Light at the end of the tun­nel

Much ado over Africa’s power sec­tor

Africa Renewal - - Contents - By Kings­ley Igho­bor

Apapa is an in­dus­trial hub in La­gos, Nige­ria’s bustling com­mer­cial cap­i­tal that’s home to some 17 mil­lion peo­ple. Daily, the air in Apapa re­ver­ber­ates with the hum­ming sound of elec­tric­ity gen­er­a­tors. In Apapa, as in most places in Nige­ria, elec­tric­ity gen­er­a­tors power big fac­tory plants and air cool­ing sys­tems, as tem­per­a­tures of­ten top 30 de­grees Cel­sius.

Nige­ri­ans ex­pect the Power Hold­ing Com­pany of Nige­ria ( PHCN), the en­tity charged with man­ag­ing elec­tric­ity pro­duc­tion and dis­tri­bu­tion, to end decades of er­ratic en­ergy ser­vice de­liv­ery. De­spite na­tional ef­forts to tackle the power cri­sis, half of Nige­ria’s 170 mil­lion peo­ple have no ac­cess to elec­tric­ity. Ha­jiya Zainab Kuchi, a for­mer Nige­rian en­ergy min­is­ter, once said: “We must re­solve to jointly ex­or­cise the evil spirit be­hind this dark­ness.” And Nige­ri­ans de­ri­sively re­fer to PHCN as “Please Have Can­dles Nearby.” Can­dles can be handy when there is a power out­age at night. Be­fore PHCN, there was the Na­tional Elec­tric Power Authority ( NEPA), which per­formed so badly that it was it­self nick­named “Never Ex­pect Power Al­ways.”

But Nige­ria needn’t be in a pre­car­i­ous power sit­u­a­tion, ar­gues Kan­deh Yumkella, the Spe­cial Rep­re­sen­ta­tive of the UN Sec­re­tary- Gen­eral for Sus­tain­able En­ergy for All, an ini­tia­tive to mo­bi­lize re­sources for en­ergy es­pe­cially in the de­vel­op­ing world. The coun­try is en­dowed with 5 tril­lion cu­bic me­ters of gas re­serves—the 9th high­est in the world—and 37 bil­lion bar­rels of oil re­serves, ac­cord­ing to the Or­ga­ni­za­tion of Petroleum Ex­port­ing Coun­tries. Mr. Yumkella says (see in­ter­view on page 22) that Nige­ria alone could po­ten­tially pro­vide elec­tric­ity for the whole of Africa. In ad­di­tion to oil and gas, the coun­try has coal, wind, ther­mal and sun—all sources of en­ergy.

En­ergy and in­dus­tri­al­iza­tion

The Liberian power sit­u­a­tion mir­rors that of Nige­ria. Rebel fight­ers de­stroyed Liberia’s en­ergy in­fra­struc­ture in 1990 and it was not un­til 2006 when street­lights were re­stored. “For more than 14 years, Liberia has lived in dark­ness, lit­er­ally and fig­u­ra­tively,” wrote the New York Times in 2006. With fi­nan­cial as­sis­tance from the US govern­ment and the Euro­pean Union, Liberia pur­chased a plant to sup­ply power to the main hos­pi­tals and to street­lights. “We have brought back what we fi­nally call light at the end of the tun­nel,” said a vis­i­bly en­thused Pres­i­dent Ellen John­son Sir­leaf, as she switched on the street­lights at an elab­o­rate cer­e­mony in July 2006.

Mr. Yumkella and other devel­op­ment ex­perts be­lieve that elec­tric­ity oils the wheels of in­dus­tri­al­iza­tion. Com­pare South Africa, Africa’s most in­dus­tri­al­ized na­tion, which gen­er­ates 44,175 megawatts for its 51 mil­lion peo­ple, to Nige­ria, Africa’s most pop­u­lous na­tion, which gen­er­ates about 3,200 megawatts. Sim­ply put, per capita, South Africans con­sume 55 times more elec­tric­ity than Nige­ri­ans.

Re­li­able En­ergy

“The cost of al­ter­na­tives, mainly diesel gen­er­a­tion, is at least four times the cost of a re­li­able power sup­ply,” notes the Guardian, a UK news­pa­per. In­dus­tries can­not be com­pet­i­tive in the in­ter­na­tional mar­ket if en­ergy is a big chunk of pro­duc­tion costs, adds Mr. Yumkella. “It means some­body can buy your raw ma­te­ri­als, take them to Asia or Europe, re­fine them and sell back pro­cessed goods to you.”

Re­li­able en­ergy doesn’t just per­tain to in­dus­tri­al­iza­tion, says the World Bank; it can be a tool to tackle poverty. With a steady flow of power, hos­pi­tals op­er­ate ef­fi­ciently, peo­ple will choose gas cook­ers rather than wood or coal that pol­lute the en­vi­ron­ment, stu­dents can ac­cess the in­ter­net and plug into global in­for­ma­tion trends, rail­ways op­er­ate ef­fi­ciently, water sup­ply is more re­li­able, bu­reau­cracy runs ef­fi­ciently—vir­tu­ally ev­ery­thing re­lat­ing to so­cioe­co­nomic devel­op­ment re­volves around en­ergy.

An en­ergy in­se­cure con­ti­nent

Yet, 48 coun­tries in sub-Sa­ha­ran Africa gen­er­ate only 68,000 megawatts of elec­tric­ity, which is what just one coun­try in Europe, Spain, pro­duces, notes the World Bank. And of that fig­ure, South Africa alone gen­er­ates more than 44,000 megawatts. This means that with­out South Africa, sub-Sa­ha­ran Africa’s elec­tric­ity out­put is 24,000 megawatts, far less than 40,000 megawatts avail­able in New York City. To com­pound mat­ters, “the low level of power gen­er­a­tion is ac­com­pa­nied by cor­re­spond­ingly low rates of elec­tri­fi­ca­tion. Less than a quar­ter of the pop­u­la­tion of sub-Sa­ha­ran Africa has ac­cess to elec­tric­ity,” says the World Bank. In brief, “Africa is the world’s most en­ergy in­se­cure con­ti­nent,” says Mr. Yumkella.

There is def­i­nitely no short­age of en­ergy sources in Africa. More than 90% of the con­ti­nent’s hy­dropower, ac­cord­ing to the bank, is not even ex­ploited. Nige­ria has oil and gas and South Africa has coal. Su­dan has 6.4 bil­lion bar­rels of gas re­serves, An­gola has 9 bil­lion with smaller de­posits in a few other coun­tries. What then is the prob­lem? Mr. Yumkella, a Sierra Leonean, ex­plains: “In the past we have not con­sid­ered en­ergy as part of poverty re­duc­tion.” For a long time, he said, African states mo­nop­o­lized and mis­man­aged the en­ergy sec­tor. Emer­gency in­ter­ven­tions in en­ergy sup­ply such as in Liberia—also em­u­lated by neigh­bour­ing Sierra Leone—have been more im­pul­sive than based on sound eco­nomics. Such an emer­gency ap­proach “rep­re­sents a plan­ning and pro­cure­ment fail­ure on a colos­sal scale,” ac­cord­ing to a World Bank’s as­sess­ment, adding that the costs of procur­ing and run­ning power plants in these coun­tries “could rise up to 3% to 5% of GDP.”

Power trade

Fur­ther­more, there are huge un­ex­ploited en­ergy re­sources in coun­tries that are far from cen­tres of de­mand. For ex­am­ple, the Demo­cratic Repub­lic of the Congo and Ethiopia have huge hy­dro­elec­tric po­ten­tial but are “far from the main eco­nomic cen­tres in south­ern, western and north­ern Africa,” the World Bank points out. And these coun­tries’ economies are not ro­bust enough to in­vest bil­lions of dol­lars in hy­dro­elec­tric­ity just for their own con­sump­tion. “Some African coun­tries have water, Guinea, for ex­am­ple. Some have gas [Nige­ria, An­gola] … there is a need to trans­mit from high pro­duc­tion ar­eas to places where they don’t have it but the de­mand is high,” says Mr. Yumkella.

To re­solve such a prob­lem, African lead­ers rec­om­mend an in­te­grated re­gional power strat­egy —mean­ing that coun­tries with bet­ter eco­nomics of scale in en­ergy re­sources should con­sider in­vest­ing in the sec­tor and then sell to others. Coun­tries spend­ing huge amounts to pur­chase diesel oil or fuel for power plants are bet­ter off ne­go­ti­at­ing with a neigh­bor­ing coun­try for hy­dropower. Along this line, the Pro­gramme for the In­fra­struc­ture Devel­op­ment of Africa ( PIDA), an African Union ini­tia­tive, is back­ing a $22 bil­lion project to de­velop a pan-African elec­tric­ity high­way by 2020.

Ethiopia’s strat­egy

Ethiopia wants to be an en­ergy su­per­power and is craft­ing a 25-year mas­ter plan to po­ten­tially gen­er­ate 60,000

Africa is the world’s most en­ergy in­se­cure con­ti­nent.

megawatts from hy­dro, geo­ther­mal, wind and so­lar. That’s al­most what all of sub-Sa­ha­ran Africa cur­rently gen­er­ates. The coun­try is build­ing the Grand Re­nais­sance Dam, the big­gest ever on the con­ti­nent which, on com­ple­tion within the next three years, could pro­duce 6,000 megawatts. In ad­di­tion, a US-Ice­landic com­pany, Reyk­javik Geo­ther­mal, is set to build a $4 bil­lion geo­ther­mal plant that will gen­er­ate 1,000 megawatts. Ethiopia has Africa’s largest wind farm from which it is gen­er­at­ing 120 megawatts.

The coun­try’s am­bi­tious en­ergy plan is like a magnet that is pulling in neig­bour­ing coun­tries. Dji­bouti, Kenya, Su­dan, South Su­dan, Rwanda, Tan­za­nia and even Ye­men, a non-African coun­try, have signed power sup­ply con­tracts with Ethiopia. At the same time, the World Bank and the African Devel­op­ment Bank (AfDB) are fi­nanc­ing a trans­mis­sion line ca­pa­ble of trans­port­ing 2,000 megawatts of elec­tric­ity from Ethiopia to Kenya. Ethiopia is look­ing “at en­ergy as an ex­port sec­tor the way you ex­port gold,” notes Don­ald Kaberuka, head of the AfDB.

There is good news in other coun­tries as well. For ex­am­ple, with sup­port from the World Bank, Rwanda suc­cess­fully com­pleted its Elec­tric­ity Roll­out Ac­cess Pro­gramme in 2012, con­nect­ing one mil­lion homes to the na­tional power grid. On­go­ing re­forms in Sierra Leone will soon brighten hopes for im­proved power for its six mil­lion peo­ple, ac­cord­ing to the World Bank. South Africa is the world’s most at­trac­tive emerg­ing so­lar en­ergy coun­try, re­ports Global In­for­ma­tion Ser­vice, an or­ga­ni­za­tion that mon­i­tors evo­lu­tion in en­ergy trans­mis­sion. The coun­try could pro­duce up to 8,500 megawatts from so­lar by 2030.

Noth­ing is im­pos­si­ble

Africa’s pri­vate sec­tor is also jump­ing on the en­ergy band­wagon. The Fi­nan­cial

Times calls Nige­ria’s en­ergy pri­va­ti­za­tion pro­gramme Africa’s most am­bi­tious. Hope­fully, this should elim­i­nate mis­man­age­ment “while de­liv­er­ing cheap elec­tric­ity.” In July last year, US Pres­i­dent Barack Obama an­nounced in South Africa a “Power Africa” ini­tia­tive that will raise $16 bil­lion from pri­vate and pub­lic sec­tors to gen­er­ate 10,000 megawatts of elec­tric­ity for com­mu­ni­ties in sub-Sa­ha­ran Africa. African phi­lan­thropists have pledged var­i­ous amounts to this ef­fort.

There is cur­rently a sense of ur­gency about en­ergy on the con­ti­nent. Africa can leap-frog ob­so­lete tech­nolo­gies to fo­cus on those for ex­ploit­ing low-car­bon en­ergy sources. “Africa has to be po­si­tioned to de­velop its re­new­able en­ergy as­sets,” writes Car­los Lopes, ex­ec­u­tive sec­re­tary of the Eco­nomic Com­mis­sion for Africa, in a blog post. While the goal, says Mr. Yumkella, is to con­cen­trate on re­new­able low- car­bon sources such as wind, so­lar, geo­ther­mal, for now, “it’s all en­ergy sources… we can be like Brazil. They have proven tech­nol­ogy on ethanol. They have just dis­cov­ered huge de­posits of oil off their coast. Still they are push­ing re­new­ables heav­ily.”

With all the ef­forts un­der­way, how soon could Africa see suf­fi­cient light at the end of the dimly-lit en­ergy tun­nel? Mr. Yumkella be­lieves that can hap­pen within two decades. “Noth­ing is im­pos­si­ble,” he quips.


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