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ALL AFRICA NEWS AGENCY BULLETIN No. 49/02 (b)
Worldwide Faith News <email@example.com>
Fri, 13 Dec 2002 20:08:09 -0800
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,
AANA Bulletin : Acting Editor - Mitch Odero
Bulletin APTA: Edition en frangais, ridacteur intirimaire : Sylvie Alemba
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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
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
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
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
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
"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
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
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
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
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
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