Lowering costs while raising tariffs is key

High prices, unreliable service
and inadequate supply have all
contributed to Africa’s energy
crisis.
Speaking at the Energy
Solutions for Africa Conference
and Exhibition in Sandton last
week, Reynold Duncan of the
World Bank said solving these
and other issues was imperative
for the continent to move
forward.
“The solutions may seem
very simplistic but it really
comes down to finding ways
and means of addressing the
problems. One of the major
issues is the inadequate supply
and distribution of energy and
the continent is going to have
to look at ways developing
regional power trade.”
Reynold said another major
factor was the high price of
energy. “Many perceive energy
to be quite cheap in Africa.
It is not. The prices are very
high and lowering costs while
raising tariffs is key. It will
also be necessary to improve
equity by better targeting of
subsidies.”
According to Reynold, the
unreliability of services across
Africa remains a contentious
issue with many major
institutions and companies
staying away as a result.
“Most large businesses who
operate from this continent
run generators. In the formal
sector load shedding results
in lost sales revenues of
between 5% and 6%, while this
figure increases to 20% in the
informal sector. It impacts on
productivity, social services
delivery and growth.”
Reynold said infrastructure
had the largest impact of any
investment climate variable and
inadequate power accounted
for 40-80% of infrastructure
impact.
Reynolds said it was
time Africa moved from a
“firefighting to foresight”
situation, planning ahead,
engaging widely with
roleplayers and became
committed to political and
financial reform.
He said in a recent study
it was found that at least
30 African countries were
experiencing chronic blackouts.
“The power supply on this
continent affects its growth
potential. It must be solved for
the continent to grow.”