Challenges affecting the African power industry: Experiences from Nigeria, Tanzania, Kenya, and DRC. Presented by Moses Duma March 2008

Transcription

1 Challenges affecting the African power industry: Experiences from Nigeria, Tanzania, Kenya, and DRC. Presented by Moses Duma March 2008

2 Agenda Industry Overview.. Slide 3 Key Challenges.. Slide 4 Way Forward.. Slide 9 Conclusion.. Slide 10

3 Africa needs additional capacities to avert looming power shortages. 23 per cent electricity access rate 4.4 per cent demand growth rate per annum Investment of $563 billion needed for the next 20 years Tasks for Countries: Nigeria - 40% access rate DRC - 10% access rate Kenya - 15% access rate Tanzania -10% access rate

4 Challenge: Lack of investment in new equipment reduces capacity to meet growing demand. African countries inherited power industries Expected Impact Over Time Up until early 2000, Nigeria, Tanzania, Kenya and DRC had not built a new power plant Medium Investment in the power sector is not reflective of the events in the economy Short Term 1-2 Years Medium Term 3-5 Years Long Term 5-7 Years Source: Frost & Sullivan

5 Challenge: Dilapidated infrastructures have low efficiency, low availability and low output. Old equipment Expected Impact Over Time technical losses maintenance budget Shortage of skilled labour Vandalism of equipment Medium Short Term 1-2 Years Medium Term 3-5 Years Long Term 5-7 Years Source: Frost & Sullivan

6 Challenge: Climatic changes affect the significance of hydropower as a reliable source of electricity. Effects of global warming. Effects of oil powered stations Evidence: Nigeria s Shiroro and Kainji power plants Medium Expected Impact Over Time Tanzania s use of diesel powered plants from 2002 Uganda s use of 100MW oil powered station Short Term 1-2 Years Source: Frost & Sullivan Medium Term 3-5 Years Long Term 5-7 Years

7 Challenge: Difficulties in raising liquidity in local financial markets cripple the sector s development. capital costs industry- 100MW costs $1billion Expected Impact Over Time Small financial markets Local companies can t afford high capital costs Medium Donor institutions have conditions Short Term 1-2 Years Medium Term 3-5 Years Long Term 5-7 Years Source: Frost & Sullivan

8 Challenge: Sub economical tariffs discourage investment from IPPs. Government interference leading to inappropriate tariffs Expected Impact Over Time Need for cost reflective tariff structures - production cost vs. selling costs Medium State subsidies and monopoly Short Term 1-2 Years Medium Term 3-5 Years Long Term 5-7 Years Source: Frost & Sullivan

9 Way Forward: Complete power reforms in many countries. Unbundling of power industry to encourage IPPs Nigeria has over 20 IPPs, 11 DisCos and 6 GenCos Tanzania has 4 IPPs contributing 330MW Need for clear sector liberalisation strategy and regulations Secure investment environment to boost the private sector s confidence, e.g. Uganda

10 Way Forward: PPAs must be financially beneficial for all parties. Contract / concession should be long enough to justify investment Limit-closes on capacity should be beneficial to both parties Cost reflective tariffs Off-taker guarantee consumption Government guarantees for security of property

11 Way Forward: Development of interconnected grid. Power sharing through interconnectors (SAPP, CAPP, EAPP, WAPP) DRC to South Africa, Ethiopia (30 000MW) to other East African countries Cross border electrification programs Kenya, Tanzania and Uganda

12 Way Forward: Explore Africa s full hydropower potential. Clean energy Cheaper source of power Readily available- Zambezi, Nile, Congo & Niger rivers Country DRC Ethiopia Nigeria Kenya Tanzania Zambia Hydropower Potential (MW)

13 Way Forward: Development of renewable energy sources for peak hours and rural electrification programs. Small and mini hydropower plants for distributed generation Africa s wind and solar potential Kenya s Kano plains and Ngong wind project MW Uganda s Karamoja region

14 Conclusion: Africa has potential to be self sustainable in electricity supply. Explore African s natural resources Involve IPPs to develop hydropower projects Interconnectors to share Africa s hydropower potential Investment in equipment upkeep to increase efficiency

15 Contact Details For any additional information please do not hesitate to contact: Moses Duma Energy and Environment Group Frost & Sullivan Kate Howarth Sales Manager Frost & Sullivan