Much ado over Africa's power sector

13 May 2014

Africa Renewal

Apapa is the industrial hub of 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.

A frustrated Hajiya Zainab Kuchi, one of Nigeria's energy ministers, 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-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...) 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 before 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.

"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 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 hydroelectri city 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 Infrastructural 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 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. The country has Africa's largest wind farm from which it is generating 120 megawatts.

Ethiopia's ambitious energy plan is like a magnet that is pulling in neighbouring 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 leapfrog obsolete technologies to focus on those for ex ploiting 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 the 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.

Original article by Kingsley Ighobor

Category: Energy

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