Southern African News Features                                           SANF 09 No 13, July 2009
SADC must collectively attract investment in energy
by Kizito Sikuka

Southern Africa must work collectively towards creating a conducive environment that would make the region an attractive investment destination for energy projects.

Regional energy stakeholders attending a Power Sector Investors Roundtable, which opened 15 July in Livingstone, Zambia, made the appeal, adding that the region is endowed with various energy resources, which if harnessed could help SADC address its current power shortages.

Chairperson of the Southern African Development Community (SADC) Committee of Ministers responsible for Energy, Dipuo Peters, who is also the South African Energy Minister, said a number of issues are impeding investment in SADC and the region must urgently resolve them.

Low electricity tariffs, political instability and long tendering procedures in some SADC member states have been identified as some of the major stumbling blocks by investors.

To address these challenges, Peters said, the region must consider "starting to take some of the tough decisions reached at the last Energy Ministers meeting for the sustainability of our power sector."

At the SADC Energy Ministers meeting held in Maputo, Mozambique, in April 2009, regional ministers agreed on the possibility of adopting cost-reflective tariffs as well as provide a conducive environment for investors.

While significant progress has been made by the Regional Electricity Regulators Association of Southern Africa (RERA) in coming up with scenarios to make tariffs more viable, member states are yet to fully adopt its recommendations as various issues still have to be taken into consideration, including affordability of energy to less privileged citizens.

The region also continues to lag behind as a number of energy projects are yet to attract interest from investors because of various reasons.

Said Peters, "As African power sector stakeholders, we need to understand the role that we can play in developing our economies.

"We need to urgently provide an enabling environment that will make our sub-region an attractive investment destination for power projects."

Zambian Energy and Water Development Minister, Kenneth Konga, concurred, noting that energy is one of the essential inputs for virtually all socio-economic development processes.

He said the SADC region has the capacity to meet all its power demands as well as export electricity if energy sources such as solar, wind and biomass were fully exploited.

Implementation of both agreed short-term and long-term generation projects by SADC member states could also see the region fully recover from its crippling power shortages.

"We have a lot of viable projects that are yet to be developed due to various reasons," Konga said.

"We believe that when the environment is right and the projects are developed, the current deficit in the region will be mitigated against."

SADC Executive Secretary, Tomaz Salomão, challenged member states to jointly identify and implement energy projects to ensure the region is able to boost generation.

Regional cooperation also attracts investment as some of the individual country projects are too small for most investors.

In a speech read on his behalf by Remmy Makumbe who is the SADC Director of Infrastructure and Services, Salomão urged the region to harness renewable energy that is clean and cheap compared to other forms of energy.

"If power projects are to be implemented based on the SAPP Pool plan, which emphasises on implementation of least cost projects options, savings of up to US$40 billion will be realised and most of the coal based generation would be replaced with clean hydro based plants," he said.

Due to its fast expanding economies, and a lack of investment in the power sector, the SADC region is experiencing serious power shortages, which were predicted almost a decade ago by the Southern African Power Pool.

The shortages have persisted despite the numerous energy resources that the region is endowed with. The Power Sector Investors Roundtable, which ends on 17 July, brings together potential investors, regional utilities and other relevant stakeholders.

Expectations are high that the Livingstone meeting would see investors exploiting the numerous energy opportunities that lie untapped in the region such as hydro, thermal, wind, solar and gas generation as well as several transmission projects.

SAPP has already identified a number of projects for commissioning between 2009 and 2025 and the availability of funds would help the region boost its generation capacity.

Some of the projects that need urgent attention include the Inga Phase 3 and the Grand Inga Phase 1 in the Democratic Republic of Congo with a total potential generation capacity of 9,500MW.

Refurbishment of the Hwange Power Station in Zimbabwe, the Benga Thermal project in Mozambique and the Kariba North Bank Extension in Zambia are other viable projects.

sardc.net

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