Samuel Kwesi Ewuah Oguah is an energy specialist with the Energy and Extractives Global Practice at the World Bank and co-author of the report “Linking Up: Public-Private Partnerships in Power Transmission in Africa” which will be discussed during the upcoming Future Energy Central Africa in Yaoundé.
Can we start with your position as energy specialist at the World Bank and the work that you focus on for this organisation?
I work with clients on a wide range of issues in the power sector covering power system planning and optimisation, regulations and project financing. I’m a co-author of the ‘Linking up: Public-Private Partnerships in Power Transmission in Africa’ report that we will be discussing at the event in October.
Any particular project/s that you are involved in that you are very excited about at the moment?
Believe it or not I am yet to work on a boring project! After four years at the Bank, I still feel relatively new in an organisation with a global reach. I am yet to repeat the same thing on a project because though the underlying problems are similar, the prevailing conditions vary in different countries – so the solution has to be tailored. I find this current study on increasing private sector participation in Africa’s transmission sector quite exciting. This approach has worked in other developing countries that started this with economies at a level similar to some African countries now. Of course, these need to be adapted to the context of Africa, but the potential is there.
What in your view are the main challenges in the power sector on the continent? In the transmission sector in particular?
Two out of three people in Africa live without electricity or with poor quality service. These are the two main challenges. A big part of this stems from the weak financial health of most utilities on the continent caused in part by poor tariff regimes and gaps in management. Maintaining infrastructure becomes a challenge in cash-strapped utilities. Investing in new infrastructure is even a bigger challenge to effectively deliver and expand quality service to consumers. A critical link in the supply chain is the transmission network which has typically been seen as a public monopoly. Unlike the generation side where independent power producers are active, investments in transmission are left to struggling utilities.
We know that the investment requirements are significant. Building and maintaining reliable transmission infrastructure in Africa requires between $3,2 billion and $4,3 billion every year until 2040. We need new ways to add to the already existing as we seek to bridge the financing gap.
What opportunities in this sector should investors look out for?
This is very much related to the previous question. The investment needs are estimated to be between $3,2 and $4,3 billion per year. So-called conventional funding will finance a big part of that, but given the scale, there is also room for the private sector. The strongest signal to investors, are the changes made to regulations that encourage private sector participation. With the right mix of incentives and risk allocation, both private sector and consumers stand to benefit from resultant projects. As most countries in Africa are at the exploratory stages, there are opportunities as well for the private sector to contribute to policy design by sharing their experience from other parts of the world.
The World Bank report: “Linking up: Public-Private Partnerships in Power Transmission in Africa?” will be presented at the upcoming Future Energy Central – What will be the message at the event about what the report establishes and recommends?
The ‘Linking up: Public-Private Partnerships in Power Transmission in Africa’ report has a very simple message: the private sector is already actively involved in power generation in Africa, and the same could happen in the transmission sector as has happened in other parts of the world under what we are calling the independent power transmission (IPT) model.
The report provides practical guidelines for government officials and industry practitioners in Africa on how to scale up private sector participation in the power transmission sector. These includes developing clear policies, crafting legal and regulatory frameworks, testing various models, ensuring adequate revenue and credit enhancements as needed, amongst others. We are looking forward to an interesting panel discussion.
We have examples of failed concessions in the utilities. Why do you think IPTs will work?
Concessions typically have a much wider scope and often, require a stronger regulatory environment. While there is always going to be the need for sector-wide regulatory reform, the IPT is better insulated from overall sector reforms because it is project-specific. A private company can successfully participate in a long-term contract to build, operate, maintain and finance transmission lines. This is why we see a higher chance of success with this model. This is not to say it can be applied in all cases or under all conditions. There are pre-requisites as outlined in our report but we see potential for its application.