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The USA’s Power Africa initiative

8 July 2013 – With an initial set of six partner countries in its first phase, Power Africa plans to add more than 10,000 MW of electricity generation capacity on the continent. It will increase electricity access by at least 20 million new households and commercial entities with on-grid, mini-grid, and off-grid solutions. The initial set of Power Africa partner countries are Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania. These countries have set ambitious goals in electric power generation and are making the utility and energy sector reforms to pave the way for investment and growth. Power Africa will also partner with Uganda and Mozambique on responsible oil and gas resources management.

The United States will commit more than US$7 billion in financial support over the next five years to this effort, including:

The U.S. Agency for International Development (USAID) will provide US$285 million in technical assistance, grants and risk mitigation to advance private sector energy transactions and help governments adopt and implement the policy, regulatory, and other reforms necessary to attract private sector investment in the energy and power sectors.

The Overseas Private Investment Corporation (OPIC) will commit up to US$1.5 billion in financing and insurance to energy projects in sub-Saharan Africa.

The US Export-Import Bank (Ex-Im) will make available up to US$5 billion in support of US exports for the development of power projects across sub-Saharan Africa.
The Millennium Challenge Corporation (MCC) will invest up to US$1 billion in African power systems through its country compacts to increase access and the reliability and sustainability of electricity supply through investments in energy infrastructure, policy and regulatory reforms and institutional capacity building.

OPIC and the US Trade and Development Agency (USTDA) will provide up to US$20 million in project preparation, feasibility and technical assistance grants to develop renewable energy projects. These efforts will be coordinated through the US – Africa Clean Energy Finance Initiative (US-ACEF) and supported by the recently launched US – Africa Clean Energy Development and Finance Centre (CEDFC) in Johannesburg, South Africa.

The US African Development Foundation (USADF) will launch a US$2 million Off-Grid Energy Challenge to provide grants of up to US$100,000 to African-owned and operated enterprises to develop or expand the use of proven technologies for off-grid electricity benefitting rural and marginal populations.

In 2014, OPIC and USAID will jointly host an African energy and infrastructure investment conference. The conference will bring investors, developers, and companies together with US and African government officials to demonstrate the opportunities for investment and the tools and resources available from the U.S. government and other partners to support investment.

Power Africa will also leverage private sector investments, beginning with more than US$9 billion in initial commitments from private sector partners to support the development of more than 8,000 MW of new electricity generation in sub-Saharan Africa. Examples of commitments to-date include:

General Electric commits to help bring online 5,000 MW of new, affordable energy through provision of its technologies, expertise and capital in Tanzania and Ghana.

Heirs Holdings commits to US$2.5 billion of investment and financing in energy, generating an additional 2,000 MW of electricity capacity over next five years.

Symbion Power aims to catalyse US$1.8 billion in investment to support 1,500 MW of new energy projects in Power Africa countries over the next five years.

Aldwych International commits to developing 400 MW of wind power in Kenya and Tanzania – which will represent the first large-scale wind projects in each of these countries, and an associated investment of US$1.1 billion.

Harith General Partners commits to US$70 million in investment for clean, wind energy in Kenya and US$500 million across the African power sector via a new fund.

Husk Power Systems will seek to complete installation of 200 decentralised biomass-based mini power plants in Tanzania – providing affordable lighting for 60,000 households.

The African Finance Corporation intends to invest US$250 million in the power sectors of Ghana, Kenya and Nigeria, catalysing US$1 billion in investment in sub-Saharan Africa energy projects.
Power Africa directly addresses constraints to investment in order to accelerate progress.  Instead of taking years or even decades to create an enabling environment for energy sector investment, Power Africa takes a transaction-centred approach that provides incentives to host governments, the private sector, and donors. These incentives galvanise collaboration, producing near-term results and driving forward systemic reforms that pave the way to future investment.

To achieve these ambitions, Power Africa includes:

An interagency transactions solutions team to provide the catalysts needed to bring power and transmission projects to fruition by leveraging financing, insurance, technical assistance, and grant tools from across the US government and our private sector partners.

Field-based transaction advisors, who have already begun their work in each of the partner countries, to help governments prioritise, coordinate, and expedite the implementation of power projects, while simultaneously building the capacity of existing host government ministries to deliver results.
Building host-government capacity to develop, approve, finance and ultimately bring power projects on line is critical to the success of the initiative. To support this need, Power Africa will work with host governments to launch or further develop delivery units charged with driving progress on specific projects. These delivery units will help increase technical skills and accelerate energy sector regulatory, market structure and enabling environment reforms.

In Tanzania for example, Power Africa will support the Big Results Now! program, which is establishing new delivery units within government ministries. In Nigeria, Power Africa will provide staffing support, capacity building and technical assistance to an existing delivery unit. Establishment of a delivery unit in Ghana will be closely coordinated with the MCC’s Compact slated for signature in 2014.