new World Bank report released today called for increased private sector investment
in Africa’s under-developed electricity transmission infrastructure, a vital
ingredient for reaching Africa’s energy goals.
Africa lags the rest of the world when it
comes to electricity, with just 35 percent of the population with access to
power and a generation capacity of only 100 GW. Those who do have power
typically consume relatively little, face frequent outages and pay high prices.
Transmission infrastructure is a crucial
middle part of the electricity value chain. Alongside generation and distribution,
improving and increasing transmission infrastructure is key to closing the
access gap. So far, transmission in Africa has been financed from public
sources and new models of financing involving the private sector have received
insufficient attention from policymakers or financiers.
The ‘Linking up: Public-Private Partnerships
in Power Transmission in Africa’ report examines private sector-led investments
in transmission globally and how this approach is applicable in sub-Saharan
Africa. The private sector has
participated successfully in transmission networks in many countries in Latin
America and Asia, and this approach could be replicated.
“Private finance has supported the expansion
of electricity transmission infrastructure in many regions of the world and the
same can happen in Africa. To attract
private sector investment, however, governments need to adopt policies
supportive of this strategy and establish the right business, regulatory and
legal environment to sustain investor interest,” said Riccardo Puliti, Senior
Director and head of Energy and Extractives Industries at the World Bank.
Estimates of annual investments required from
2015-2040 to expand the transmission network range from US$ 3.2 billion to
US$4.3 billion. These investments are critical to delivering cost-effective
power to households and industries.
The report examined independent power
transmission projects (IPTs) in five countries (Brazil, Chile, India, Peru and
the Philippines) where major power sector reforms were undertaken to privatize
the sector. The use of privately financed transmission lines in Brazil, Chile,
Peru and India, for example, collectively raised over US$24.5 billion of
private investment between 1998 and 2015. This resulted in close to 100,000 km
of new transmission lines.
The study provides a set of recommendations
for countries to adapt to specific local conditions and lists 10 steps to get
there, including the right legal and regulatory framework, new models for
concessional lending, competitive tender processes, adequate revenue flow and
credit enhancement for projects, or tailored IPT projects to attract
international investors, to name a few.