wfn.org | ALL AFRICA NEWS AGENCY BULLETIN No. 49/02 (b)

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ALL AFRICA NEWS AGENCY BULLETIN No. 49/02 (b)
December 16, 2002

AANA Bulletin is an ecumenical initiative to highlight all endeavours and 
experiences of Christians and the people of Africa.  AANA Bulletin is 
published weekly and, together with the French Edition - Bulletin APTA - is 
also available through e-mail.	For editorial and subscription details, 
please contact: 

AANA Bulletin	: Acting Editor - Mitch Odero		
Bulletin APTA: Edition en frangais, ridacteur intirimaire : Sylvie Alemba

All Africa News Agency
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FOCUS  ON  ENERGY

Slow Privatisation Denies Continent Essential Energy

BLANTYRE (AANA) December 16 - The message is now getting louder: 
Development in all spheres would continue to be a nightmare for Africa 
until efforts were undertaken to reform the energy sector.

Rural electrification programmes were initiated but lacked the needed 
impetus denying the larger part of the populations electricity supplies at 
the same time hampering industrialisation and general economic growth.

Africa has all the necessary resources for power generation like rivers, 
coal, and abundant sunshine for photovoltaic electricity and other solar 
appliances to provide electricity. But because of such challenges as 
increasing donor fatigue, unstable international oil prices, low 
industrialisation and widespread poverty, the resources are not fully
utilised.

It is for this reason that stakeholders in the energy sector across the 
continent cite at privatisation as one sure way to make electricity 
available to many people and the rural masses. Regional co-operation among 
power utilities and reforming of legislation to allow for the private 
sector and relieve total government control over power are some of the 
proposed areas of development by energy experts.

Participants in the energy sector point that the energy sector, 
particularly electricity, is one of the key areas where African countries 
could make good progress on the privatisation front. The energy sector is 
of course touted as the engine for growth.

Statistics are not offering a comfortable picture as less then eight 
percent of the continent's 722 million people have access to commercial 
energy. The World Bank estimates that at least US $10 billionn needs to be 
invested in Africa every year just to provide energy.

The question is whether Africa is ready to attract giant international 
investors for them to look favourably to the African market. Transparent 
policies are also called for to guide the market regarding the use of 
strong regulatory bodies as that would rekindle hope for the investors.

At a recent Africa Power 2002 Conference held in Sandton, South Africa and 
organised by research and advisory group, Global Pacific & Partners, it was 
expressed that African power utilities have been dominated by their 
governments which have often paralysed the role of both regulator and 
controller. Politics is playing an adverse part and ways were being sought 
to liberate the sector through privatisation.

The conference was told that privatisation was potentially a solution to 
many of the impediments inherent in state-dominated power sectors. 
Presently, 27 African countries have since embarked on privatisation 
initiatives for the electricity  but an equal number has not taken concrete 
steps placing the government a sole player in African power markets.

Duncan Clarke, Global Pacific & Partners chairman reminded stakeholders of 
the power sector at Sandton that the sale of state assets has many 
advantages: it will secure funds to reduce government debts, make 
operations more efficient with lowered tariffs as a result of boosted 
domestic competition among players with a resultant broader shareholder base.

Other benefits, he pointed, included reduced corruption costs, 
transparency, improved governance, technology access and freeing the 
government to focus on formulating policies.

"Privatisation is surely a solution to the many weaknesses in the energy 
sector as state-control would pave way for other players from the private 
sector. This is actually what Africa yearns for to move forward," says
Clarke.

The captains of the energy sector regret the inability of the continent to 
mobilise private funding due to inadequate rates of return and strangled 
capital markets. Apparently, the investors are becoming more and more 
sensitive to the issue of profits so they are wary before taking up the risk.

It is believed therefore that regulating the energy sector to serve the 
broader public interest, providing investments and efficiency incentives as 
well as providing subsidies in a transparent manner were ingredients for 
progress.

It is believed therefore that regulating the sector to serve the broader 
public interest, providing investments and efficiency incentives as well as 
providing subsidies in a transparent manner were ingredients for progress.

Apart from liberalisation and privatisation of electricity markets 
regional, co-operation has emerged as a central component to propelling the 
sector and giving investment a stronger push, while at the same time 
countries strive to changing the institutional framework by redefining the 
role of the state in the energy sector.

Earlier, Malawi's Minister of Natural Resources, Harry Thomson, urged a 
meeting of the Southern Africa Power Pool (Sapp - a grouping formed in 1995 
by heads of state of the fourteen member nations of the Southern Africa 
Development Community SADC) stressed the need for regional cooperation.

The minister maintained that there was no way the region could forge ahead 
unless member countries pooled their resources to enhance power provision.

The same was cited by South Africa's Minerals and Energy Minister, Phumzile 
Mlambo-Ngcuka who emphasized the importance of African countries working 
together.

She commended the formation of Sapp, a loose association of power utilities 
in the SADC, which among other things allows for trading of electricity 
among member countries as a meaningful milestone in regional integration 
and co-operation.

"We expect high benefits from establishment of the SADC power pool. Similar 
efforts ought to be encouraged in other energy infrastructures such as gas 
pipeline," Mlambo-Ngcuka said.

But for regional integration to succeed there were of course challenges to 
be endured that include availability of suppliers with surplus capacity, 
customers who were willing and able to buy, the ability to deliver energy 
to those customers, and ensuring there were defined rules and procedures. 
The rules will have to provide for economic returns for all parties 
involved, Sapp was advised.

A Regional Association for Electricity Regulators was established this year 
in a bid to provide a platform for cooperation among independent power 
regulators within the SADC.

The association's key objectives being to build capacity, share information 
and experience, co-ordinate regional policy strategy and legislation, and 
collaborating on recommending mechanisms to regulate electricity 
interconnections and trade.

Through the association, Southern African countries will be able to import 
and export electricity to and from any neighbouring state. Harmonised 
market structures and institutional arrangements are to be formulated.

The chairman of Malawi National Electricity Council (NEC), Gerald 
Johnstone, who is party to the regional Association, says countries facing 
problems in generation power due to lower water levels in rivers that 
provide hydro-electric power  will now have alternative sources of 
electricity in times of shortage by importing from a neighbour.

"The danger of relying on one source of electricity is that businesses 
could be brought to a halt, and this we must avoid at all cost," notes 
Johnstone.

Privatisation and liberalisation of the global economy seem to have taken 
Africa unawares judging from the frequent media reports with some sections 
of the societies blaming the phenomenon as other borrowed concepts from the 
West blamed for pushing Africa further deeper into poverty and stalled 
economic growth.

The question to be addressed is the challenge for experts and stakeholders 
to strive to convince African government's and the private sector of the 
necessity to discern the advantages that might outweigh the hardships of 
privatisation and globalisation bearing in mind why power privatisation has 
to be given priority.

Reported by Hobbs Gama

Govt, Donors Outline 10-Year Energy Development Plan

KAMPALA (AANA) December 16 - Uganda's ambitions of becoming a strategic 
player in regional energy requirements are outlined in the latest 
government document on energy, thanks to a joint effort by the government 
and some donor institutions.

The September 2002 restricted energy policy document exclusively availed to 
AANA is elaborate on how Uganda can earn US $2.3 billion from energy in the 
next ten years.

Part of the strategy is to increase power exports to the region. Government 
records show that Kenyan power exports will rise to 50MW by 2006 from the 
current 30MW.Tanzanian power exports will also rise from the current 9MW, 
according to the document.

The Ugandan government projections are that it will realize US $246 million 
power exports to regional states up to the year 2012, highlighting the 
significance of power exports as important revenue earner for a country 
that has little to export to neighboring states.

"Within East African sub-region, Uganda is currently spearheading NEPAD 
efforts recognizing the opportunities to export Uganda power," says the 
government's energy document.

The document was authored by a team led by Philipe Siminon, the energy 
advisor of the	German technical organization, GTZ, that financed the 
drawing up of energy plan.

To this effect regional cooperation infrastructure projects is a matter of 
interest and the Energy Ministry considers construction of transmission 
lines traversing regional states as one of the projects.

Investments of US $1.8 billion of which 68 percent will be raised by the 
private sector underline the design of the roadmap to be mostly private 
sector driven.

Of the amount, US $532 million has been committed. Private firms will be 
allowed to generate hydropower wind, geothermal, solar and nuclear energy 
for both local and regional consumption.

Hydropower sector has been restructured with distribution and generation as 
separate business. ESKOM, a South African firm won the distribution 
concession and competes with TATA Power (India), and Union Femosa 
International (Spain) for the generation concession.

Energy resource is increasingly taking regional dimensions. And this is 
evident in fuel firms. Kobil, a Kenyan firm, has been expanding its 
interests in the region and according to its management, Kobil controls 9 
percent of the Ugandan fuel market. Other Kenyan firms include Fuelex.

The Ugandan government is keen to streamline the transportation of fuel and 
this also is to be done through regional approach. Transportation is 
streamlined with construction of pipelines.

The policy framework provides for harmonization of energy component in the 
regional context while protecting the country's interests. Uganda has 
projected US $246 million earnings through export of power within the 
region in the ten-year period.

Uganda is also anxious to become a one-stop centre for a regional database 
and an East Africa Energy Master plan is being developed.

However, Ugandan strategy is faced with some challenges. Construction of 
Bujagali dam hangs in the balance as its viability is being questioned. 
Charges of corruption, which cost Mr Richard Kaijuka his World Bank job, 
also appear to threaten the project.

Museveni is adamant. (he even rejected Egyptian proposal to build a dam 
with similar capacity in another area) and said construction will go ahead 
even without donor funds.

Liberalisation of the petroleum sector is not bringing desired results. 
Government statistics show that since it was opened in 1996, fuel prices 
have risen by 67 percent. Shell, Total and Caltex have taken up some 60 
percent of the share. This has not erased the possibility of these firms 
creating a cartel.

The success of the plan also rests on regional cooperation. Although wars 
have reduced but mistrust rules, especially as government is keen on 
developing oil projects in southern Sudan - vehicles marked "Southern Sudan 
oil exploration programme" are visible on Kampala streets driven by SPLA 
officers.

The extension of oil exploration programme from Uganda into the DRC was in 
the year 2000 criticized by UN office of coordination for humanitarian 
affairs as another form of exploiting natural resources of the DRC.

The government acknowledges inadequate financing, low quality of 
electricity supply and consumer service. However, Mr Mark Malloch Brown, 
the UNDP administrator, cautioned the government on how to liberalize 
saying the government has to retain some role.

Reported by Crespo Sebunya