a whole, only 290 million equivalent to the energy consumption of a 60 watt light
out of its 915 million inhabitants have access to electricity. bulb powered for 7.5 hours a day. In comparison, a fridge
Even more depressing is the fact that the absolute number may consume around 500-600kWh/year (World Bank).
of people without access to electricity in SSA is increasing!
(IEA). The investments needs are immense. By some estimates,
US$490 billion of investments in new generation capacity
Grid-based generation capacity in SSA (excl. South and another US$345 billion of investments in transmission
Africa), with a population of around 860 million, was and distribution are needed for the region to meet its
around 45 GW in 2012 (IEA). This is roughly the same demands by 2040 (McKinsey). Yet, SSA is still largely a
as peak demand in Spain (population 47 million) or in place where investments in the energy sector focuses on the
Turkey (population 75 million). development and extraction of resources for export (IEA).
The lack of access to energy, and electricity in particular, not compared to the norm in developed countries of 10%), and
only manifests itself in poor economic performances, poverty, collection rates low (at around 85%) [IMF].
and the regions poor record on social-economic indicators; the
environment suffers too. Four out of five people in SSA rely Aside from the perverse effect of subsidising those already
on solid biomass, mainly in the form of fuelwood, for cooking privileged enough to have access to grid connected electricity,
(IEA). This leads to deforestation and the associated soil erosion tariffs below cost recovery means that SSA utilities have had
as well as detrimental health and safety impact on the population. limited opportunities to invest in new generation capacity
and upgrade the transmission and distribution network to
So why would wind power offer a solution to these challenges? enhance access to electricity.
Well, first we need to take a closer look at the power sector
of today in SSA. Thirdly, SSA power sectors are often dominated by vertically
integrated state-owned utilities, not conducive to attract
private investments. Until recently, the state owned utility
THE SUB-SAHARAN AFRICAN POWER would be the only entity investing in generation capacity in most
SECTOR markets, and we are seeing the results of that in the statistics
above. Only in a limited number of markets have electricity
Electricity in SSA is expensive. The average tariff in SSA amounts market reform been undertaken, thus allowing for private sector
to US$0.17/kWh (or US$170/MWh). This is about twice the investments in new generation and distribution capacity.
average tariff paid in other developing countries. On top of that,
own-generation by firms forced to rely on expensive back-up In this context, why would wind power be an option worth
generators easily costs US$0.30-0.70/kWh (IMF). This reveals considering?
demand as well as willingness to pay for grid-supplied electricity
in SSA. The question, therefore, is why the investments in SSAs
power sector are lagging so far behind demand. WHY WIND PROVIDES (PART OF) THE
ANSWER
To answer this, we need to assess the typical structure of the
power sector in sub-Saharan Africa. Wind power provides a number of advantages worth
highlighting:
Firstly, electricity generation in SSA is expensive. Excluding
South Africa, generation costs average US$150/MWh. In Wind power is affordable. Compared to current electricity
countries mainly reliant on thermal generation, the average generation costs in SSA, wind power looks like a bargain. The
generation costs reach US$210/MWh (IMF). In addition IEA estimates that the levelised cost of electricity (LCOE) in
to inefficient generation companies, this is partly driven by SSA from wind power is just below US$100/MWh, obviously
costly emergency power generation as well as low economies depending on wind resource availability and location.
of scale in generation. Nonetheless, this is on par with the LCOE from a combined
cycle gas turbine with gas prices at US$12/MBtu. In any
Secondly, SSA utilities are chronically cash-strapped. Despite case, with just a fair wind resource, adding wind power to the
tariffs being high, they do not allow for full cost recovery. On energy mix will only help reduce the average generation costs.
average, electricity tariffs in SSA only cover 70 per cent of the
cost of generating and distributing power. Most countries This cost-reducing effect is being demonstrated in practice
apply administered pricing, and in addition distribution losses by the power purchase agreements negotiated for the 26
(reflecting significant theft during distribution) are high (25% MW Cabelica wind farm in operation in Cape Verde,
and the flagship 310 MW Lake Turkana wind farm under
construction in Kenya. These two wind farms are among the
few privately owned utility scale wind power projects in SSA
(excl. South Africa), and in both cases the power purchase
agreements (PPA) signed were significantly lower than the
system average cost of generation. Thus, the PPA for Lake
Turkana is about 25 per cent lower than the average systems
cost. For Cabelica, the PPA is even more favourable, being
50 per cent lower than the average system cost.
The PPA for Lake Turkana is Wind power utilises a domestic and free resource. The only
fuel of a wind power plant is the wind. This is obvious, but
about 25 per cent lower than the benefits of this are often overlooked or underestimated.
Firstly, wind power is independent of disruptions to the
the average systems cost. fuel supply chain. Whatever the conflict in a neighbouring
country, the wind will blow the same. Secondly, the cost of
goes to South Africa. Thus, installed wind power capacity in THE SOLUTION
SSA in 2014 stood at around 800 MW, with three-quarters
being installed in South Africa, and only around 200 MW in One prescription to this challenge is power sector reform
SSA excl. South Africa. providing a stable framework for independent power
producers (IPPs) and addressing the insolvency of off-takers.
While BNEF expects installed wind power capacity in SSA Some countries in SSA, notably Kenya and Uganda, have
(excl. South Africa) to increase more than ten-fold to 2.4 followed this route with some success. Nonetheless, it is fair
GW by 2020, this is far from what we at Vestas consider to say that recent IPP investments in these countries would
technically and economically feasible, given the merits and not have materialised without the implicit and explicit
competitiveness of wind power. guarantees provided by international financial institutions
(IFIs).
Having pioneered wind power in more than 30 markets, and
with installations in 73 countries around the globe, Vestas So while we wait for power sector reforms to deliver in
is confident that the technical and regulatory challenges to SSA, how may wind power plants provide an affordable
wind power can be overcome in any SSA market. While and feasible solution towards addressing the acute shortage
this requires collaboration between regulatory authorities, of generation capacity in SSA? Unfortunately there is no
developers, investors and technology providers, these silver bullet, and it is difficult to see how IPP investments in
challenges are not showstoppers. wind power plants in SSA will take off without PPAs being
guaranteed by IFIs. Several IFIs are already working on
However, financing of wind power plants in SSA still provides guarantee products which may provide the necessary cover
a significant challenge which has tended to keep wind power for investments to happen. However, all too often, these
investments at a sub-optimal level. And as of now, it is unlikely products are bureaucratic and time consuming. In addition,
that the private sector and national authorities alone can find often more than one IFI is involved in each deal, which
sustainable, robust and replicable solutions to this challenge. carries a risk of over-multilateralisation, further slowing
down the process of achieving financial closure of viable
THE CHALLENGE: OFF-TAKER RISKS projects.
credit rating, if it has any credit rating at all. Add to that International Energy Agency (IEA), Africa Energy Outlook, 2014
International Monetary Fund (IMF), Energy Subsidy Reform in Sub-Saharan Africa,
exchange rate risks and transfer risks, and the political and
2013
commercial risks associated with a 20 year PPA become McKinsey & Company, Brighter Africa The growth potential of the sub-Saharan
insurmountable. In practice this means that save for a few electricity sector, 2015
exceptions, privately financed investments in wind power World Bank, Africa Development Indicators, 2013; World Development Indicators,
plants in SSA outside South Africa will remain subdued. 2015.
Vinod Kumar Khare, Chief Executive Officer of Ethiopian Electric Utility (EEU), has more than 32 years of experience in the field of power lines,
substation construction, operation and maintenance, grid operation etc. As Chief Executive Officer of EEU, he is responsible for transformation
of the electrical system of Ethiopia and ensuring compliance with the established APQC (American Process and Quality Centre) Electric Utility
process classification framework. The EEU is all set to achieve world class bench marks.
Prior to this, he served various positions at the Power Grid Corporation of India Limited, specifically leading transmission utility in Western and
Northern Indian Grids. He began his career as an Executive of National Thermal Power Corporation (NTPC), India. He has presented many
research papers in international seminars, and has a B.Sc., B.E.(Electrical), M.B.A. from reputed Indian institutions.
QUESTION: Ethiopia has a vast generation is being discouraged; however (687 ckm, 4223 ckm, 5033 ckm, 2234
capacity for the development of the installed capacity is expected to be of ckm, 476 ckm respectively)
renewable energy projects. What do the order of 200 MW. Currently, some The transformation capacity is 7000 MVA.
you expect the countrys energy mix to areas are being fed through self-contained
look like in 10-15 years time? How will systems (isolated DG set networks), which The following Transmission projects are
it differ from today? will be increasingly connected to the main expected to be completed by the end of
electrical grid. year 2015:
4 nos. 230 KV sub-stations
Present installed capacity of power In the coming 10 years, approximately Approx. 90 km of double circuit
generation of Ethiopia is 2258 MW. 98% of power from renewable energy 400 KV lines.
Diesel power generation contributes only sources is estimated to comprise the energy 2 nos. of 132 KV GIS sub-stations
112 MW, compared to the 2146 MW mix. More stress is being given to increase 450 km of 230 KV lines.
installed capacity coming from renewable the proportion of wind and solar power
sources of energy. to reduce dependency on hydro resources. The upgrading of 4 nos. existing 132 KV
sub-stations to 230 KV is expected to
A major portion of power generation complete this year.
comes from hydro 1978 MW, wind EnergyNet hosted the third Powering
power generation capacity is 171 MW Africa: Ethiopia meeting last November It is worthwhile to mention that last
and geothermal capacity is 7 MW. The in Addis. What developments are on the year the power sector added 2500 MVA
current power generation capacity consists horizon in 2015 regarding the countrys capacity to the transmission network. This
of 95% from renewable energy. power sector? year, substantial MVA capacity shall also
be added.
POWER PLANTS UNDER
CONSTRUCTION EXPECTED Some of the Transmission and Distribution The existing distribution network comprises
TO BE COMMISSIONED IN projects are scheduled to be completed this 189,000 km of MV/LV lines and more
COMING YEARS year (2015), while some generation plans than 26,000 distribution transformers.
Hydro Power 9,000 MW currently under construction are expected
Wind Power 300 MW to start in either full or part generation. In the last fiscal year, our utility added
Solar Power 300 MW Some of the generating units that are more than 700 distribution transformers
Geothermal expansion 70 MW expected to be commissioned this year and 1200 km of MV/LV lines. This
Waste-to-Energy power 50 MW (a total of 1735 MW planned to be added fiscal year our plan is to add more
Co-generation 100 MW to the Grid): than 5000 km of MV/LV lines. This
5 units of 187 MW each & 2 units augmentation shall help us in releasing
The expected power generation is of 375 MW each of Hydro plants 300,000 connections for domestic as well
estimated to be more than 10,000 MW. 50 MW of waste-to-energy plants as industrial clients.
The generation growth is expected to
surpass the growth of demand. The TRANSMISSION NETWORK The utility is also executing a big upgrading
differential power can be exported and The existing Transmission network totals and rehabilitation project for the
will also contribute towards the economic 12652 circuit kilometer (ckm.) It consists transmission and distribution system, each
prosperity of the country. In future, diesel of 400 kV, 230 kV, 132 kV, 66 kV, 45 kV. worth 116 million US$ and 162 million
US$ respectively. The project includes the board of directors of EEA and approved Is there a need for capacity building with
construction of 132 KV GIS sub-stations, by the Ministry of Energy. the utility and if so, what support can
rehabilitation / replacement of existing the international community provide?
switchgear and installation of SCADA The erstwhile EEPCo presented, at the
systems in some distribution sub-stations. end of 2013, a new energy master plan for
the next 25 years. 28 projects with total The international community or agencies
Due to sustained efforts in the T&D investments of 156 billion USD shall be can provide capacity building support in
sector, the average number of interruptions realized by 2038. By 2016 EEP plans to the following areas:
is being reduced, grid blackouts have increase the power production to 10000 1. Energy management solutions
been eliminated and southern region MW. Also, the transmission and distribution 2. Energy Audits
transmission constraints are minimized. grid shall be extended significantly. 3. Tariff review & re-structuring
4. Energy efficiency improvement
What have been the barriers to The Energy policy also dedicates a Besides the above, companies can set up
investments in the past and how has special section for the encouragement of their subsidiaries in manufacturing of
the situation changed today? the private sector to be involved in the electrical goods and accessories, which are
development of the energy resources of the currently imported in the country. Easy
country, specifically by being involved in availability of these items would add to the
Exports from Ethiopia in general have the construction of energy infrastructure,
been growing, but imports are increasing muscle of utilities in providing fast services
a field that has been and still is seen to be to its domestic and industrial clients.
more rapidly than exports because of the mainly a responsibility of the government.
recent rapid economic growth. Therefore,
export of surplus electricity is an effective Ethiopia has opened up the electricity What would be your message to those
countermeasure to earn foreign currency. generation to private players for the first wishing to invest in Ethiopias electricity
time in its history. The decision came after sector for the first time?
Ethiopia has high potential regarding the ratification of a new proclamation by the
renewable energy sources, but is still to fully House of Peoples Representatives. Before the
utilize this potential. Evidence indicates Africa is developing fast and Ethiopia
new dispensation, the government-owned is the place for investors to be. Average
that the nation has the potential to generate utility (erstwhile EEPCO) was solely in
100,000 MW of electric power, but it has annual GDP growth rate of Ethiopia
charge of power generation, transmission, for last 10 years is 10.7%. The countrys
only managed to utilize about 2,200 MW distribution, and sale of electricity
of it. When the countrys projects currently growth is being fuelled by electric utilities.
throughout the country. But the new law
under construction are completed, the allows private power companies interested In the power sector, thrust is being given
figure is expected to rise to 10,000 MW. in investing in the energy sector to compete on renewable energy. The exploitable hydro
with EEP (Ethiopian Electric Power). power reserves of Ethiopia are 45000
BARRIERS IN THE PAST MW and less than 5% has been utilized.
A. Lack of private equity in power sector The newly established Ethiopian Electric Similarly, the wind, solar and geo-thermal
B. Lack of dynamism in tariff regulation Agency (EEA) will control private reserves are less that 1% utilized (out of
investments in the energy sector and is the full reserves). Hence there is a lot of
CHANGES THAT HAVE COME expected to set tariffs. EEA will be headed potential for investors in power generation.
Currently, the government is doing all by a board of directors that will review
it can at all levels of its administration tariff proposals for the national grid The estimated domestic consumption by
to invest heavily in renewable sources before being submitted to the Council the end of 2015 shall be approx. 2520
of energy all over the country. The of Ministers for approval. This comes after MW, and for the year 2037 is 20,700 MW
government has conviction that through many organizations, including the World - an eight-fold increase. To support this
capitalizing on renewable sources of Bank, asked the Ethiopian government demand, consummate infrastructure in
energy, green economy will be realized to open key sectors of the economy to generation, transmission and distribution
and sustainable growth will be achieved. private companies. is required.
In November 2013 the Ethiopian The new proclamation has been taken The Government is inviting & supporting
parliament approved the Energy as a sign of a new chapter in Ethiopias investors and is interested in Public-Private
Proclamation to liberalize the energy economic orientation. The government Partnership models as well. There is a
sector. Later on, the Ethiopian Energy plans to generate 10,000 megawatts dedicated Ethiopian investment agency
Authority (EEA) was founded, where of electricity from various sources by to assist the investors. Ethiopian Electric
foreign companies can register and obtain the end of the countrys Growth and Utility also has an industrial desk to
licenses to produce electricity and get a Transformation Plan-1 (GTP-1), a five- support the existing and forthcoming
fixed feed-in tariff for the generated power. year strategic plan that was initiated in industries, ensuring them a safe and
The feed-in tariffs will be fixed by the 2010 to improve the economy. reliable electric supply.
CAN RENEWABLE
ENERGY help to address
South Africas energy crisis?
Alastair Campbell, Managing Director,Vantage Green X
Alastair is the Managing Director of Vantage GreenX where he is responsible for the assessment,
structuring, execution and post-transaction monitoring of senior debt lent to projects in the
sustainable energy space. He joined Vantage GreenX in January 2014.
Prior to joining Vantage GreenX, Alastair headed up the renewable energy finance team within
Standard Bank. While there he successfully oversaw the funding of more than R15.5bn of debt
to 15 wind and solar projects in bid dates 1 and 2 of the REIPP procurement program. He has
worked on various infrastructure Project Financings across the African continent in a diverse
range of countries including Mali, Senegal, Ghana, Nigeria, Cote dIvoire, Kenya, Uganda,
Tanzania, Zambia, Mozambique, Zimbabwe, Botswana, Namibia, Swaziland and South Africa.
The evolution of the energy sector and in particular the coming to the country to participate in the DOE-run
renewable energy sector in South Africa over the last three renewable energy IPP procurement program (REIPPPP)
years has been remarkable and it has had a number of spin- All ancillary service providers which includes lawyers,
off benefits. financial advisers, technical consultants, contractors and
It has seen the maturation of what, until recently, was a funders have, in a very short space of time, developed a
nascent IPP market, with literally hundreds of developers deep and thorough knowledge of the sector
There has been a significant transfer of skills and These are, in no particular order:
knowledge from international construction firms to local 1. The financial squeeze that Eskom finds itself in. A large
firms proportion of Eskoms time, money and effort is being
A number of equipment suppliers have opened up local directed towards the closure of the Medupi and Kusile
manufacturing plants projects. More often than not this is to the detriment of
The electricity tariffs currently being bid in the REIPP all else going on within the organisation. An unintended
procurement program have come down significantly and consequence is that REIPPPP projects are being delayed
are currently approaching grid parity because not enough money is being spent on a timely basis
to prepare the national grid to accommodate the REIPP
The net result of this is that a lot of knowledge and deal-closing projects coming online.
capacity has been created in the local market for the roll out of 2. The Integrated Resource Plan (which forms part of the
renewable energy. With Eskom just having been downgraded energy master plan) is now 4 years out out of date and, in
to junk bond status from a credit perspective, the State is going an ideal world, the annual MW allocations for renewable
to find it very difficult to raise additional capital to help South technologies should be updated to reflect the considerable
Africa meet its energy needs. It is therefore quite conceivable amount of market interest that REIPPPP has generated
that the financial difficulties currently being experienced by to date.
Eskom will leave the government with no option other than to 3. From a demand side management perspective, delays
accelerate the involvement of the private sector by procuring a in the promulgation of the net metering legislation is
large proportion of the countrys new generation capacity from severely hampering financial close on a number of roof-
Independent Power Producers (IPPs). top projects that could conceivably feed surplus energy
It is public knowledge that REIPPPP has been 3-4 times back into the grid.
oversubscribed in each of the bidding windows to date. 4. Delays to the close of the first round of deals on the Small
This factor, when combined with the chronic power Projects IPP procurement program and the launch of the
shortages currently being experienced in South Africa right Co-Gen and Gas procurement programs are also hindering
now, presents an opportunity for renewable energy sector the timely procurement of power from the private sector.
developers to play a meaningful role in helping to address 5. The fact that Eskom has not yet been unbundled pursuant
South Africas energy generation shortfall as market interest to the ISMO bill is considered by many private sector
far outstrips the MW allocation currently on offer. participants (banks and investors alike) as a significant
obstacle to their participation in the South African
The big question is how best to take advantage of this electricity sector.
developer interest in the local electricity sector. The first
requirement is to make it easier for these companies to Despite this list of constraints to doing business in the local
do business in South Africa. There are however a number market, there is still a lot of interest in participating in the
of market and regulatory impediments that are making it various processes being run by the DOE, but it could be so
difficult for IPPs to achieve financial close on a timely basis. much more. Given the competitiveness in the market, the
tariffs that have been bid are all within a relatively narrow
band. By definition therefore, most of the projects bidding
in REIPPPP will consequently be competitive and should
therefore be attractive to the DOE.
be gaining a lot of support within government. Worth and Provident funds are not governed by Basel III, they will
noting is that awarding preferred bidder status to projects become the sell-down partners of choice for the commercial
in these areas will not necessarily result in the lowest banks and DFIs going forward.
tariffs being achieved as the REDZ arent all located in
parts of the country that have the best solar irradiation or On paper therefore, it appears that South Africa already has
wind resource in the country. the makings of an ideal solution to help it solve its energy
crisis. For the DOE to take advantage of the many willing
Sceptics of such an approach argue that if there is an and capable renewable energy developers wishing to do
accelerated roll-out of IPPs in South Africa then there will business in this country, it is this writers contention that the
not be sufficient liquidity in the debt market, and it will put a following steps should be undertaken as a minimum:
strain on the financial, technical and environmental (human)
resources within the country. 1. Eskom should be unbundled in the manner contemplated
by the ISMO Bill - there are two reasons for this.
While there is a limit to the total amount of debt that local a. Almost all formerly state owned utilities that have
banks will put into a single sector, it should be noted that at been unbundled have become more effective and
present the combined exposure of the local banks is nowhere competitive post restructuring. The justification
near their exposure to say the mining sector which is many offered by the South African government for not
multiples higher. In other words there is still significant capacity unbundling Eskom (which is that it will be able
and appetite to lend to projects in the electricity sector. to preserve its credit rating) no longer holds true.
Restructuring Eskom will send the right message to
A further positive consequence of REIPPPP is that it has the investor and lender market and it will help to
brought institutional lenders into the direct lending space attract new players to the market, and
in a meaningful way for the first time. Traditionally, lending b. It will remove all of the current ambiguity within the
to projects on a limited or non-recourse basis has been the organisation, thereby enabling the Transmission business
principal domain of the commercial banks and development to raise its own capital on a timely basis to fund the
finance institutions. The only time life companies and necessary transmission and sub-station upgrades that
pension & provident funds have considered taking debt in are needed to accommodate any new IPPs. As a separate
these projects has been in the secondary market which has corporate entity, the transmission business will not have
usually been in the form of a rated and listed bond. to fight for what has become an increasingly scarce
The two main reasons for this are (i) these institutions have amount of internal capital to fund new generation and
traditionally been uncomfortable taking construction risk, and transmission assets within the organisation.
(ii) their investor base has usually only invested in assets that are 2. Net Metering legislation should be promulgated as soon
able to generate income immediately. On a project financing, as possible. It will open the door for a wave of commercial
this can only occur once construction has been concluded. and industrial customers becoming small IPPs who are
Both of these factors have resulted in these institutions playing able to contribute meaningfully to the Demand Side
a secondary or sell-down role in the lender market. With the Management program currently being run by Eskom
roll out of the REIPPPP this has changed. 3. Either a REFIT tariff or a bidding process that prioritises
projects in REDZ should be implemented. Serious
As the REIPP procurement process has matured, the appetite consideration should also be given to the awarding of
of pension and provident funds to invest in the sector has preferred bidder status to all compliant bids received
grown and, along with it, so has their understanding of under the REIPP procurement process
investing and/or lending into limited recourse project 4. The financial close window for IPPs should be widened
financings. There are now a number of instances where considerably to allow deals to close whenever they are ready,
pension and provident funds have invested in projects at but prior to a published long-stop date. This will ensure that
financial close (i.e. they have taken construction risk). a. there isnt a (human) resource squeeze that happens
for two months every year as every successful bidder
This is a positive development in many respects. The first tries to reach financial close in the same week, and
positive is that it has facilitated a much larger pool of b. there isnt a run on the South African Rand as all the
ZAR liquidity for borrowers, and the second is that this bidders attempt to hedge their currency risk and swap
accumulation of knowledge is a timely development, as it their floating rate loans into fixed rate loans
can only contribute in a positive way to the local lending
market navigating its way through the promulgation of In conclusion, if the steps outlined above are implemented,
banking legislation such as Basel III. The capital and liquidity it is quite possible that 3-4GW of renewable energy could
constraints imposed by Basel III will make it increasingly be added to the South African grid each year for the next 3
difficult for local commercial banks and DFIs to lend and/or years and in so doing, renewable energy IPPs will contribute
hedge beyond the medium term (i.e. 5-8 years). As Pension significantly to relieving the energy crisis in this country.
Mezzanine Floor, Flat M01, Building #0C61, Muroor Road, Abu Dhabi, UAE,
P.O.B. 128295, T. +971 2 6390552 | F. +971 2 6390565
SUSTAINABLE SOLUTIONS FOR AFRICA
Mr. Joshua Kibet Choge is the Chairman of KenGen Board of Directors. Born in 1958, he holds a Bachelor of Science degree in Mathematics
and Statistics. He is a trained accountant from Strathmore College and has also undergone training by the Chartered Institute of Purchasing and
Supply UK on Procurement Management. He is currently pursuing a master of management and leadership (MML) degree at The Management
University of Africa.
Mr. Choge is also an executive member of The Institute of Directors (Kenya). He has over fifteen years experience in the public sector, having
served in various positions in public sector, including the East African Portland Cement, where he served as Purchasing Manager and also as
Deputy Chief Internal Auditor.
He is the Chairman of the Board of African Inland Church Kapsabet Bible College in Nandi County. Currently, Mr. Choge is the C.E.O of Talent
Foundation International (TFI), a non-governmental organization that targets to identify and develop talent among needy children.
QUESTION:
Why should investors consider Kenya
as a more attractive destination to
invest in a power project than perhaps
other East African countries?
Kenya is projected
to hit a national
peak demand
of 26,500MW
in year 2030
against the current
national capacity of
2,152MW.
Figure 3:
QUESTION:
Can you tell us more about the projects
you are currently working on in 2015?
We are presently focusing on
ANSWER: KenGens current expansion
geothermal sources of energy
program is focused on geothermal sources which is more green and
of energy. We are focused on changing our
energy mix from overreliance on hydro renewable but at the same time
sources of energy which are weather
dependent to the more reliable and a capital intensive form of
renewable geothermal sources.
QUESTION:
Why is the Africa Energy Forum an
important meeting place for KenGen
to attend? Are there any particular
private sector partners you are hoping
to engage with in Dubai?
M O ZA M BIQUE
5-6 may 2016, Maputo
Maintaining Momentum in Mozambiques Power Sector
Key speakers from 2015 include:
Antonio Carlos Alberto Yum Willem Theron, Natlia Camba,
Osvaldo Saide Member of the General Manager, Chemical Engineer,
Director, New and Board Southern African Institute of
Renewable Energy, Electricidade de Energy Unit National
Ministry of Mineral Moambique (EDM) Eskom Petroleum (INP),
Resources and Mozambique
Energy, Mozambique
Companies Who attended in 2015
Acwa Power International Africa Finance Corporation (AFC) African Infrastructure Investment Managers (Pty) Ltd Aggreko Associao Lusfona de Energias Renovveis
(ALER) Banco Unico BCI - Banco Comercial e de Investimentos Bechtel Ltd Black & Veatch Bloomberg Africa TV BTC/Funae Cabelte Mozambique Camargo Correa
Canas Engenharia, S.A. Chancellor House Holdings Clarke Energy Ltd Cofely Fabricom - GDF Suez CTA confereration of economic association of mozambique Cummins
Africa DBSA Deutsche Gesellschaft fr Internationale Zusammenarbeit (GIZ) GmbH Dietsmann Technologies Eastern Africa Power Pool ECV Mozambique Lda EDM -
Electricidade de Moambique, E.P. EDP Internacional Empresa Nacional De Hidrocarbonetos De Mocambique ENI East Africa ESBI International Eskom FDL Generators
FirstMetical Fluor GAUFF GmbH & Co Engineering KG GE Oil and Gas GLOBAL ALLIANCE Hidroelectrica de Cahora Bassa Infrastructure Development Management Ltd.
(IDM) Ingerop South Africa Pty Ltd Innovent Institute of National Petroleum (INP) Interfax Europe Ltd International Finance Corporation Koch Engineering & Construction
LDA MAN Diesel & Turbo South Africa (Pty) ltd Manitoba Hydro International Ltd METKA SA Midal Cables International Lda Millenium Bim Ministry of Mineral Resources
and Energy Ministry of Transport Mozambique MITSUBISHI CORPORATION Mota-Engil Africa Moza Banco Ncondezi Energy Nedbank Capital Norton Rose Fulbright
Old Mutual Alternative Investments Overseas Private Investment Corporation (OPIC) Pimenta Law Firm Powertech Transformers PTA BANK Quantum Power R&C Globe
Renaissamce Heavy Industries Renaissance Turkey ROVUMA CONSULTORES Lda Russell & Associates Sarens (Pty) Ltd Sasol Chemical Industries SelfEnergy Mozambique
Servitrade Siemens AG - Fossil Power Generation Division SMBCE SoEnergy International Sotechnisol Entreposto Source Capital Standard Bank Structa Mozambique
TODAREDE Solues para Redes, S.A. Tractebel Engineering Trino Energy University of Mondlane Vieira de Almeida & Associados, Soc. de Advogados R.L. Yenigun
For more information about how to get involved with next years meeting,
contact amy.offord@energynet.co.uk or call +44 (0)20 7384 8068
www.poweringfrica-mozambique.com
SUSTAINABLE SOLUTIONS FOR AFRICA
MOZAMBIQUE:
A Future in Renewable Energy?
Paula Duarte Rocha is a partner with Mozambique Legal Circle Advogados (MLC Advogados)
founded in 2012 by a team of highly reputable lawyers of Mozambican nationality. In the
context of an international association with Morais Leito, Galvo Teles, Soares da Silva, the
Mozambican law office MLC Advogados is a member of the MLGTS Legal Circle, a network of
alliances with leading law firms in Angola, Macau (China), Portugal and Mozambique.
Growing at around 7% each Even before she finished her degree in law Paula started her career as a legal assistant in GAPI and
year, the countrys economy then as a Legal Assistant to Mrs. Maria Joo Dionsio Santos, partner at Pimenta, Dionsio &
Associados. Later she provided multidisciplinary legal consultancy at the Tax and Legal Services
is one of Africas strongest Department of PricewaterhouseCoopers, cooperating with national and foreign investors. She
was also an Associate Lawyer and Senior Legal Advisor at MGA Advogados & Consultores.
performers. Foreign companies More recently Paula was Managing Partner and Lawyer at Ferreira Rocha & Associados,
have increasingly chosen to Sociedade de Advogados. Throughout this professional experience she intervened in all areas of
practice: advising national and foreign private companies in respect to public sector laws, public
invest here, particularly in tenders and contracts, as well as advising foreign entities in the compliance with all Mozambican
tax, labour and commercial obligations.
mining ventures.
including natural gas and coal capacity, could overtake Increasingly committed to the goals of better lawmaking
donor assistance within five years. and better regulation in the natural resources sector, the
Government of Mozambique has been on the path to achieve
After a slowdown in investments in the second semester of sustainability and competitiveness.
2014, pending the presidential elections, experts say that
Mozambican renewable energy potential (wind, solar, Law, Environment Law, Energy Strategy, Biofuels Policy
hydro and biomass) is huge and in the light of the global and Strategy, Renewable Energy Policy, Renewable Energy
economic situation, with the decline in coal prices and Strategy, etc. support the Mozambican Governments
new downturn in the oil industry, along with the US renewable energy policy development and strategy, creating
shale gas revolution, consideration should be given to new investment opportunities.
a progressive shift allowing the country to adapt to this
new economic situation and combine solutions for a Supplementing the renewable energy policy development
sustainable economy. and strategy, Mozambique now has a Renewable Energy Atlas
developed with FUNAE (Fundo Nacional de Energia) a
Market trends and forecasts from two years ago are now public institution established to promote rural electrification
wholly inaccurate. An economy such as Mozambiques and rural access to modern energy services in a sustainable
becomes particularly vulnerable if it remains solely in the manner.
hands of the natural resources coal and natural gas free
market. On one hand, the renewable energies Atlas is a management
support tool that will allow FUNAE to diversify its project
Wind, solar and biomass technologies are still incipient in portfolio. On the other hand, it will give greater consistency in
the country notwithstanding the approval of the National project cost estimation. The results obtained by the Atlas will
Policy and Strategy for Biofuels in February, 2009, which allow FUNAE to implement projects in each region according
focuses on ethanol from sugarcane, sorghum, coconut and to its potential.
biodiesel from jatropha. The hydropower technology, though This renewable energy Atlas not only confirms the huge
with the Cahora Bassa dam having potential to dominate renewable potential of the country, but it also shows where
the energy sector in the region may be seen as the first one can best take advantage of the Mozambican renewable
strategic bet for lucrative prospects in the future. energy potential.
A number of legal instruments are already in place. Private investors in Mozambique can thus explore a variety
Investment Law, Environment Policy, Land Policy and of renewable energy sources, boosting the economy and
Strategy, Forest and Fauna Policy and Strategy, Electricity reducing the dependency on coal and natural gas exports.
Arjan Visser is the founder of Electricity4all. He worked for five years as a strategy consultant (specialization: power sector) with Accenture in the
Netherlands. He then decided to move to Malawi with his wife leveraging his skills and experience to advise governments, donors, NGOs and
private companies in Southern Africa. He was the co-author of a 350$M investment proposal for the US Government to invest in the energy
sector of Malawi; and he valued, designed and coordinated a large-scale energy efficiency program in Malawi reducing electricity peak demand
by ~15%. He founded Electricity4all in 2011 to address the need for more initiatives focused on increasing access to electricity in off-grid areas.
Electricity4all won the SEED Africa Award 2014 for setting up a business to improve access to electricity in Southern Africa. The SEED Initiative
identifies and supports promising small-scale social and environmental entrepreneurs around the globe, entrepreneurs who while working towards
a greener economy also tackle poverty, marginalization and social exclusion.
E4A is a company based in Malawi aimed at increasing access to electricity in areas where the grid is not likely
to be expanded to in the coming years by offering affordable, clean and sustainable power solutions to households
and small-to-medium enterprises.
QUESTION: Why is there a need for the environment when not disposed of electricity to power the whole house/
these systems in Malawi? safely. Furthermore, there is a lack of enterprise.
awareness amongst people in the rural Unaffordable: A high-quality system
ANSWER: Less than 10% of the areas about the benefits of affordable with sufficient capacity to power
population in Malawi has access to off-grid power solutions, and the range the whole house/enterprise is too
electricity and with the current rate of electrification options offered in expensive.
of electrification, the majority of the Malawi is very limited. Poor after-sales services: The supplier
population will not gain access to of the system does not offer good pre-
electricity in the coming years. The average Malawian faces a number and after-sales services such as advise,
of challenges when purchasing a system installation, maintenance, repair and
People without electricity mostly use that can power their whole house and/ warranty services.
inefficient, expensive and unhealthy or enterprise.
sources of energy (such as paraffin, QUESTION: What does E4A offer?
used car batteries, low-quality torches Low-quality: A system to power the
and candles) for their household and whole house/enterprise he can afford
business activities. Most small and does not last long enough. ANSWER: E4A offers a wide range of
micro businesses need to close before Low-capacity: A high-quality system stand-alone power systems (including
it gets dark and do not have facilities he can afford does not supply enough energy efficient appliances) that
to keep their fresh products cooled.
School pupils have insufficient light
to continue studying in the evening
and rural clinics lack basic lighting
for their operations and cooled storage
People without electricity
for their medicines. The current main
sources of lighting (i.e. paraffin, candles
mostly use inefficient, expensive
and firewood) produce a number of
by-products when they are burned
and unhealthy sources of
including greenhouse gases like carbon
dioxide, and can be detrimental for
energy for their household and
the health when used indoors.
Disposable batteries and packages of
business activities.
paraffin/candles can be harmful for
Experts, project owners and practitioners from the globe share insights on
Engerati to help solve tomorrows energy problems today
Our network is free to join allowing you to access information from the latest
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SUSTAINABLE SOLUTIONS FOR AFRICA
are protected against overload and institutions for customers who want The increase in the number of
easy to install and maintain. The to purchase a solar system but want productive hours creates new job or
components of the system are sourced to pay in installments. Payments can study placements.
from various suppliers to ensure high- be made in installments as E4A works Security is improved as lights can be used
quality products (i.e. low failure rate with financial institutions to offer that are brighter than the lights currently
and long lifetime) can be offered at credit facilities to selected customers. and mostly used in the villages.
prices affordable for the majority of
the population in urban areas and QUESTION: What is the impact of Environmental Impact
major trading centres of Malawi. The your work? Furthermore, the usage of disposable
systems range in capacity from small batteries containing toxic elements and
systems providing basic electricity packages of paraffin / candles is reduced
(e.g. for lighting, phone charging and There are several social, environmental contributing to a toxic-free and cleaner
watching television) to large systems and economic benefits of our work. community.
providing electricity for customers with
a relatively high-energy consumption Social Impact Economic Impact
(e.g. for powering rural health Indoor pollution is reduced as peopleno Users have more opportunities for
clinics, schools and small-to-medium longer rely on firewood for lighting income generation as the battery kits
businesses). E4A has the in-house anymore. The reducedconditions can be used to increase revenues of their
knowledge to design systems that of the community as indoor air existing businesses (e.g. to extend the
suit the customers particular energy pollution due to the indoor burning business hours when it is dark or to
demand and optimize the lifetime of polluting fuels have been associated keep agricultural products longer fresh
of the system. E4A guarantees the with respiratory infections amongst by cooling them in a fridge) or to start
customer access to professional after- children and adults. a new business for which electricity is
sales support by providing high-quality Education and information dissem- required (e.g. barbershop, computer
installation, maintenance, repair and ination is improved as people will have centre and bar/restaurants). Users also
warranty services. E4A offers credit more opportunities to study during the have an opportunity to reduce their
facilities in cooperation with financial night and watch television. expenditure on energy.
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ESI Africa digital magazine Daily top stories, event news and Most influencial figures in Access to webinars
Industry reports
archive business tender updates African Power and various multimedia
www.esi-africa.com
The biggest challenge is
demonstrating to host countries
and off-takers that there is no
tradeoff between developing
sustainable power projects and
making sure that the electricity
generated can be afforded by the
152 communities. 2015 Africa Energy Yearbook
SUSTAINABLE SOLUTIONS FOR AFRICA
Reda is a Chartered Alternative Investment Analyst, before founding Access, Reda worked for ACWA Power where he established and led the
implementation of the renewable energy strategy.
Reda led many precedent setting projects that eventually served as a guiding platforms for the wider adoption and implementation of renewable
energy projects in several countries. He has been involved in over 6,000 MW of power projects. Reda is passionate about bringing renewable
energy projects into new unsaturated markets where renewable energy is an economical alternative to conventional power.
Prior to joining ACWA Power Reda held various positions at Unilever and Price Waterhouse Coopers.
Aabru Art is a London based firm dedicated to evolving, sourcing, promoting and
selling Modern and Contemporary West African Art. The company and its founder
and chairman Anshu Bahanda work closely with the artists to develop their careers,
raise awareness and provide high quality artworks to the international buyer. The
company has been the focal point of Modern and Contemporary Art for the past 5
years and is offering consultancies for both corporate and private collectors, events
organisation and an overall professional support for companies and individuals in
the African art world.
This year, Aabru Art presented its third edition of Transcending Boundaries the
largest selling Modern and Contemporary West African Art show in London,
featuring paintings and sculptures by 35 artists from Africa. These artists are
masters in their region and are quickly emerging internationally.
Every time I think life is beginning to slow down, Aabru Art has a way of making
us run - faster than I thought was possible. I never imagined we would be dealing
with so many artists in a single show! We are also taking 5 artists work to the Venice
Biennale and have opened an office in Dubai based on interest from the region.
The last 2 Transcending Boundaries were about the boundaries we had transcended
- it was about Aabru Art giving a voice to our artists to show the world what
they had achieved. This Transcending Boundaries is different - its about the
boundaries that have yet to be transcended at many different levels and in many
different layers... The kidnappings; the social issues; the broken system; the cultural
traditions; the struggles, hopes and dreams of many... Can we give them a voice?
Can we embody the best of art where it can be used as a catalyst for change? Can
we make a difference?
Anshu Bahanda
Aabru Art Founder
BRUCE ONOBRAKPEYA
Dr. Bruce Onobrakpeya was born on August 30, 1932 at Agbarha-Otor, Delta State. He
graduated from the Nigerian College of Arts, Science and Technology, Zaria 1957 1962.
He also holds a Diploma in Fine Arts (Dip. F.A.), moderated by Goldsmiths College, London
University and a Post Graduate Arts Teachers Certificate (ATC) from the Institute of Education,
London University.
Bruce is a prolific artist. He is a printmaker, painter, teacher and scholar. He is also the initiator
and chairman of the Harmattan Workshop Series, Agbarha-Otor, Delta State, Nigeria which has
been running since 1998. He has participated in over 68 exhibitions in Africa, Asia, Europe and
the United States and was one of the artists participating in Aabru Arts Transcending Boundaries
2015 in London.
Onobrakpeya has received over 30 national and international awards and appointments which
include the MFR (Member of the Order of the Republic of Nigeria) 2002; Living Human
Treasure Award by Federal Government of Nigeria in collaboration with UNESCO 2006 and
the most recent the SPANFEST Excellence Award Lifetime Achievement Award in the Art,
2013 and National Museum of African Art Smithsonian Institution Washington DC Award in
Recognition of Widespread Achievements in the Arts, 2014.
His works are well known around the globe and are in many private and public collections. He
has also illustrated several books and his works appeared on many books and journals as Cover
illustrations. He is perhaps the most published African artist and has also featured in some film
productions and documentaries.
His piece Gala Day Under The River I is a pictorial inspiration of spirits inspired by the story
taken from the novel My Life in the Bush of Ghosts written by a Nigerian writer Amos Tutuola.
For more information on the artist or his work, please contact Aabru Art
(W: www.aabruart.com; E: art@aabru.co.uk; T: +44 7847 244 217)
DISEYE TANTUA
Born in Amassoma, Bayelsa State in 1974, Diseye attended the Rivers State University of
Education, now Ignatius Ajulu University and holds a degree in Fine and Applied Arts
(painting), 2001.
He has exhibited extensively within Nigeria, Europe and United States, is a recipient of several
awards and a member of several prestigious art societies and groups, which include the Guild of
Professional Fine Artists of Nigeria and The Society of Nigerian Artist. He is a full time studio
artist, experimenting with what he calls Afro Pop Art.
Undoubtedly one of the finest painters of his generation, he is viewed as blazing the trail of modern
African Pop Art. His drawings like calligraphy are mostly a selection of traditional proverbs made
popular by headboards, bumper write-ups and street signs. The artist works closely with Aabru
Art and exhibited at Transcending Boundaries 2015 exhibition in April.
His work Monkey by grade, Shoe by size is an example of one of his popular slang used as a teaser
or advice. He refers to the haves and have nots a financial situation in his present environment.
Most of his paintings, which are witty, funny and hilarious, also carry a deep, strong message.
For more information on the artist or his work, please contact Aabru Art
(W: www.aabruart.com | E: art@aabru.co.uk | T: +44 7847 244 217)
GEORGE EDOZIE
George Edozie was born on the May 11, 1972 in Enugu state Nigeria. He studied Fine and
Applied Arts at the University of Benin where he majored in Painting in 1996.
George has had 5 solo exhibition and over 76 group exhibitions within and outside Nigeria.
His last solo exhibition titled Shifting the Paradigm hosted by the Museum Of Contemporary
Art North Miami Florida, was listed among the 4 best exhibition at the Art Basel Miami 2014.
He is the co-author of the book 101 Contemporary Artist, A Celebration of Modern Nigerian
Art, a member of Society of Nigerian Artist, and Guild of Professional Fine Artists of Nigeria.
George Edozie is one of the sculptors collaborating with Aabru Art and his piece was a part of
the Transcending Boundaries show in London this year.
He sees art as a universal language, which cuts across different cultures or race. He believes a good
work of art should carry a strong message, record history and act as a mirror of society that the
work is created in. He conveyed this in his piece Four Faces of Agbogho Mmuo 2 for which
a strong link between the artist and his work allows one to relate to the artist though his works.
For more information on the artist or his work, please contact Aabru Art
(W: www.aabruart.com | E: art@aabru.co.uk | T: +44 7847 244 217)
Four Faces of Agbogho Mmuo 2 | 2015 | Mixed Media Fabric Sculpture | size range 164 x
59 cm - 190 x 50 cm
Her artwork Lost Innocence is one of the works produced to examine the trado-cultural reasons for
the practice of Female Genital Mutilation (FGM) in Africa; and to evaluate its impact so far. The
practice of FGM in some cultures is an approved norm, because it is seen as a means of curbing
teenage promiscuity, at the same time promoting virtue. In the process, young virgins are expected
to partake in the maidens dance wearing nothing but a few strings of beads. Young girls, aged 10
15 year, unaware of their bodies but basking in the approving attention of their families, parade
themselves for their parents, guardians and society. Science has proven that the victims often suffer
from psychological and emotional trauma resulting in the need for sexual emancipation.
For more information on the artist or his work, please contact Aabru Art
(W: www.aabruart.com | E: art@aabru.co.uk | T: +44 7847 244 217)
GBENGA OFFO
Gbenga Offo worked in advertising before starting his work as a full time painter. He studied
at the renowned Yaba College of Technology and is an established member of the Guild of
Professional Fine Artists of Nigeria (GFA).
He has exhibited extensively locally and internationally and is recognized for his playfulness with
the geometry of the human form. Every one of his works is a story and his choice of figurative art
in an environment increasingly contending with debates around conceptual art and installation
methods is a measure of free will.
The artist believes that art is a profession, like any other and if you keep on applying yourself and
keep looking for areas unattended to, you can create your own market and indeed, build wealth.
Gbenga has been an Aabru Art artist for the past three years and has participated in first and third
edition of Transcending Boundaries 2015.
The Quartet is an artwork depicting a Jazz band and the colours represents the force that holds
this piece together; its movement, its fluidity, its brightness; the sheer freedom it evokes. Jazz
itself is about improvisation, but as you listen, you begin to relate to it, you begin to connect with
it. It is the same with this piece the more you look the more you see.
For more information on the artist or his work, please contact Aabru Art
(W: www.aabruart.com | E: art@aabru.co.uk | T: +44 7847 244 217)
SAM EBOHON
Sam Ebohon is from Edo State but was born in Lagos, Nigeria. He graduated from the Yaba
College of Technology in 1990 with a Higher National Diploma. In the year 2000 he also added
a degree from the Federal College of Education Akoka, Yaba to his list. Ebohon is a member of
the society of Nigerian Artist and the prestigious Guild of Professional Fine Artist of Nigeria.
He started his full time painting career immediately after finishing school and has experimented
with his paintings in the hope of a style that stands him out. His works are characterized by
cress-cross linear strokes, which tend to abstract his paintings thereby giving it a voice that is
refreshingly new in intensity and boldness coupled with the most exquisite symphony of vision.
He has collected numerous awards in his native country and abroad which include a first price in
the 2009 edition of the Caterina de Medici painting award and competition, which took place in
Florence, Italy. He has participated in numerous exhibitions around the world and is very much
respected among his peers, colleagues, collectors and critics alike. Ebohon has been collaborating
with Aabru Art from the beginning and has showcased his paintings at two editions of Aabru
Arts Transcending Boundaries in United Kingdom. Portrayed in his Figuration, Ebohon believes
the human form is a gallery that exhibits the essence and meaning of creation in its entirety. It
creates unimaginable landscapes that in turn elicit profound emotions capable of producing
more than the mind can phantom.
For more information on the artist or his work, please contact Aabru Art
(W: www.aabruart.com | E: art@aabru.co.uk | T: +44 7847 244 217)
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Wind power
Company: ALSTOM Greenheart Energy (Pty) Ltd Director
Head Office: Barcelona, Spain London, United Kingdom +27 (0)73 672 2502
Type of generator: 1.25 MW howard.ramsden@terrapower.co.za www.
Size: 1.67 to 3MW South Africa, Kenya, Namibia, Angola terrapower.co.za
List 5 top countries of operation: Mike Eyre
Contact: Laurene Hommet Director
Position: Sales department, +44 (0) 7802 437389 The Wind Factory International BV
Alstom Wind mike@greenheart.co.uk Amsterdam, The Netherlands
Telephone: +34 93 489 09 38 www.greenheartenergy.co.za 600W, 1,4kW, 5,8kW, 10kW, 80kW, 250kW,
Email: 900kW
laurene.hommet@power.alstom.com Kenya, Madagascar, Tanzania, Gambia, South
Website: www.power.alstom.com Africa
Iberdrola Ingenieria y Construccion
Pieter Klimp
Madrid, Spain
Managing Director
Wind FarmSupplier
+31-203422137
Ammonit >50 MW
info@thewindfactory.com
Berlin, Germany North Africa, Central Africa, Southern Africa
www.thewindfactory.com
Wind turbines and accessories Miguel Garagorri
South Africa, Kenya, Europe Business Development
Henner Schienitzk +34913833180
+49-30-6003188-0 mgmi@iberdrola.es VERGNET
hs@ammonit.com www.iberdrolaingenieria.com Ormes - France
www.ammonit.com from 200 kW to 1 MW (Wind Diesel Systems)
Ethiopia, Nigeria, Kenya, Angola, Mauritiana
Leopold Faye
Selam Awassa Business Group PLC Sales Manager
Bergey Windpower Hawassa, Ethiopia .+33 238 52 39 70
Norman, OK USA 0-2kW l.faye@verget.fr
1kW, 7.5kW, 10kW Ethiopia, East African Region www.vergnet.fr
Kenya, South Africa, Angola, Morocco, and Atkelt Girmay
Tunisia General Manager
Scott Merrick +251916581694 Vestas
Sales/Customer Service selamabg@ethionet.et Madrid, Spain
(405) 364-4212 www.selamawassa.org Any
smerrick@bergey.com Present in 70 countries on 5 continents
www.bergey.com Lance Marram
Semco Maritime Vice President Business Development
Esbjerg, Denmark +34 91 362 83 79 9379
El Sewedy Cables All +34 610 506 850 (Mobile)
Cairo, Egypt Africa, Central America, Middel East, africaenergyforum@vestas.com
1.65 MW, 2.5 MW Jacob Rikard Nielsen www.vestas.com
Amr Abdoun Regional Sales Manager Melissa Lyras
Business Development
Sales Director +971 50 88 21 439
+34 91 362 8425
+202 2690 43 11 jarni@semcomaritime.com
+34 664 301 110 (Mobile)
a.abdoun@elsewedy.com www.semcomaritime.com
www.elsewedy.com
Winglette
Siemens Harrismith, South Africa
Fortis Wind Energy Munich, Germany 3kW
Hoogkerk, The Netherlands 2.3 MW -3.6 MW Hans van Eeden
800W, 1.4kW, 5kW 10kW South Africa, Nigeria, Tunisia, Morocco, Algeria, Chief Engineer
Mocambique, Mauritania, Kenya, Maroc Kenya +270 58622 1838
Johan Kuikman Alain De Cat info@winglette.com
General Manager Sector Cluster Lead www.winglette.com
+31 (0) 50 5515 666 +234 (1) 4480220
info@fortiswindenergy.com alain.de_cat@siemens.com
www.fortiswindenergy.com www.siemens.com/africa African Windpower
Cape Town, South Africa
AWP 3.7
GE Energy superwind GmbH Namibia, Uganda
Frankfurt, Germany 50321 Bruehl / Germany +27 84 4444118
+49 (0) 69 45 09 09 110 350 W wtdist@mweb.co.za
martin.reuther@ge.com Morocco, RSA www.africanwindpower.com
Klaus Krieger
Director
kk@superwind.com Suzlon Wind Energy S.A. (Pty) Ltd
Goldwind Africa www.superwind.com
Cape Town, South Africa Pune, India
Permenant magnet direct drive wind turbines Asia, Australia, Europe, South Africa, South
1.5MW and 2.5MW America
Silas Zimu
South Africa Terra Wind Energy
CEO
Daniel Kurylo Lanseria, South Africa
011 784-7768
Director 2.5 megawatt
Silas.Zimu@suzlon.com
+27(0) 71 2095030 South Africa, Mozambique, Zambia, Botswana,
www.suzlon.com
danielkurylo@goldwindafrica.com Zimbabwe
www.goldwindglobal.com Howard Ramsden
Hydropower
Company: AEM OSSBERGER GmbH+ Co
Head Office: Dessau, Germany Otto-Rieder-Str. 7, 91781 Weissenburg, Germany Toshiba
Unit size: Up to 5 MW/MVA 5 kW up to 3,3 MW Tokyo, JPN
List 5 top countries of operation: Worldwide Rwanda, Angola, Cameroon, South Africa Any
Contact: Reiner Storch Mr. Helmut Erdmannsdrfer Egypt, South Africa, Kenya
Position: CEO/Head of Sales Department MD Hydro Hiromi Nagano
Telephone: +49 340 203-210 +49 (0) 9141 977 0 Group Manager, Business Strategy & Planning
Email: r.storch@aemdessau.de he@ossberger.de Div. Power Systems Company
Website: www.aemdessau.de www.ossberger.de hiromi.nagano@toshiba.co.jp
www3.toshiba.co.jp/power/index3.htm
Rural World Resources International
ANDRITZ HYDRO GmbH. Bamenda, Cameroon Tsega Mekonnen General Metal and Machining
Vienna, Austria <100KW Cameroon Works PLE
1 to 800 MW Dr. Matt Fombong Addis Abeba, Ethiopia
Austria, Germany, Canada, India, China Director 0-50kW
Jens Putz 237 99827697 Ethiopia, East African Region
Head of Marketing & Communications ruralworldresources@yahoo.com Tsega Legesse
+43/50805-52675 Owner
jens.paeutz@andritz.com +251911454528
www.andritz.com tsega_l@yahoo.com
Sea Power International AB
Stockholm, Sweden
Ethiopia
Entec Inge Pettersson Telemenia Ltd.
St. Gallen - Switzerland CEO Airpoert City, Israel
Up to 250 kW +46 850586541 Depends on specific turbines. We install Pelton
info@seapowerinternational.se and Francis turbines
Indonesia, Nepal, Vietnam, Laos, UK, Switzerland www.seapowerinternational.se Albania, Ethiopia, Cote dIvoire, Uganda
Martin Boelli Hana-Muriel
Sales Manager Dr. Setteboun
+41 (0) 71 228 10 20 VP Business Development & Finance
info@entec.ch Siemens +972-3-9720500
www.entec.ch Munich, Germany hanas@fkgen.com
All sizes can be offered depending on project www.genrent-international.com
South Africa, Nigeria, Tunisia, Morocco, Algeria
Ute Meinikheim
Gilbert Gilkes and Gordon Ltd Sector Cluster Lead
Kendal, UK +234 (1) 4480220 VS TURBO (PVT) LTD
Hydro Turbines and Ancillery equipment ute.menikheim@siemens.com Head Office - Colombo, Sri Lanka 1 - 25 MW
Hydro www.siemens.com/africa Uganda, Kenya
Up to 20MW Udaya Siriwardena
UK, North America, Africa, Sri Lanka, Japan Plant Manager
Andrew Eaton +94 11 2533444 (Head Office)
Semco Maritime nishan@v-s-hydro.com
Hydro Sales Engineer Esbjerg, Denmark
+44 1539 720028 www.v-s-hydro.com
All
Africa, Central America, Middel East
Jacob Rikard Nielsen
Regional Sales Manager
Greenheart Energy (Pty) Ltd +971 50 88 21 439
London, United Kingdom jarni@semcomaritime.com
1.25 mW www.semcomaritime.com
South Africa, Kenya, Namibia, Angola
Mike Eyre
Director
+44 (0) 7802 437389 Selam Awassa Business Group PLC
mike@greenheart.co.uk Awassa, Ethiopia
www.greenheartenergy.co.za 0-300kW
Ethiopia, East African Region
Atkelt Girmay
Technical Manager
Konar - Generators and Motors Inc. +251911649994
Zagreb, Croatia selamabg@ethionet.et
Up to 400 MVA; 25kV www.selamawassa.org
Ethiopia, Morocco, Guinea, Tanzania, Nigeria
Roko Bodulic
Sales Manager
+385 1366 7495 Telemenia Ltd.
+94 77 3500424 (Mobile) Airpoert City, Israel
rbodulic@koncar-gim.hr Depends on specific turbines. We install Pelton
www.koncar-gim.hr and Francis turbines
Albania, Ethiopia, Cote dIvoire, Uganda
Hana-Muriel
Dr. Setteboun
VP Business Development & Finance
+972-3-9720500
hanas@fkgen.com
www.genrent-international.com
Solar power
Company: AEG Power Solutions FLABEG Holding GmbH PRECIMA (Junkers)
Head Office: Cape Town, South Africa Nmberg, Germany Casablanca, Morocco
Unit description: Solar Inverters, Power Solar mirrors for concentrated solar power and Solar Thermal (Junkers brand)
Controllers concentrated photovoltaics 150, 200, 300 L
Unit size: 3,000 - 9,000 Liter/day (200 Wp/unit) Up to 2GW Morocco
5 top countries of operation: Egypt, Morocco, China, USA, India Khalid Berrada
Contact: Trevor De Vries Thomas Deinlein Director
Position: Managing Director Head of Marketing & Communication +212 5 22 35 05 08
Telephone: +27 21 555 8100 +49 911 96456 245 contact@precima.ma
Email: trevor.de-vries(@)aegps.com Thomas.deinlein@flabeg.com www.precima.ma
Website: www.aegps.com/en www.flabeg.com
Sovello GmbH
Bitterfeld-Wolfen, Germany
Photovoltaics
180 MW Nominal capacity per year (300MW
planned)
Germany, Italy, Spain, UK, France Sylvia
Schmenk
Director Sales
+49 3494 6664 0
info@sovello.com
www.sovello.com
STENDO s.r.l.
Rome - Italy
Consulence
Italy UK Israel South Africa
Stefano Cecutta
Owner
+390695945492
stefano@stendo.com
www.stendo.com
Semco Maritime
Esbjerg, Denmark
All
20-200MW
Africa, Central America, Middel East
Jacob Rikard Nielsen
Regional Sales Manager
+971 50 88 21 439
jarni@semcomaritime.com
www.semcomaritime.com
Setsolar
Cape Town, South Africa
Photovoltaic modules, system components, solar
water heating
+21 535 1794
SunPower
San Jose, USA
High efficiency PV solar solutions for residential,
commercial and ground applications
USA, Japan, Italy, Germany, South Africa
Franois Le Ny
Director of Utility & Power Plants Key Accounts,
EMEA
+33 6 73 28 39 70
francois.leny@sunpowercorp.com
YANDALUX GmbH
Hamburg, Germany
PV plants and components, solar home systems,
solar powered pumps, solar telecom shelters,
telephone kiosks, village power plants, hybrid
plants Alexander Sipua
Director African Affairs
+49-40-25309890
info@yandalux.com
www.yandalux.com
EnergyNet Ltd. organise a global portfolio of investment meetings, conferences and infrastructure events focused
specically on the power and industrial sectors across Africa. Proven to engage the decision makers and technical
directors behind Africa's most exciting economies, EnergyNet places economic development at the heart of
industrial solutions, helping to generate a more stable and viable investment option for our partners in Africa.
Our up-coming meetings in 2015 include:
PA: SERIES
POWERING AFRICA: GHANA 17 18 September 2015 | Accra
The Powering Africa: Ghana summit will provide a platform for investor insights on the future direction of the power sector in Ghana. The agenda
will focus on the country's electricity landscape following the division of the energy and power ministries, the critical issues facing the government
G H A N A and investors, and the future project pipeline which is rapidly growing under the leadership of the Minister for Power. Meet with 250 decision-
makers including DFIs, banks, developers and EPCs to discuss what is needed to fully support and enable the transformation of Ghanas electricity
sector in the medium to long term.
17-18 SEPTEMBER
ACCRA www.poweringafrica-ghana.com
PA: SERIES POWERING AFRICA: FINANCE OPTIONS 5 6 November 2015 | Cape Town
The 9th Annual Powering Africa: Finance Options meeting is an executive briefing designed for CEOs and senior-level directors active in
the energy, finance and consulting sectors and focused on the financing of projects across Africa. The meeting will get to the heart of the
issues and opportunities surrounding project nance, allowing participants to directly engage with key decision-makers over the course of the
concentrated 2 day retreat. This meeting is restricted to two delegates per company to preserve the roundtable format and high quality
networking opportunities.
5-6 NOVEMBER
CAPE TOWN www.poweringafrica-finance.com
PA: SERIES
Coming
up in 2016: 27-29 JANUARY 17-19 FEBRUARY 21-24 JUNE
WASHINGTON CAIRO LONDON
www.energynet.co.uk
Hydropower for Africa
Hydropower for Africa
Renewable and sustainable energy for the future
Renewable and sustainable energy for the future
Algeria
Mali Mansouriah
Morocco Egypt
Matmata
Manantali Algeria
Darguinah
Mali Mansouriah Tunisia New Naga Hammadi
Morocco
Ahmed El Hansali Egypt
Manantali Darguinah Sidi Salem Aswan
Matmata
El Borj Tunisia New
Ahmed El Hansali Sidi Salem AssiutNaga Hammadi
Tanafnit Aswan
El Borj El Hansali
Ahmed Assiut Ethiopia
Tanafnit
Daurat
Ahmed El Hansali Beles
Ethiopia
Gilgel Gibe
Daurat
Burkina Faso Beles
Bagre Gilgel Gibe
Burkina Faso
Bagre Guinea Uganda
Garafiri Nalubaale Kenya
Guinea Uganda
Kiira
Nalubaale Kindaruma
Cote dIvoire Garafiri Kenya
Masinga-Dam
Ayame Kiira Kindaruma
Cote
TaabodIvoire Masinga-Dam
Ayame Tanzania
San Pedro Lower Kihansi
Taabo TanzaniaFalls II
San Pedro Togo Pangani
Nangbeto Lower Kihansi
Togo Malawi Pangani Falls II
Nangbeto Tedzani 1-3
Ghana Nigeria Malawi
Akosombo Gabon Kainji 11/12, 5/6 Wovwe
Ghana Kinguele Nigeria Tedzani 1-3
Kpong Gabon Shiroro Wovwe
Akosombo Kainji
Jebba11/12, Cameroon
5/6 Mozambique
Kpong Kinguele Shiroro
Eda I-III Mawusi
Jebba Cameroon Mozambique
Corumana
Congo Song Loulou Mawusi
Eda I-III Madagascar
Djou Song Loulou Corumana
Congo Mandraka
Djou Democratic Madagascar
Andekaleka
Republic of Congo Mandraka
Democratic
Inga II Andekaleka
Republic
Ruzizi I of Congo
Inga Zambia
RuziziII II Victoria Falls
Ruzizi
Nzilo I Angola Zambia
Ruzizi II Kariba North
Zongo Cambambe Victoria Falls
Nzilo Angola
Bukavu
Zongo
Lauca
Cambambe Lesotho Kariba North
Sebeya Matala Muela
Bukavu
Koni Lauca South Africa Lesotho
Sebeya Matala Mantsonyane I & II
Steenbras Muela
Koni Namibia South Africa
Drakensberg Mantsonyane I & II
Ruacana Steenbras
Vanderkloof
Namibia Drakensberg
Ruacana Vanderkloof