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Pathway to revolutionise regional energy markets

Examining the East African Community’s energy sector can reveal information on how neighbouring countries can benefit from interdependence even in the wake of an energy market revolution.

This article first appeared in ESI Africa Edition 5, 2018. You can read the magazine’s articles here or subscribe here to receive a print copy. 

Energy infrastructure like transportation – the skeleton for the development of any other kind of infrastructure – is the bloodstream that pumps energy into different enterprises for economic development. This premise relies on energy being tradable and interdependable whereby one country can rely on the energy infrastructure of another.

Furthermore, the stability and growth of a country’s energy infrastructure and regulatory landscape is the magnet that attracts investments without which countries find themselves limited by stunted socio-economic growth.

Investment in electricity is a discreet national economic goal, which is worth prioritising not only for industrialisation aimed at boosting economic development but also as a vital contributor for technological advancement in any country.

Unlike other public sector assets, like roads, water supply and clean air that everyone benefits from, energy infrastructure ceases to be a public good when it is being demanded and consumed individually.

In this modern smarter world, customers are able to view their usage of electricity through mobile devices, the internet, special remote home sensors and monitors. On the supply side, utilities do the same through meter data management systems. Enhanced through technology applications, the supply of energy becomes a product that is exportable to neighbouring countries.

It is when the energy supplied to other countries (as in the case of Uganda with Tanzania and South Sudan) that the revenue generated and accrued from the energy exported becomes indirectly a public good – but only if the state effectively recapitalises it in further investments.

The energy sector is extremely sensitive and is one of those cross cutting issues, especially in the building of hydro power dams and nuclear power plants, that tend to have direct impact on the populations of neighbouring countries.

A unique but dangerous feature of the East African Community (EAC) energy sector is that over 80% of the population of every member state over-relies on biomass, which is sustained on forest products like trees and crop wastes.

This in essence is climatically unfriendly since it destroys the forests that are the lungs of the world. Energy infrastructure therefore needs to be jointly planned.

Involving stakeholders in deciding on building a dam or nuclear power plant is vitally important to sustainable energy infrastructure in the EAC.

In the advent of decarbonisation, decentralisation, and digitalisation, EAC holds an outstanding position in possessing huge energy reserves: oil, coal, geothermal, natural gas, hydropower, wind and solar, vast but depleting forests that supply 80% of the population in the region with biomass, and the new prospects of nuclear energy plants.

The future of fossil fuels, coals, and biomass (charcoal and wood) is crisscrossing at this time of decarbonisation, decentralisation, and digitalisation (3Ds). However, in order to realise an effective competitive energy market in the oncoming tide of the 3Ds, a number of recommendations, which are not exhaustive, are enumerated below.

These are presented for the EAC member states to follow if they need to invest and promote energy infrastructure in the Community but can be implemented in any region.

1) Economic empowerment of the local population is the cornerstone for the foundation of an increased energy accessibility to take place.

The member states have to avail every opportunity to its citizens in terms of physical infrastructure, good healthcare, education, and democratic governance, which will not only create a proactive and productive population but also will ultimately lead to poverty eradication and a decline in political riots.

2) Reform is badly needed in the energy sector that aims at liberating energy from carbon and investing in the development of energy infrastructure and climate change.

The East African Community should identify technologies that explore the abundant energy potentials that each country can contribute from oil, coal, geothermal, natural gas, hydropower, wind and solar energy so as to increase accessibility of clean and sustainable energy in the region.

3) Develop approaches and alternatives that mainstream sustainable and reliable energy projects into environmental protection national strategies.

Countries (especially South Sudan) that depend on non-renewable natural capital like petroleum, gas, and biomass should embrace recapitalisation of the natural capital into the development of sustainable energy infrastructure, which enhances investments that lead to wealth generation and economic growth.

A successful building of the Grand Inga Dam in the Democratic Republic of Congo and Fulla Falls in South Sudan together with the completion of the Karuma multinational hydropower dam in Uganda would be a more reliable approach to addressing the energy deficits within and outside the region.

4) Authentic global and regional partnerships should be established in line with the Paris Treaty on Environment to promote both regional and global sustainable markets in the energy sector. These partnerships are to be trustworthy, mutually respected and clearly understood with clear duties and responsibilities of the participants. This will enforce coordinated efforts exerted on the provision, distribution and supervision of energy infrastructure effectively managed in the EAC.

5) The EAC should design and establish a regulatory framework with an independent commission (based in Arusha, Tanzania) to provide a clear legal instrument and authority for policy, regulation and operation. This will be a body or instrument that measures initial steps by passing an Electricity Law and providing Utility Regulatory Agent (URA) with the mandate to regulate the electricity and gas market.

6) Grants in the form of subsidies to domestic investors and especially the state-owned enterprises to boost investment in this competitive environment of the East African Community.

In conclusion, energy infrastructure is the bloodstream of economic development and a magnet that attracts investments into the country without which economic growth will be stunted.

Energy infrastructure, if developed in a coordinated effort, is firstly tradable within a given nation and amongst countries and secondly facilitates normal functions of a country especially in industries. Hence, it is worth investing in an energy sector that will act as a gateway for investors to flood into the country for foreign direct investment to take place.

This will increase on the level of experts that yield revenue to the country especially for EAC member states that have come together for a number of interests, including economic interest. ESI

Charles Kpiosa

This article first appeared in ESI Africa Edition 5, 2018. You can read the magazine’s articles here or subscribe here to receive a print copy. 

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