Conference: East African Power Industry Convention
Location: Addis Ababa, Ethiopia
Presenter: Callixte Kambanda
Abstract: Presented by Callixte Kambanda at East African Power Industry Convention
Infrastructure development in Africa, particularly the power infrastructure needs significant investment. Following the African Development Bank estimates, more than 8 billions USD are yearly needed for power infrastructure priority projects throughout Africa. This huge investment for the continent is very difficult to be mobilized through public means alone. Private Sector Participation has become a necessity.
What has to be particularly considered by a PPP arrangement?
- Combination of local and foreign PSP;
- Challenges for government and the private sector partner(s):legal and regulatory enabling environment to be assured by the Government, risk assessment and risk mitigation to be assessed and agreed upon by both parties;
- Pricing issues.
Problems encountered in Power Projects with PSP
A number of power projects with Private Participation have been identified to be under stress . Following the study made by WB, the main causes of the mentioned stress for the Sub-Saharan African Region are low level of commitment to PPI, resistance by public and governments to control the vertically integrated utilities, and macroeconomic issues. It is also in this region where the performance of the investors are very low due to inability by the investors to execute agreed investment plan, operational performance of the investor below the government expectation, dispute on the application of the pricing formula and sociopolitical resistance to PPI.
From lessons learned, what is the best approach of power projects development in Eastern Africa with PSP?
- Scrutinize among the priority projects those that could be for interest of the private sector;
- Improve the national legal and regulatory frameworks to create enabling environment for private investment,
- Strengthen the negotiating capacity of government institutions involved in PPP projects;
- Involve as much as possible local private companies in financing arrangements;
- Involve at the earliest stage of the project the key stakeholders.
Important key of the project success
Transparent and fairly negotiated contractual arrangements for all the parties.