Ministers approve agreement to review SADC Energy Protocol

SANF 20 no 48 – by Joseph Ngwawi
Ministers responsible for energy in southern Africa have approved an agreement amending a regional legal instrument that promotes the harmonious development of national energy policies for the balanced development of the sector throughout the SADC region.

The Committee of the Southern African Development Community (SADC) Energy Ministers, meeting jointly with ministers responsible for water, approved the draft Agreement of the SADC Protocol on Energy (1996) as well as the draft amendments to Annex 1 to the protocol.

The draft agreement and amendments have now been forwarded to the Committee of Ministers responsible for Justice/Attorneys General for legal clearance and subsequent submission to the SADC Council of Ministers for consideration and approval in March 2021.

The rationale for the review of the Protocol on Energy was based on the need to eliminate inconsistencies, correcting inadequacies, capturing emerging institutional reforms and promoting private sector participation in infrastructure development.

This has necessitated the amendment of Annex 1 to the protocol that deals with guidelines for cooperation in the priority SADC energy sub-sectors of electricity, petroleum and gas, coal, renewable energy and energy efficiency.

Various sections of the annex are outdated and need to be amended in line with emerging issues.

One such issue is the establishment of the SADC Centre for Renewable Energy and Energy Efficiency (SACREEE), which did not exist at the time the protocol was adopted 24 years ago.

Based in Namibia, SACREEE was established in August 2015 following a decision by the SADC Council of Ministers to endorse a recommendation by the Committee of Energy Ministers.

The centre aims to contribute towards increased access to modern energy services and improved energy security across the SADC region through the promotion of market-based uptake of renewable energy and energy efficient technologies and energy services.

The protocol has also been reviewed to align it with provisions of the Regional Infrastructure Development Master Plan (RIDMP).

The master plan guides the development of infrastructure in the six priority sectors of energy, information communication technology, meteorology, tourism, transport and water, and would also acts as a framework for planning and cooperation with development partners and the private sector.

The historic adoption of the RIDMP in 2012 was informed by the realisation that infrastructure development and maintenance is a priority for accelerated regional economic development and trade.

In order to facilitate trade and economic liberalisation, as well as to address regional supply side constraints, it was found necessary to address the key bottlenecks to trade and industrialisation through the provision of seamless trans-boundary infrastructure in the areas of transport, power generation and transmission systems, regional telecommunications infrastructure as well as river basin organisations and water supply and sanitation.

To this end, SADC acknowledges that regional infrastructure is a key enabler of the regional integration agenda as envisioned through strategic frameworks such as the Industrialization Strategy and Roadmap.

The success of RIDMP, however, depends on the ability of SADC Member States to attract private sector investments for infrastructure projects.

The RIDMP policy document advocates for the adoption of Public Private Partnerships (PPPs) in regional infrastructure development.

In addition, the policy document also recommends the elimination of monopolies in key sectors, so as to encourage greater private sector participation.

Some Member States have invited the private sector to partner with government on investment in infrastructure, either as sole investors or in the form of PPPs.

Closely linked to private sector participation is the creation of an enabling environment, within the region, which promotes investment flows towards planned projects.

A key enabler in this regard would be the adoption of the user-pays principle for infrastructure development, a policy option also known in the energy sector as cost-reflective tariffs.

Such an environment would guarantee investors a favourable return on infrastructure investments.

The ministers meeting, which was coordinated virtually by Mozambique, also reviewed progress towards development of the regional gas programme in SADC, in particular issues to do with policy, strategic, institutional and regulatory matters.

The ministers approved recommendations to promote development of gas infrastructure and markets in the region.

“They also urged Member States to promptly develop gas infrastructure and markets in the Region and commended progress achieved in the development of the Regional Gas Master Plan Phase I, and noted the roadmap for development of the Regional Gas Master Plan Phase II,” according to a statement issued after the meeting held via video conferencing technology on 30 October.

The region has some of the largest deposits of natural gas in the world and harnessing this would improve the energy situation in the region and contribute to the regional energy mix, which is dominated by coal.

During the 38th SADC Summit held in Windhoek, Namibia in August 2018, the Secretariat was directed to operationalise the Regional Gas Committee and to develop the Regional Gas Master Plan.

To operationalise this Summit decision, the Secretariat commissioned a study between November 2019 and April 2020 on the status of the SADC natural gas sector.

Given the complexities of the natural gas sector and the imperative to build consensus at national and regional level with regard to the role and future of natural gas in the region, it was resolved to adopt a phased and incremental approach to the development of the master plan.

It was agreed that Phase 1 would involve defining the conceptual and policy framework, focusing on investigating natural gas supply and demand dynamics.

The second phase would involve master planning for the sector, which would focus on mapping of the strategic location of natural gas-based industries or projects and the development of the master plan and investment blueprint.

The study report unpacked the drivers for a regional gas market, analysed the enabling regulatory frameworks, and assessed the natural gas supply and demand situation in the region as well as the regional gas infrastructure development outlook.

This was with the view of developing a SADC gas industry and establishing gas-to-power energy plants for diversifying the generation energy mix in the region, which is currently dominated by coal and hydropower.

The meeting reviewed progress towards the transformation of the Regional Electricity Regulators Association of Southern Africa (RERA) into a regulatory authority.

The transformation of the association into an authority is expected to address operational challenges related to regulatory governance experienced by some SADC Member States.

The absence of a regional authority in energy governance as well as a regionally endorsed high-level set of principles and practices are major constraints to efforts to harmonize efforts among SADC Member States regarding energy regulation.

Officially launched in September 2002, RERA is currently a formal association of electricity regulators which provides a platform for cooperation between independent electricity regulators within the SADC region. However, it does not have powers to set legally binding rules.

Its membership is open to all electricity regulatory bodies in SADC. Currently, all SADC Member States, except Union of Comoros and DRC have energy electricity regulators.

However, of the 14 Member States with energy regulators, only 11 are members of RERA. Seychelles, Madagascar and Mauritius are not yet members of RERA.

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