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With Federal Government’s power reform projects running behind schedule and the country’s electricity crisis yet to abate, the Power Africa Initiative of the United States presents a glimmer of hope for the country and its citizens, writes Olisemeka Obeche.
When President Barrack Obama of the United States formally launched the ‘Power Africa Initiative’ (PAI) in Cape Town, South Africa on June 30, 2013, his government had Nigeria on its priority list of countries that urgently need the PAI therapy. Nigeria, Africa’s largest economy and most populous black nation with over 160 million people, remains mired in power crisis despite federal government’s massive investment aimed at revitalizing the ailing sector since 2007.
With 14 power generating plants, consisting of three hydro plants and 11 thermal (gas/steam) plants, supplying barely 4,800mw to a national grid made up of 4,889.2km of 330kV line, 6,319.33km of 132kV line, 6,098MVA transformer capacity at 330/132kV and 8,090MVA transformer capacity at 132/33kV, the country’s dream of stable electricity remains far-fetched despite President Goodluck Jonathan’s pledge of tackling the power paralysis in four years.
However, as the federal government struggles to meet the targets set in its power sector reform road map, Obama’s Power Africa Initiative, which seeks, among other things, to double the number of people with access to sustainable and efficient power in sub-Saharan Africa presents a new vista of hope for fixing Nigeria’s energy crisis.
“Nigeria is well-positioned to reap the rewards of this increased focus on the energy sector. It is our expectation that our joint effort will improve the lives of countless Nigerians and serve as a model for other African countries whose implementation of energy sector reform is nascent,” declares Ambassador James F. Entwistle, US Ambassador to Nigeria.
According to Entwistle, the reason countries like Nigeria had largely failed to achieve stable electricity so far was because the level of funding needed to electrify Africa far outstrips the capacity of African governments and foreign donors. “In this regard, the Power Africa Initiative would strengthen Nigeria’s energy sector through credit enhancement, grants, and technical assistance as well as investment promotion efforts,” he says.
Power Africa initiative
‘Power Africa’ is a new five-year United States of America Presidential initiative aimed at supporting economic growth and development by increasing access to reliable, affordable, and sustainable power in Africa. The programme is designed as a multi-stakeholder partnership among the governments of the United States of America, Nigeria, Tanzania, Kenya, Ethiopia, Ghana and Liberia, African private sector, and development finance institutions such as the World Bank and the African Development Bank (AfDB).
According to the programme’s preview, ‘Power Africa’ is part of President Obama’s new approach to supporting sustainable development in sub-Saharan Africa through building local capacity and support innovative ways to make traditional assistance programmes more effective and sustainable.
Obama had at the launch of the initiative declared his recognition of the importance of electricity to the economic development of emerging economies; expressing hope that through the initiative about 20 million Africans will have access to electricity at the completion of the first tranche of the initiative in Nigeria, Ethiopia, Ghana, Kenya, Liberia and Tanzania.
Through Power Africa, African governments, private sector and other development partners such as the World Bank and the AfDB seek to add more than 30,000 megawatts (MW) of cleaner, more efficient electricity generation capacity in sub-Saharan Africa by 2018. The initiative is also expected to unlock the substantial wind, solar, hydropower, natural gas, and geothermal resources in the continent to enhance energy security, decrease poverty and advance economic growth.
“By expanding mini-grid and off-grid solutions and building out power generation, transmission, and distribution structures, Power Africa will also increase electricity access by adding more than 60 million new household and business connections. At the same time, Power Africa will enhance energy resource management capabilities, allowing partner countries to meet their critical energy needs and achieve sustainable, long-term energy security,” explains Andrew Herscowitz, Interagency Coordinator for the Power Africa and Trade Africa initiatives.
He explains further that Power Africa will bring to bear a wide range of US government tools to support investment in Africa’s energy sector. “From policy and regulatory best practices, to pre-feasibility support and capacity building, to long-term financing, insurance, guarantees, credit enhancements and technical assistance, Power Africa will provide coordinated support to help African partners expand their generation capacity and access,” Herscowitz says.
To realize the objective, White House will commit more than $7 billion in financial support and loan guarantees over the next five years, in addition to the expertise of 12 US government agencies leveraging partnerships with relevant stakeholders. “Power Africa’s financial partners are committed to providing over $20 billion in project finance through direct loans, guarantee facilities, and equity investments,” Herscowitz adds.
According to the International Energy Agency, sub-Saharan Africa will require more than $300 billion in investment to achieve universal electricity access by 2030 with Nigeria needing almost half of that amount to significantly increase its power generation capacity above 20,000MW to be able to realize its vision 20-2020 full industrialization goal.
A new Investment Window
Incidentally, at the time Nigeria signed a Memorandum of Understanding (MoU) with the United States of America for 10,000-megawatts power generation project [courtesy of the Power Africa] initiative last July, the country’s total power generation was still below 4,000 MW and electricity supply across the country erratic. The federal government had set for itself the target of increasing the country’s power generation capacity to 10,000 MW by December 2013 and failed. A similar target of increasing the power generation capacity to 10,000 MW by December 2014 appears unrealistic in the face of myriads of challenges that had bedeviled the implementation of the Power Sector Reform so far.
Although, the Presidency’s projection is that Nigeria’s power generation capabilities could hit 10,000 MW by the time it completes ongoing power station projects across the country, experts insist it is still a far cry from what is required to ensure stable electricity for Africa’s largest economy.“The fact remains that Nigeria still has a long way to go before actualizing stable electricity and current government investment in the sector cannot achieve that,” declares Engineer Best Ezeani, an energy expert.
Olugbenga Adesanya, a Lagos-based energy economist also gives reason the chances of achieving stable electricity through the current power station projects remain slim. “Even if the NIPPs have come on stream and we have up to 10,000MW generating capacity, the existing network cannot distribute more than 5,000MW; our national transmission network is still based on archaic radial technology which is not used again, we need a super-highway transmission network to successfully wheel out higher megawatts of electricity,” he says.
However, the Power Africa deal has opened door for flow of private investment into the country’s power sector. For instance, Global Edison Corporation kick-started plans to construct a 1500MW gas power plant worth $2.5 billion in Anambra State as part of the Power Africa initiative agreement deal signed between the Presidency and the US government last July.
Similarly, Heirs Holdings, a Pan African investment company has declared its determination to generate at least a quarter of Nigeria’s power consumption needs in the next five years using the platform of the Power Africa Initiative. Mr. Tony Elumelu, Chairman of Heirs Holdings believes that the Power Africa Initiative “is an amazing opportunity to democratize access to power for Africans.” According to him, the $2.5 billion investment commitment Heirs Holdings has made reflects exactly how excited he is about it.
While the Power Africa Initiative may have opened a new vista of investment in Africa’s power sector, there are growing fears of its sustainability and completion due to the political situations in Africa and United States. “There is uncertainty over what would happen to the ongoing power reform programme under Goodluck Jonathan’s government should there be a change of leadership after the 2015 election. Any sudden shift in policy could adversely affect this kind of initiative,” says Mr. Cliff Nneli, an energy analyst.
Todd Moss, a former deputy assistant secretary in the State Department’s Bureau of African Affairs and chief operating officer and senior fellow at the Center for Global Development also views a power change in United States as a potential threat to the Power Africa project.“The big challenge right now is for Power Africa to find a home in the US government. Building modern power systems is a long-term effort. If Power Africa is going to make a real difference, then it must exist after President Obama leaves office,” he quips.
The puzzle remains will Nigeria, a country that badly needs to resolve its power crisis, grab the opportunity of the ‘Power Africa’ initiative and utilize it to scale up and stabilize its power sector? Only time will tell.