Africa’s energy strategy requires an investment of approximately US$42.2 billion annually to meet its goal of providing universal access to energy on the continent by 2030. This is according to the Minister of Energy, David Mahlobo, who addressed delegates at the Energy Indaba in Johannesburg last week. “The African Union and various regional energy power pools in the continent have approved the Programme for Infrastructure Development in Africa (Pida), with the majority of projects focusing on energy. The continent has an energy policy, strategy and plan with identified projects for implementation,” he explained. Mahlobo said the Pida had identified 15 priority energy programmes with over 50 projects focused on hydropower, geothermal, renewable energy and regional interconnectors (transmission lines) and pipeline infrastructure. “The major challenge is securing the funding for the identified projects. This is where Africa needs genuine development partners from international organisations including financial institutions, non-governmental organisations, other governments and private business,” he commented, stressing that without the private public partnerships it was not possible for utilities and governments to fund the energy infrastructure requirements. “African governments are typically not in a position to advance resources or borrow money for project preparation, and private sponsors are unwilling to take the significant risks involved in sinking large sums of money up front,” Mahlobo pointed out. He said investors in turn lacked confidence in the absence of a reliable investment climate. “Investor concerns include limited access to finance, inadequate supply of infrastructure, tax regulation and rates, and an insufficiently skilled workforce with requisite technical skills,” he said. Mahlobo pointed out that the energy sector in Africa needed to improve its investment climate in order to provide certainty to investors to ensure that the perceived risks could be minimised. Furthermore, he added, political leaders and institutions also needed to establish appropriate enabling environments in order to facilitate private sector investment. “Policy harmonisation within Africa is critical to attracting investment in the energy sector, and the policy framework in the region must be conducive to investment in the energy sector and clean energy in particular,” Mahlobo said. Development partners, he asserted, could play a key role by expanding their traditional concessional financing function to include risk mitigation, capacity building and selective finance. “For example, by enabling project developers to meet industry and international standards in project preparation, establishing benchmarks for policy formation, and facilitating open cross-party engagement, international institutions can help increase the probability of positive returns and thereby increase investment attractiveness,” he said.
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The major challenge is securing the funding for the identified projects. – David Mhlobo
