East Africa has the potential to be a hub for energy related investments and could become one of the largest producers, as well as exporters, of oil and natural gas in the world. This is according to Frost & Sullivan’s latest analysis, East Africa Energy.
“Countries like Tanzania, Kenya, Ethiopia and Rwanda – which have traditionally depended on biomass to meet most of their energy requirements – are gradually shifting to modern energy sources to meet the growing demands of the expanding urban population and the rising per capita income levels.”
The report reveals that East African countries will have a generation potential of more than 50,000MW by 2030, which mostly will be “dominated by hydro, coal, wind, geothermal and natural gas based generation systems.”
Frost & Sullivan analysis
The report says that more than 80% of the potential gas resources in East Africa are concentrated around Mozambique and Tanzania. While liquefied natural gas (LNG) exports from these countries are expected no earlier than 2020, rapid development of gas power projects would provide a short term response to growing electricity demand in the region.
According to the report, this potential will afford advantage for the southern African region and will “provide immense opportunities for companies specialising in oil and natural gas exploration and production, power generation and associated infrastructure, as well as renewable energy technology commercialisation.”
Frost & Sullivan energy and environment senior research analyst Neeraj Sanjay Mense stated: “Energy development is gaining priority as East African economies look to attain middle income status over the next decade.
“In view of this objective, governments in the region are adopting strategies to diversify the energy mix as well as encourage private sector participation.”
Private sector investment is essential
The analysis also highlighted that investment from the private sector is essential because energy reserves in East Africa require extensive funding in order to achieve their full potential; cautioning that issues relating to finance, political stability as well as security could limit private sector participation within the region.
Furthermore, the analysis encourages training for local workers which it states will “ultimately aid the long-term sustainability of energy businesses in East Africa.”
In conclusion Mense said “An adoption of mechanisms to share technical knowledge through international cooperation will ensure steady growth.
“Collaboration with experienced project developers will also be imperative to accelerate technological advancements and implement the respective plans within the East African energy sector.”