Since the Central African Power Pool (CAPP) launched its vision for 2040, there has been a hive of activity to create an improved business environment to attract investment for the many projects on show, writes Nicolette Pombo-van Zyl.
The central African region has pronounced itself ready for local, regional and international collaboration to achieve universal energy access, which will deliver economic growth in the next few years. And advising global and local business, Kah Walla, CEO of Strategies! in Cameroon, who attended the Future Energy Central Africa conference in October, said: “The region is rich in resources; there are no more excuses, let’s just do it!”
What will it take to succeed?
1. Accelerating solar projects through: project documentation made available upfront and with acceptable terms; standardised procedures for delivery of approvals, permits and licences; downsizing due diligence costs; and facilitating access to risk mitigation and credit enhancement tools.
2. Cameroon faces a lack of experience rather than a lack of skills. Proposed solutions: mentoring between junior and senior professionals; and incentivising graduates who studied abroad to return to the region.
3. To finance projects in the region more Blended Finance Solutions should be used. Advantages include: ability to bridge the tariff gap; offer cost competitive and sustainable tariffs to the utility and end user; provide funding where it’s not available; and encourage matching of private investment.
4. To facilitate successful private investment, it is recommended that each country in the region prepares or consolidates a power master plan in which it identifies the best projects to be structured as IPPs (typically with the lowest cost of production and best structured procurement processes).
5. The region should prioritise agile projects versus massive projects. Cameroon for example has a huge potential for small hydro to achieve rural electrification.
6. Recommended best practices from investment specialists to encourage more PPP in the region include: clearly defined expectations from private sector; standardised procurement policies and procedures, timely delivery of responses; standardised bankable concession and offtake agreements and clarification of the PPP legal environment, which will signal a stable support system for this type of contract.
7. It is essential to consider skills and assign the roles of government organisations involved in providing infrastructure, from planning, economic and financial leaders, to institutions responsible for investing in specific PPP projects. ESI