Africa’s power challenges

Lack of skills to blame

There is a need in Africa to understand how these deals are structured, how risk is assessed, procurement is undertaken and finance arranged

One of the biggest obstacles standing in the way of African economic growth and investment is electricity supply, which affects almost every country on the continent in one way or another. The power crisis is exacerbated by drought, high petroleum prices, damage to infrastructure through wars, rapid demand growth, insufficient investment in maintenance and refurbishment, and a lack of skills in the sector.

According to a World Bank Enterprise survey there are on average 56 days per year with power interruptions in Africa, which explains why more than half of large firms rely on back-up generators.

While the picture is far from rosy, it is not all doom and gloom. Professor Anton Eberhard director of the Managing Power Sector Reform and Regulation in Africa programme at the UCT Graduate School of Business (GSB) and a member of the National Planning Commission, says that there are signs that things are beginning to shift. Many African countries have started on power sector reforms to reduce the dependence on state-owned utilities and to encourage private sector investment and Independent Power Projects (IPPs). After a slow start, South Africa has launched a successful renewable energy IPP programme and Nigeria has also shown significant improvements. Around 30 African countries have established independent electricity regulators and some have begun unbundling state-owned utilities.

It is a crucial time in the industry in Africa which is why, says Eberhard, “understanding these challenges and the far-reaching changes that infrastructure utilities are facing around the world has become imperative for industry leaders, government officials, economists, financial experts and all those working in the energy industry field.”

For the past decade, Eberhard and colleagues at the GSB have worked to enhance knowledge and boost capacity to manage the reform and regulation of the electricity, gas telecommunication, water and transport industries in support of sustainable development. They have just published a book:Power Sector Reform and Regulation in Africa detailing some of this work with HSRC Press and the Managing Power Sector Reform and Regulation in Africa programme is recognised as one of top three of its kind in world.

The 2013 course, which runs from 7-11 October  this year, will expose participants to the frontiers of international experience, to best practices in Africa, in managing the challenges facing electricity industries on the continent. These include the restructuring of state-owned electricity industries to improve performance and private sector participation as well as the involvement of IPPs.

“New regulatory regimes are being put in place and reformed utilities need to deliver expanded and affordable services for the poor, while underpinning and supporting economic growth,” says Eberhard.

“There is a strong emphasis on participants applying lessons to their own work context, to encourage them to start thinking about their own utilities.”

The course will also look at ways to accelerate investment in renewable energy. “We have a good example in South Africa. After years of Eskom dominating the industry, government ran a competitive tender process for renewable energy power to feed into the grid.”

“It has been an enormous success, with more than 2 400MW being contracted from 47 companies. All of these new wind and solar projects have started construction, representing a huge amount of private investment.

Professor Eberhard notes that there is a need in Africa to understand how these deals are structured, how risk is assessed, procurement is undertaken and finance arranged so that they may be replicated.

“In the course, we bring people up to speed on where we are in the reform process in Africa so they have the insights and intelligence tools to make changes. If they operate in a utility, they understand better how it works, if they are from government, they learn how to manage reform, and if they are regulators, they learn how to best regulate.”

One of the world’s top energy management courses is offered in South Africa by the University of Cape Town’s Graduate School of Business and is designed to help African countries capitalise on opportunities in the continent’s power sectors.



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