DIREC TIONS IN DE VELOPMENT

Infrastructure

Africa’s Power Infrastructure
Investment, Integration, Efficiency
Anton Eberhard Orvika Rosnes Maria Shkaratan Haakon Vennemo

Africa’s Power Infrastructure

Africa’s Power Infrastructure
Investment, Integration, Efficiency
Anton Eberhard Orvika Rosnes Maria Shkaratan Haakon Vennemo Vivien Foster and Cecilia Briceño-Garmendia, Series Editors

© 2011 The International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved 1 2 3 4 14 13 12 11 This volume is a product of the staff of the International Bank for Reconstruction and Development/The World Bank. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgement on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. ISBN: 978-0-8213-8455-8 eISBN: 978-0-8213-8652-1 DOI: 10.1596/978-0-8213-8455-8 Library of Congress Cataloging-in-Publication Data Africa’s power infrastructure : investment, integration, efficiency / Anton Eberhard ... [et al.]. p. cm. Includes bibliographical references. ISBN 978-0-8213-8455-8 — ISBN 978-0-8213-8652-1 (electronic) 1. Rural electrification—Government policy—Africa, Sub-Saharan. 2. Energy policy—Social aspects—Africa, Sub-Saharan. 3. Capital investments—Africa, Sub-Saharan. I. Eberhard, Anton A. HD9688.S832.A37 2011 333.793'20967—dc22 2011002973 Cover photograph: Arne Hoel/The World Bank Cover design: Naylor Design

Contents

About the AICD Series Foreword Acknowledgments Abbreviations Chapter 1 Africa Unplugged The Region’s Underdeveloped Energy Resources The Lag in Installed Generation Capacity Stagnant and Inequitable Access to Electricity Services Unreliable Electricity Supply The Prevalence of Backup Generators Increasing Use of Leased Emergency Power A Power Crisis Exacerbated by Drought, Conflict, and High Oil Prices High Power Prices That Generally Do Not Cover Costs Deficient Power Infrastructure Constrains Social and Economic Development Notes References

xvii xix xxi xxvii 1 1 2 5 7 7 10 12 12 16 19 19
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vi Contents Chapter 2 The Promise of Regional Power Trade Uneven Distribution and Poor Economies of Scale Despite Power Pools. Low Regional Power Trade The Potential Benefits of Expanded Regional Power Trading What Regional Patterns of Trade Would Emerge? Water Resources Management and Hydropower Development Who Gains Most from Power Trade? How Will Less Hydropower Development Influence Trade Flows? What Are the Environmental Impacts of Trading Power? Technology Choices and the Clean Development Mechanism How Might Climate Change Affect Power Investment Patterns? Meeting the Challenges of Regional Integration of Infrastructure Conclusion Note Bibliography Investment Requirements Modeling Investment Needs Estimating Supply Needs Overall Cost Requirements The SAPP The EAPP/Nile Basin WAPP CAPP Notes Reference Strengthening Sector Reform and Planning Power Sector Reform in Sub-Saharan Africa Private Management Contracts: Winning the Battle. Sector Performance The Search for Effective Hybrid Markets 23 24 26 28 31 33 33 38 39 39 40 40 50 50 50 53 54 55 58 64 67 70 74 77 78 79 80 85 87 88 Chapter 3 Chapter 4 . Losing the War Sector Reform.

despite Many Agencies and Funds Inequitable Access to Electricity Affordability of Electricity—Subsidizing the Well-Off Policy Challenges for Accelerating Service Expansion References Recommitting to the Reform of State-Owned Enterprises Hidden Costs in Underperforming State-Owned Enterprises Driving Down Operational Inefficiencies and Hidden Costs Effect of Better Governance on Performance of State-Owned Utilities Making State-Owned Enterprises More Effective Conclusion References Closing Africa’s Power Funding Gap Existing Spending in the Power Sector How Much More Can Be Done within the Existing Resource Envelope? Increasing Cost Recovery On Budget Spending: Raising Capital Budget Execution Improving Utility Performance Savings from Efficiency-Oriented Reforms Annual Funding Gap How Much Additional Finance Can Be Raised? Costs of Capital from Different Sources 94 100 101 103 104 105 110 112 119 129 Chapter 6 133 134 135 136 137 147 148 149 151 157 158 160 161 162 164 166 178 Chapter 7 .Contents vii The Possible Need to Redesign Regulatory Institutions Notes Bibliography Chapter 5 Widening Connectivity and Reducing Inequality Low Electricity Connection Rates Mixed Progress.

2 The Difficulties in Forging Political Consensus: The Case of Westcor The West African Power Pool (WAPP) and New Investment Difficulties in Setting Priorities in SAPP Definitions Kenya’s Success with Private Sector Participation in Power Côte d’Ivoire’s Independent Power Projects Survive Civil War Power Sector Planning Dilemmas in South Africa Ghana’s Electrification Program Residential Electricity Tariff Structures in Sub-Saharan Africa 42 45 46 61 83 84 90 106 116 .3 5.1 4.1 4.2 4.1 5.3 3.viii Contents The Most Promising Ways to Increase Funds What Else Can Be Done? Taking More Time Lowering Costs through Regional Integration The Way Forward Note References Appendix 1 Appendix 2 Appendix 3 Appendix 4 Appendix 5 Appendix 6 Africa Unplugged The Promise of Regional Power Trade Investment Requirements Strengthening Sector Reform and Planning Widening Connectivity and Reducing Inequality Recommitting to the Reform of State-Owned Enterprises Closing Africa’s Power Funding Gap 180 180 180 181 182 183 183 187 199 213 239 267 291 299 305 Appendix 7 Index Boxes 2.2 2.1 2.

2005 Savings Generated by Regional Power Trade among Major Importers under Trade Expansion Scenario Cross-Border Power Trading in Africa in Trade Expansion Scenario (TWh in 2015) Overall Power Spending by Country in Each Region Prevalence of Power Sector Reform in 24 AICD Countries 3 4 5 1.1 1.7 1.1 4.3 6.8 1. 2005 Average Residential Electricity Prices in Sub-Saharan Africa and Other Regions. 2005 Electricity Exports and Imports in Sub-Saharan Africa.Contents ix 5.1 6.5 3.11 1.2 1.4 2.1 2. 1990–2005 Per Capita Electricity Consumption and GDP in Selected Countries of Sub-Saharan Africa and World Regions. 1980–2005 Power Generation Capacity in Sub-Saharan Africa by Country. 2005 Average Cost of Grid and Backup Power in Sub-Saharan Africa Average Power Sector Revenue Compared with Costs Contribution of Infrastructure to Total Factor Productivity (TFP) of Firms Profile of Power Generation Capacity in Sub-Saharan Africa Disaggregated Operating Costs for Power Systems in Sub-Saharan Africa. 2006 Economic Cost of Power Outages as Share of GDP. Days per Year. 2007–08 Generator Ownership by Firm Size Own Generation as Share of Total Installed Capacity by Subregion.5 1.3 7.1 6 8 9 9 10 13 13 14 17 25 26 27 30 34 63 81 .6 1. 2004 Power Outages.3 2.4 Power Generation Capacity by Region. 2006 Household Electrification Rate in World Regions.10 1.9 1.1 Rural Electrification in Mali Kenya’s Success in Driving Down Hidden Costs Botswana’s Success with a State-Owned Power Utility The Combination of Governance Reforms That Improved Eskom’s Performance Introducing a Country Typology 127 138 139 142 152 Figures 1.2 2.12 2.3 1.2 6.

3 6.1 6.5 5.3 5.1 Effect of Management Contracts on Performance in the Power Sector in Sub-Saharan Africa Power Sector Performance in Countries with and without Regulation Coexistence of Various Regulatory Options Choice of Regulatory Model Based on the Country Context Patterns of Electricity Service Coverage in Sub-Saharan Africa Electrification Rates in the Countries of Sub-Saharan Africa.4 5.6 5. Coverage of Modern Infrastructure Services Is below 10 Percent Infrastructure Services Absorb More of Household Budgets as Incomes Rise About 40 Percent of Households Connected Do Not Pay Subsistence Consumption Priced at Cost Recovery Levels Ranges from $2 to $8 Electricity Subsidies Do Not Reach the Poor Subsidy Needed to Maintain Affordability of Electricity Prepayment Metering Potential Rural Access: Distribution of Population by Distance from Substation Overall Magnitude of Utility Inefficiencies as a Percentage of Revenue Effect of Utility Inefficiency on Electrification and Suppressed Demand Impact of Reform on Hidden Costs in the Power Sector in Sub-Saharan Africa Incidence of Good-Governance Characteristics among State-Owned Utilities Effect of Governance on Utility Performance in State-Owned Power Utilities Power Spending from All Sources as a Percentage of GDP 88 95 99 100 104 107 108 109 111 113 114 115 117 118 123 126 135 136 137 140 141 155 .x Contents 4.4 4.12 6.3 4.11 5.8 5. Funds. Latest Year Available Rural Electrification Agencies.2 6.4 6.1 5.9 5.2 4.10 5.2 5.5 7.5 5.7 5. and Rates in Sub-Saharan Africa Countries’ Rural Electrification Rates by Percentage of Urban Population For the Poorest 40 Percent of Households.

Sub-Saharan Africa Average Potential Efficiency Gains from Different Sources Power Infrastructure Funding Gap Overview of Private Investment to African Power Infrastructure Costs of Capital by Funding Source Spreading Investment over Time 158 159 163 165 172 179 181 Tables 1.2 2.7 3. 2005–15 11 28 31 32 36 56 56 57 59 60 62 64 65 68 69 71 72 74 75 .2 3.Contents xi 7. 2015 Overnight Investment Costs in SAPP.9 3. Social. 2005–15 Required Spending for the Power Sector in Africa. 2005–15 Generation Capacity and Capacity Mix in EAPP/Nile Basin.4 7.5 3.4 3. 2005–15 Generation Capacity and Capacity Mix in CAPP.3 2.3 7.1 3.8 3.2 7. 2005–15 Estimated Cost of Meeting Power Needs of Sub-Saharan Africa under Two Trade Scenarios Generation Capacity and Capacity Mix in SAPP.1 2. 2015 Generation Capacity and Capacity Mix in WAPP. 2015 Overnight Investment Costs in WAPP.6 7. 2015 Overnight Investment Costs in CAPP.3 3.13 3.14 Overview of Emergency Power Generation in Sub-Saharan Africa (Up to 2007) Regional Trade in Electricity.10 3.1 2. 2005 Top Six Power Exporting Countries in Trade Expansion Scenario Power Exports by Region in Trade Expansion Scenario Long-Term Marginal Costs of Power under Trade Expansion and Trade Stagnation Blackout Data for Selected Countries Projected Market.4 3.12 3.7 7.11 3. and Total Net Electricity Demand in Four African Regions Projected Generation Capacity in Sub-Saharan Africa in 2015 in Various Scenarios New Household Connections to Meet National Electrification Targets.6 3. 2015 Overnight Investment Costs in the EAPP/Nile Basin.8 Sources of Financing for Power Sector Capital Investment Power Prices and Costs.5 7.

2 A1.9 7.1 7. Short-Term.5 A1.2 5.2 7.1 A1.5 7.3 A1.6 7. by Financing Source Power Sector Spending in Sub-Saharan Africa. by Economic Use.1 4.11 7.8 7.2 5.12 A1.3 7. 1995–2004 Financial Instruments for Locally Sourced Infrastructure Financing Outstanding Financing for Power Infrastructure. Leased Generation Distribution of Installed Electrical Generating Capacity between Network and Private Sector Self-Generation Effect of Own Generation on Marginal Cost of Electricity 82 93 111 112 124 142 151 154 160 161 162 164 167 174 175 176 177 178 188 190 192 193 193 195 .3 6.4 A1. 2006 Syndicated Loan Transactions for Power Sector in 2006 Details of Corporate Equity Issues by Power Sector Companies by End of 2006 Details of Corporate Bonds Issued by Telecom Operators by End of 2006 National Power System Characteristics Electricity Production and Consumption Outages and Own Generation: Statistics from the Enterprise Survey Emergency.xii Contents 4.7 7. Annualized Flows Annual Budgetary Flows to Power Sector Average Budget Variation Ratios for Capital Spending Potential Gains from Higher Operational Efficiency Annual Power Funding Gap Net Change in Central Government Budgets.6 Overview of Public-Private Transactions in the Power Sector in Sub-Saharan Africa Common Questions in Hybrid Power Markets and Their Policy Solutions Proportion of Infrastructure Electricity Coverage Gap in Urban Africa Attributable to Demand and Supply Factors Monthly Household Budget Potential Targeting Performance of Electricity Connection Subsidies under Various Scenarios Governance Reforms to Improve State-Owned Utility Performance Sectoral Composition of Investment.1 5.10 7.4 7.1 7.

Access. Constant Access Rates. Trade Expansion A3.2 Projected Long-Run Marginal Cost in 10 Years under Alternative Trading Scenarios A2. Trade Expansion A3.5 Estimated Annualized 10-Year Spending Needs to Meet Infrastructure Requirements under Alternative Trading Scenarios A3.5 Total Electricity Demand A3. Projected Average Annual Growth Rate A3.4 Target Access to Electricity.7a Annualized Costs of Capacity Expansion. National Targets for Access Rates.3 Target Access to Electricity.7 Losses Due to Outages (“Lost Load”) for Firms with and without Their Own Generator A1. Trade Expansion A4. Trade Expansion A3. by Number of New Connections A3. 35% Access Rates.7c Annualized Costs of Capacity Expansion.1 Institutional Indicators: Summary Scores by Group of Indicators 195 196 200 202 206 208 210 214 215 218 220 223 224 226 228 230 232 234 236 239 .2 Suppressed Demand for Power A3. by Percentage of Population A3. Trade Expansion A3. National Targets for Access Rates.1 Power Demand.8 Operating Costs of Own Generation A2.8 Annualized Costs of Capacity Expansion under Different Access Rate Scenarios.7d Annualized Costs of Capacity Expansion.1 Projected Trading Patterns in 10 Years under Alternative Trading Scenarios.6 Generating Capacity in 2015 under Various Trade.3 Projected Composition of Generation Portfolio in 10 Years under Alternative Trading Scenarios A2. by Region A2.7e Annualized Costs of Capacity Expansion. and Growth Scenarios A3.7b Annualized Costs of Capacity Expansion. Low Growth Scenario.4 Projected Physical Infrastructure Requirements in 10 Years under Alternative Trading Scenarios A2. Trade Stagnation A3.Contents xiii A1.

Latest Available Year. 2007 Private Participation: Greenfield Projects. Management and Lease Contracts.7 A5.2a A4.5 A5.8 A5. Coverage of Electricity.6a A4. and Rural Electrification Agency and Fund Share of Urban Households Whose Utility Bill Would Exceed 5 Percent of the Monthly Household Budget at Various Prices Overall Targeting Performance (Ω) of Utility Subsidies Potential Targeting Performance of Connection Subsidies under Different Subsidy Scenarios Value of Cost Recovery Bill at Consumption of 50 kWh/Month 240 242 244 245 246 248 250 251 252 255 259 261 268 270 272 274 276 278 280 282 283 284 285 .5b A4. Hook-Up.10 A5.xiv Contents A4. 1990–2006 Access to Electricity Adjusted Access. 1990–2006 Private Participation: Concessions. 2007 Institutional Indicators: Description of SOE Governance Indicators Institutional Indicators: SOE Governance. Divestitures.9 A5.2b A4.3 A5.4 A5.11 Institutional Indicators: Description of Reform Indicators Institutional Indicators: Reform.7 A4. 2007 Institutional Indicators: Description of Regulation Sector-Specific Indicators Institutional Indicators: Regulation Sector Specific. 2007 Institutional Indicators: Description of Reform Sector–Specific Indicators Institutional Indicators: Reform Sector Specific.6 A5.2 A5.1 A5. Urban Areas Electricity Expenditure and Its Share in Household Budget Kerosene Expenditure and Its Share in Household Budget Liquefied Propane Gasoline (LPG) Expenditure and Its Share in Household Budget Wood/Charcoal Expenditure and Its Share in Household Budget Rural Access to Power. 2007 Institutional Indicators: Description of Regulation Indicators Institutional Indicators: Regulation.5a A4.3a A4.4a A4.6b A4.3b A4. Off-Grid Power.4b A4.8 A5.

4 A7.15 A5.14 A5.2 A6.3 A6.16 A6.12 A5.3 Residential Tariff Schedules Social Tariff Schedules Industrial Tariff Schedules Commercial Tariff Schedules Value and Volume of Sales to Residential Customers as Percentage of Total Sales Electricity Sector Tariffs and Costs Residential Effective Tariffs at Different Consumption Level Electricity Sector Efficiency Hidden Costs of Power Utilities as a Percentage of GDP and Utility Revenue Existing Spending on the Power Sector Size and Composition of the Power Sector Funding Gap Sources of Potential Efficiency Gains.2 A7. by Component 286 287 288 289 290 292 294 295 296 300 302 303 .1 A6.Contents xv A5.13 A5.1 A7.

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information and communication technologies. irrigation. population. Burkina Faso. Cameroon. Cape Verde. Chad. Côte d’Ivoire. including energy.About the AICD This study is a product of the Africa Infrastructure Country Diagnostic (AICD). The first phase of the AICD focused on 24 countries that together account for 85 percent of the gross domestic product. The most significant findings were synthesized in a flagship report titled Africa’s Infrastructure: A Time for Transformation. transport. and water and sanitation. spending needs. and sector performance in each of the main infrastructure sectors. making it possible to monitor the results achieved from donor support. xvii . The countries were Benin. a project designed to expand the world’s knowledge of physical infrastructure in Africa.infrastructureafrica . All the underlying data and models are available to the public through a Web portal (http://www. The AICD provides a baseline against which future improvements in infrastructure services can be measured. The project produced a series of original reports on public expenditure. and infrastructure aid flows of Sub-Saharan Africa. which flagged the importance of scaling up donor finance to infrastructure in support of Africa’s development. It also offers a more solid empirical foundation for prioritizing investments and designing policy reforms in the infrastructure sectors in Africa.org). Democratic Republic of Congo. allowing users to download customized data reports and perform various simulation exercises. The AICD was based on an unprecedented effort to collect detailed economic and technical data on the infrastructure sectors in Africa. The AICD was commissioned by the Infrastructure Consortium for Africa following the 2005 G-8 Summit at Gleneagles.

A group of distinguished peer reviewers from policy-making and academic circles in Africa and beyond reviewed all of the major outputs of the study to ensure the technical quality of the work. Ghana. Under a second phase of the project. the main focus was on the 48 countries south of the Sahara that face the most severe infrastructure challenges. the term “Africa” is used throughout this report as a shorthand for “Sub-Saharan Africa. Madagascar. Nigeria. and major infrastructure donors. Uganda. Namibia. Some components of the study also covered North African countries to provide a broader point of reference. Tanzania. Lesotho. longterm responsibility for ongoing collection and analysis of African infrastructure statistics was transferred to the African Development Bank under the Africa Infrastructure Knowledge Program (AIKP). the New Partnership for Africa’s Development (NEPAD). Kenya. Following the completion of the AICD project. Consistent with the genesis of the project. Unless otherwise stated. and Germany’s Kreditanstalt für Wiederaufbau (KfW). Senegal. and Zambia. The Sub-Saharan Africa Transport Policy Program and the Water and Sanitation Program provided technical support on data collection and analysis pertaining to their respective sectors. A second wave of data collection of the infrastructure indicators analyzed in this volume was initiated in 2011. the African Development Bank. the Public Private Infrastructure Advisory Facility.” The AICD was implemented by the World Bank on behalf of a steering committee that represents the African Union. Niger.xviii About the AICD Ethiopia. . South Africa. Mozambique. Malawi. Sudan. Rwanda. therefore. Agence Française de Développement. Africa’s regional economic communities. the European Commission. Financing for the AICD was provided by a multidonor trust fund to which the main contributors were the Department for International Development (United Kingdom). coverage was expanded to include the remaining countries on the African continent.

They cover all aspects of the AICD project relevant to each sector.Series Foreword The Africa Infrastructure Country Diagnostic (AICD) has produced continent-wide analysis of many aspects of Africa’s infrastructure challenge. Hence the idea of producing four technical monographs. Although the flagship report served a valuable role in highlighting the main findings of the project. transport. power. It attracted widespread media coverage feeding directly into discussions at the 2009 African Union Commission Heads of State Summit on Infrastructure. including sector performance. Meant for policy makers. it could not do full justice to the richness of the data collected and technical analysis undertaken. and water—as companions to the flagship report. and estimates of the need for additional spending on xix . There was clearly a need to make this more detailed material available to a wider audience of infrastructure practitioners. The main findings were synthesized in a flagship report titled Africa’s Infrastructure: A Time for Transformation. These technical volumes are intended as reference books on each of the infrastructure sectors. published in November 2009. gaps in financing and efficiency. such as this one. to provide detailed results on each of the major infrastructure sectors—information and communication technologies (ICT). that report necessarily focused on the high-level conclusions.

and infrastructure practitioners. Each volume also comes with a detailed data appendix—providing easy access to all the relevant infrastructure indicators at the country level—which is a resource in and of itself.infrastructureafrica. Yet another set of reports provides an overall picture of the state of regional integration of infrastructure networks for each of the major regional economic communities of Sub-Saharan Africa. http://www. the AICD has produced a series of country reports that weave together all the findings relevant to one particular country to provide an integral picture of the infrastructure situation at the national level. or through the World Bank’s Policy Research Working Paper series. With the completion of this full range of analytical products. All of these papers are available through the project web portal. development partners. and maintenance. In addition to these sector volumes. we hope to place the findings of the AICD effort at the fingertips of all interested policy makers.org. operations.xx Series Foreword investment. Vivien Foster and Cecilia Briceño-Garmendia .

Daniel Camos. xxi . Anton. Washington. “Underpowered: The State of the Power Sector in Sub-Saharan Africa. Africa Infrastructure Country Diagnostic. DC. Key contributors to the book on a chapter-by-chapter basis were as follows. Vivien Foster. Maria Shkaratan. Key Source Document Eberhard. World Bank. and Haakon Vennemo. Vivien Foster. Cecilia Briceño-Garmendia. Cecilia Briceño-Garmendia. under the overall guidance of series editors Vivien Foster and Cecilia Briceño-Garmendia. Maria Shkaratan. Fatimata Ouedraogo. 2008. Fatimata Ouedraogo.” Background Paper 6. Daniel Camos. Orvika Rosnes. Chapter 1 Contributors Anton Eberhard.Acknowledgments This book was co-authored by Anton Eberhard. and Maria Shkaratan. under the auspices of the Africa Infrastructure Country Diagnostic (AICD). The book draws upon a number of background papers that were prepared by World Bank staff and consultants.

” Working Paper 23. Vivien Foster. 2008. World Bank. Maria Shkaratan. “Underpowered: The State of the Power Sector in Sub-Saharan Africa. Daniel Camos. Africa Infrastructure Country Diagnostic. “Powering Up: Costing Power Infrastructure Spending Needs in Sub-Saharan Africa. Maria Shkaratan. Haakon Vennemo. Cecilia Briceño-Garmendia. and Maria Shkaratan. Fatimata Ouedraogo. World Bank. Vivien Foster. Washington. Anton Eberhard. John Nellis. Africa Infrastructure Country Diagnostic. Anton. 2008. Key Source Documents Rosnes. and John Nellis. Vivien Foster. Key Source Document Rosnes. DC. DC. Fatimata Ouedraogo. Africa Infrastructure Country Diagnostic. Haakon Vennemo. World Bank.” Background Paper 6. Key Source Documents Eberhard. Vivien Foster. “Evaluating Africa’s Experience with Institutional Reform for the Infrastructure Sectors. 2010. Chapter 4 Contributors Anton Eberhard.” Background Paper 6. Africa Infrastructure Country Diagnostic. Anton. World Bank. Chapter 3 Contributors Orvika Rosnes. 2008.” Background Paper 5. “Powering Up: Costing Power Infrastructure Spending Needs in Sub-Saharan Africa. 2008. Washington. Daniel Camos. Orvika. Africa Infrastructure Country Diagnostic. Maria. Washington. DC. Orvika. “Underpowered: The State of the Power Sector in Sub-Saharan Africa. Daniel Camos. . DC. DC. Maria Vagliasindi. and Maria Shkaratan. Washington. and Haakon Vennemo. Cecilia Briceño-Garmendia. Cecilia Briceño-Garmendia. Vagliasindi. World Bank.” Background Paper 5. Fatimata Ouedraogo. Anton Eberhard. Eberhard. Washington. and Haakon Vennemo. Daniel Camos. Fatimata Ouedraogo. Cecilia Briceño-Garmendia.xxii Acknowledgments Chapter 2 Contributors Orvika Rosnes.

Karlis Smits. “Access. Hellal Uddin. Irving. Vivien Foster. Maria Shkaratan. “Underpowered: The State of the Power Sector in Sub-Saharan Africa. and Maria Shkaratan. World Bank. “Local Sources of Financing for Infrastructure in Africa: A Cross-Country Analysis. DC. Cecilia. Chapter 7 Contributors Maria Shkaratan. Sudeshna. Africa Infrastructure Country Diagnostic. Quentin Wodon. Vivien Foster. 2008. Washington.” Background Paper 6. DC. Africa Infrastructure Country Diagnostic. and Vivien Foster. Briceño-Garmendia.” Background Paper 2. Washington. World Bank. Washington. World Bank. Nataliya Pushak. Cecilia Briceño-Garmendia. 2010. 2008. Astrid Manroth. DC. Amadou Diallo. Cecilia Briceño-Garmendia. Quentin Wodon.” Policy Research Working Paper 4878. Fatimata Ouedraogo. Affordability and Alternatives: Modern Infrastructure Services in SubSaharan Africa. 2009. and Astrid Manroth. Amadou Diallo. World Bank. Key Source Document Banerjee. DC. Taras Pushak. Washington. Sudeshna Ghosh Banerjee. “Financing Public Infrastructure in Sub-Saharan Africa: Patterns and Emerging Issues.” Background Paper 15. Washington. Fatimata Ouedraogo.Acknowledgments xxiii Chapter 5 Contributors Anton Eberhard. Clarence Tsimpo. World Bank. Taras Pushak. Vivien Foster. Chapter 6 Contributors Anton Eberhard. Africa Infrastructure Country Diagnostic. Daniel Camos. Cecilia. Key Source Documents Briceño-Garmendia. Maria Shkaratan. and Maria Shkaratan. “Power Tariffs: Caught Between Cost Recovery and Affordability. Jacqueline.” Working Paper 8. Anton. DC. Clarence Tsimpo. 2008. Vivien Foster. Karlis Smits. Cecilia Briceño-Garmendia. Key Source Documents Eberhard. Jacqueline Irving. Africa Infrastructure Country Diagnostic. . Daniel Camos. Hellal Uddin. and Vivien Foster. Cecilia Briceño-Garmendia.

Canada) Jean-Marie Fansi (Pricewaterhouse Coopers) Adam Vickers. S. provided constructive and thoughtful comments.S. Roland Amehou Yemarshet Yemane Fares Khoury (Etude Economique Conseil. Country Angola Benin Botswana Burkina Faso Cameroon Cape Verde Central African Republic Chad Congo. Côte d’Ivoire Ethiopia Gabon Ghana Kenya Lesotho Madagascar Mali Local consultants or other partners Fares Khoury (Etude Economique Conseil. Canada) Afua Sarkodie Ayub Osman (Pricewaterhouse Coopers) Peter Ramsden Gerald Razafinjato Ibrahim Mamame . Fanny Missfeldt-Ringius. Rep. and Fabrice Karl Bertholet. None of this research would have been possible without the generous collaboration of government officials in the key sector institutions of each country. which formed the basis of this book.xxiv Acknowledgments Substantial sections of this book were derived from the above-listed background papers. Dem. Prasad Tallapragada V. Gabriel Goddard. Kyran O’Sullivan. as well as from the text of the AICD flagship report. The external peer reviewer for this volume. notably Rob Mills. Vijay Iyer. Reto Thoenen. edited by Vivien Foster and Cecilia Briceño-Garmendia. David Donaldson. Rep. Africa’s Infrastructure: A Time of Transformation. as well as the arduous work of local consultants who assembled this information in a standardized format. Mark Davis. The comprehensive editorial effort of Steven Kennedy is much appreciated. Clemencia Torres. Philippe Benoit. Dana Rysankova.. The work benefited from widespread peer review from colleagues within the World Bank.N. Congo. Nelson Mokgethi Maxime Kabore Kenneth Simo (Pricewaterhouse Coopers) Sandro de Brito Ibrahim Mamame Kenneth Simo (Pricewaterhouse Coopers) Henri Kabeya Mantsie Rufin-Willy Jean-Phillipe Gogua. Storm van Leeuwen contributed significantly to the technical analysis and policy recommendations for the AICD power sector work. Key contributors to the book on a country-by-country basis were as follows. Rob Mills. Luiz Maurer. Lucio Monari. and Tjaarda P.

Nelson Mokgethi Adson Cheyo (Pricewaterhouse Coopers) Adson Cheyo (Pricewaterhouse Coopers) Mainza Milimo. Natasha Chansa (Pricewaterhouse Coopers) Eliah Tafangombe . Nelson Mokgethi with the support of Alusine Kamara in SL Statistical Office Alioune Fall Peter Ramsden Adam Vickers.Acknowledgments xxv Country Mauritania Mauritius Mozambique Namibia Niger Nigeria Rwanda Sierra Leone Senegal South Africa Swaziland Tanzania Uganda Zambia Zimbabwe Local consultants or other partners Fares Khoury (Etude Economique Conseil. Canada) Boopen Seetanah Manuel Ruas Peter Ramsden Oumar Abdou Moulaye Abiodun Momodu Charles Uramutse Adam Vickers.

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AICD AIM AMADER AU BPC BRVM capex CAPP CDM CER CIE CIPREL CREST DBT EAPP ECOWAS EDF Africa Infrastructure Country Diagnostic alternative investment market Agence Malienne pour le Developpement de l’Energie Domestique et d’Electrification Rurale African Union Botswana Power Corporation Bourse Régionale des Valeurs Mobilières capital expenditures Central African Power Pool Clean Development Mechanism certified emission reduction credit Compagnie Ivoirienne d’Electricité Compagnie Ivoirienne de Production d’Electricité Commercial Reorientation of the Electricity Sector Toolkit decreasing block tariff East African Power Pool Economic Community of West African States Electricité de France xxvii .S. dollars unless noted.Abbreviations All currency denominations are in U.

xxviii Abbreviations EDM ESMAP FR GDP GW HFO IBT ICT IDA IFRS IPP KenGen KPLC kVA kWh LRMC LuSE MW NEPAD NES NGO O&M ODA OECD opex PPA PPI PPIAF Q REA REF RERA ROR SADC SAPP SHEP SOE SSA T&D Electricidade de Moçambique Energy Sector Management Assistance Program fixed rate gross domestic product gigawatt heavy fuel oil increasing block tariff information and communication technology International Development Association International Financial Reporting Standards independent power project Kenya Electricity Generating Company Kenya Power and Lighting Company kilovolt-ampere kilowatt-hour long-run marginal cost Lusaka Stock Exchange megawatt New Partnership for Africa’s Development National Electrification Scheme nongovernmental organization operations and maintenance official development assistance Organisation for Economic Co-operation and Development operational expenses power-purchase agreement private participation in infrastructure Public-Private Infrastructure Advisory Facility quintile rural electrification agency rural electrification fund Regional Electricity Regulators Association rate of return Southern African Development Community Southern African Power Pool Self-Help Electrification Programme state-owned enterprise Sub-Saharan Africa transmission and distribution .

Abbreviations xxix tcf TFP TOU TPA TW TWh UCLF USO WAPP Wh WSS trillion cubic feet total factor productivity time of use third-party access terawatt terawatt-hour unplanned capability loss factor universal service obligation West African Power Pool watt-hour water supply and sanitation .

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but the supply of electrical power is unreliable throughout the continent. Mozambique. The situation is so dire that countries increasingly rely on emergency power to cope with electricity shortages. Ethiopia. The average price of power in Sub-Saharan Africa is double that in other developing regions. Some of the largest operating hydropower installations are in 1 . and Nigeria (in descending order by capacity). The region’s power generation capacity is lower than that of any other world region. Household connections to the power grid are scarcer in Sub-Saharan Africa than in any other developing region. Madagascar.CHAPTER 1 Africa Unplugged Sub-Saharan Africa is in the midst of a power crisis. Much of that is located in the Democratic Republic of Congo. about one-tenth of the world’s total—remains unexploited. and capacity growth has stagnated compared with other developing regions. Cameroon. Angola.1 The weakness of the power sector has constrained economic growth and development in the region. Gabon. The Region’s Underdeveloped Energy Resources An estimated 93 percent of Africa’s economically viable hydropower potential—or 937 terawatt-hours (TWh) per year.

There are a few exceptions: proven oil reserves are concentrated in Nigeria (36 billion barrels). particularly solar and wind. Africa’s natural uranium reserves account for approximately one-fifth of the world’s total and are located mainly in South Africa. most countries rely on imports. Significant natural gas discoveries have also been made in Mozambique. Malawi. and Uganda also rely heavily on hydroelectricity. Zambia. as much as 25 percent of installed capacity is not operational for various reasons. and Kenya has several geothermal plants in operation. Actual oil production follows a similar pattern (BP 2007).2 tcf. Burundi. and 2. respectively. Namibia. Excluding South Africa. and actual gas production is an even smaller proportion of the world’s total production (BP 2007). and Côte d’Ivoire.0 tcf. A number of smaller deposits have been found in Gabon. Chad.4 billion barrels). including aging plants and lack of maintenance. Small amounts have been discovered in Tanzania. EIA 2007). only a few use local petroleum and gas resources. the total falls to 28 GW. The continent has abundant renewable energy resources. Geothermal power looks economically attractive in the Rift Valley. Angola (9 billion barrels). although these are often costly to develop and mostly provide off-grid power in remote areas where alternatives such as diesel generators are expensive. Gas reserves in Sub-Saharan Africa make up less than 4 percent of the world’s total proven reserves. and Sudan (6.2 Overall. the Democratic Republic of Congo. Although most Sub-Saharan African countries have some thermal power stations. Rwanda. Moreover.2 trillion cubic feet [tcf]). and Angola. and Niger.2 Africa’s Power Infrastructure the Democratic Republic of Congo. Cameroon. Instead. Equatorial Guinea. Nigeria. The Lag in Installed Generation Capacity The combined power generation capacity of the 48 countries of SubSaharan Africa is 68 gigawatts (GW)—no more than that of Spain. the Republic of Congo. equivalent to the installed capacity of Argentina (data for 2005. Namibia. Natural gas reserves are concentrated primarily in Nigeria (5. and Ghana.800 megawatt (MW) Koeberg station in South Africa. with reserves of 4. 2. Mozambique. Lesotho. Sub-Saharan Africa accounts for less than 5 percent of global oil reserves.5 tcf. Only one nuclear power plant has been built on the continent: the 1. The installed capacity per capita in Sub-Saharan Africa (excluding South Africa) is a little more than one-third of South Asia’s (the two regions were equal in 1980) and about one-tenth of that of Latin America .

and coal is therefore the dominant fuel in the region. the power plants of Sub-Saharan Africa generated 339 TWh of electricity—approximately 2 percent of the world’s total. This has widened the gap between Sub-Saharan Africa and the rest of the developing world. even compared with other country groups in the same income bracket (Yepes.211 MW). South Africa has a total generation capacity of about 40. 1980–2005 1980 1985 1990 1995 2000 2005 East Asia and Pacific Middle East and North Africa Sub-Saharan Africa Source: Derived by authors from AICD 2008 and EIA 2007.Africa Unplugged 3 (figure 1.2).443 MW). Zimbabwe (2. and Foster 2008).1 600 500 MW / million people 400 300 200 100 0 Power Generation Capacity by Region.099 MW). with growth rates of barely half those found in other developing regions. Coal-fired plants generate 93 percent of South Africa’s electricity. Capacity is much lower in other countries: Mali (280 MW). Ghana (1.778 MW). Most of Figure 1. Kenya (1. South African power plants generated about 71 percent of that total (Eberhard and others 2008). In 2004. A handful of countries have intermediate capacity: the Democratic Republic of Congo (2. with less than 4.084 MW)—although not all of their capacity is operational.000 MW. Zambia (1. Pierce. South Africa’s power infrastructure stands in stark contrast to that of the region as a whole. Burkina Faso (180 MW). Rwanda (31 MW). Note: MW = megawatt. Latin America and the Caribbean South Asia Sub-Saharan Africa without South Africa . Nigeria comes in second. and Côte d’Ivoire (1.000 MW. despite its much larger population of 140 million. and Togo (21 MW) (EIA 2007). Per capita generation capacity also varies widely among countries (figure 1. Capacity growth has been largely stagnant during the past three decades.490 MW). With a population of 47 million people.1).

MW = megawatt.2 Power Generation Capacity in Sub-Saharan Africa by Country. South Africa’s figure is 855 MW per million people. 2006 Gabon Zimbabwe Cape Verde Zambia Namibia Mozambique Swaziland Botswana Ghana São Tomé and Príncipe Côte d’Ivoire Angola Cameroon Senegal Nigeria Congo. Rep. Eritrea Guinea Sudan Equatorial Guinea Mali Tanzania Malawi Gambia. .4 Africa’s Power Infrastructure Figure 1. Lesotho Kenya Congo. Note: By comparison. Rep. Dem. The Burkina Faso Togo Guinea-Bissau Madagascar Ethiopia Uganda Sierra Leone Central African Republic Comoros Niger Somalia Benin Rwanda Burundi Chad 0 20 40 60 80 100 120 140 160 180 200 MW per million people Source: EIA 2007.

6 percent of the global total.Africa Unplugged 5 the region’s coal reserves are located in the south.3 100 90 80 % households with access 70 60 50 40 30 20 10 0 Household Electrification Rate in World Regions. 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 Europe and Central Asia South Asia IDA total 19 90 91 19 19 92 19 .3 Coal reserves in Africa constitute just 5. Less than 30 percent of the population of Sub-Saharan Africa has access to electricity. Power generation in Sub-Saharan Africa is much different outside of South Africa. with the remainder divided almost evenly between oil and natural gas generators. Few other countries in the region rely on coal. Hydropower accounts for close to 70 percent of electricity generation (and about 50 percent of installed generation capacity). but Botswana and Zimbabwe are among the exceptions. 1990–2005 East Asia and Pacific Latin America and the Caribbean Sub-Saharan Africa Source: Eberhard and others 2008.3). Note: IDA = International Development Association. mainly in South Africa. fewer than 40 percent of Figure 1. Stagnant and Inequitable Access to Electricity Services Sub-Saharan Africa has low rates of electrification. compared with about 65 percent in South Asia and more than 90 percent in East Asia (figure 1. which has the fifth-largest reserves globally and ranks fifth in annual global production (BP 2007). Based on current trends.

6 3. Kenya Ghana Cameroon Côte d’Ivoire Sub-Saharan Africa Senegal South Asia Zambia Middle East & North Africa East Asia & Pacific Latin America & Caribbean Europe & Central Asia South Africa . All countries in Sub-Saharan Africa (except South Africa) lag far behind other regions in per capita power consumption and gross domestic product (GDP). It has the lowest per capita emissions among all world regions and has some of the lowest emissions in terms of GDP output. and that figure falls to 124 kWh if South Africa is excluded (Eberhard and others 2008). Per capita consumption of electricity averages just 457 kilowatt-hour (kWh) annually in the region. 2004 3.4 shows the relationship between electricity consumption and economic development in world regions.2 3. Note: GDP = gross domestic product.6 Africa’s Power Infrastructure African countries will achieve universal access to electricity by 2050 (Banerjee and others 2008).6 2. the annual average per capita consumption in the developing world is 1.0 2.4 3.155 KWh and 10.4 2. Figure 1.8 log (electricity consumption per capita) Source: Eberhard and others 2008. the power sector in Sub-Saharan Africa accounts for less than 1 percent of global carbon dioxide emissions.0 3. By contrast.0 2. Sub-Saharan Africa is the only world region in which per capita consumption of electricity is falling.6 3.2 2.4 log (GDP per capita) 3.2 2. Sub-Saharan Africa is an insignificant contributor to carbon dioxide emissions and climate change. Excluding South Africa.198 kWh.4 2.8 3.2 3. Figure 1.4 Per Capita Electricity Consumption and GDP in Selected Countries of Sub-Saharan Africa and World Regions.8 3.0 2. Because of its low electricity consumption.8 2.6 2. If South Africa is excluded.

Based on outage data from the World Bank’s Investment Climate Assessments (ICA). The share is much lower in southern Africa. and 144 days. firms identify power as a major constraint to doing business and are more likely to own backup generators. which result in significant losses. In the Democratic Republic of Congo.7). the number of transmission interruptions. Yet most African countries still do not systematically collect or report these data. firms in Senegal. for example. Tanzania. The size. In those Africa . Frequent power outages result in forgone sales and damaged equipment for businesses. Equatorial Guinea. These losses are equivalent to 6 percent of turnover on average for firms in the formal sector and as much as 16 percent of turnover for informal sector enterprises that lack a backup generator (Foster and Steinbuks 2008). The Prevalence of Backup Generators In countries that report more than 60 days of power outages per year. Larger firms are more likely to own backup generators (figure 1.6). but it is likely to increase as the region experiences further power outages. The overall economic costs of power outages are substantial. respectively (figure 1. 63.5 and the estimates of the value of lost load or unserved energy. Conventional measures of the reliability of power systems include the unplanned capability loss factor (UCLF)4 of generators. utility load-shedding data. Own generation constitutes a significant proportion of total installed power capacity in the region—as much as 19 percent in West Africa (figure 1.1 percent of GDP. The value of in-house generating capacity in SubSaharan Africa as a percentage of gross fixed capital formation ranges from 2 percent to as high as 35 percent (Foster and Steinbuks 2008). indicate that most African enterprises experience frequent outages. and indexes of the frequency and duration of interruptions. South Africa—which for many years maintained surplus capacity—recently experienced acute power shortages. power outages in the countries in Sub-Saharan Africa constitute an average of 2. In 2007. sector. which provide a useful alternative measure of the reliability of grid-supplied power. The World Bank enterprise surveys. and Burundi experienced power outages for an average of 45.Africa Unplugged 7 Unreliable Electricity Supply Power supply in Sub-Saharan Africa is notoriously unreliable. and Mauritania. and export orientation of the firm also influence the likelihood of the firm having its own generation facilities (hereafter own generation). backup generators account for half of total installed capacity.5).

Chad Equatorial Guinea Gabon Zambia Congo Cape Verde Cameroon Lesotho Benin Botswana Namibia Mali Burkina Faso South Africa Mauritania Niger 0 20 40 60 80 100 120 140 160 180 200 Source: Enterprise Survey database. Days per Year. Burundi Guinea Angola Kenya Madagascar Gambia. Rep. Dem.5 Power Outages. 2007–08 Congo. . World Bank 2008.8 Africa’s Power Infrastructure Figure 1. The Guinea-Bissau Ethiopia Rwanda Sudan Malawi Uganda Tanzania Ghana Mozambique Zimbabwe Mauritius Côte d’Ivoire Nigeria Sierra Leone Togo Senegal Central African Rep.

So ut he rn Ea st Af ric a ca a M em or pl e th oy an ee s em pl 10– oy 50 ee s . Figure 1.8). the costs ranged from less than 1 percent of GDP in countries such as Niger to 4 percent of GDP and higher in countries such as Tanzania (figure 1. 2006 20 18 % of installed capacity 16 14 12 10 8 6 4 2 0 25 ric fri fri Af ra lA tA Ce nt W es Source: Foster and Steinbuks 2008. 0 Infrastructure Country Diagnostic (AICD) countries for which we were able to make our own calculations (about half of the countries).7 Own Generation as Share of Total Installed Capacity by Subregion.Africa Unplugged 9 Figure 1.6 Generator Ownership by Firm Size 60 % of generator owners 50 40 30 20 10 0 w e em r th pl an oy 10 ee s em 5 pl 0–1 oy 00 ee s em 10 pl 0–2 oy 50 ee s ca Fe firm size Source: Foster and Steinbuks 2008.

after which the private operator removes the power plant. the Tanzanian prime minister and energy minister resigned in February 2008 after a parliamentary investigation revealed that lucrative contracts for emergency power had been placed with a company with no power generation experience. Note: GDP = gross domestic product.8 7 6 percentage of GDP 5 4 3 2 1 0 Economic Cost of Power Outages as Share of GDP. The country leases the equipment for a few months to a few years. Countries experiencing pressing power shortages can enter into short-term leases with specialized operators who install new capacity (typically in shipping containers) within a few weeks. The cost of So M ut h in pe M al aw i ge ga as ni ni . Despite the high cost of leased power. Emergency power is relatively expensive—typically around $0. which is much faster than a traditional power-generation project. Temporary emergency generators now account for an estimated 750 MW of capacity in Sub-Saharan Africa. and it is a better option than individual backup generators.20–0. 2005 o ca r n n rd e ny a a r l ric a Af da oo as Be aF Ve ne Ni za an Ke er ad ag Ug Ta n Se m Ca Ca rk Bu Source: Briceño-Garmendia 2008 and authors’ calculations of own-generation costs based on Foster and Steinbuks 2008. In some countries. For example.6 Procurement has also been tainted by corruption and bribery.30 per kWh. a multi-megawatt emergency power installation can be large enough to achieve economies of scale. the cost of emergency power is a considerable percentage of GDP.1). and they constitute a significant proportion of total capacity in some countries.10 Africa’s Power Infrastructure Figure 1. Increasing Use of Leased Emergency Power The increasing use of grid-connected emergency power in the region reflects the gravity of the power crisis (table 1.

04 0.7 Percent of total installed capacity Overview of Emergency Power Generation in Sub-Saharan Africa (Up to 2007) Estimated annual cost (% GDP) 1.5 100 20. Note: Leases for emergency power are generally short term.3 35.84 1. Therefore.45 1. — = Not available.25 0.7 48.45 2.90 1.4 8.Table 1. installed capacities in individual countries change from year to year.1 Emergency capacity (MW) 150 14 80 100 50 15 40 20 180 100 18.96 3.4 41.1 3.79 1. 11 .37 4.4 16.4 5.29 Country Date Contract duration (years) Angola Gabon Ghana Kenya Madagascar Rwanda Senegal Sierra Leone Tanzania Uganda 2006 — 2007 2006 2004 2005 2005 2007 2006 2006 2 — 1 1 Several years 2 2 1 2 2 Source: Eberhard and others 2008.

which is about twice the tariff in other parts of the developing world.10). Overall.9).12 per kWh. A Power Crisis Exacerbated by Drought. and Somalia. political conflict and economic contraction have undermined the power system as investment resources have dried up. war has seriously damaged power infrastructure in the Central African Republic. Sierra Leone.12 Africa’s Power Infrastructure emergency power also far exceeds the value of lost load. Countries with significant hydropower installations in affected catchments—Burundi. Rwanda. Kenya. Drought has seriously reduced the power available to hydro-dependent countries in western and eastern Africa. The average power tariff in Sub-Saharan Africa is $0. are experiencing a power crisis induced by rapid growth in electricity demand coupled with prolonged underinvestment in new generation capacity. Countries that have entered into these expensive. Tanzania. the Democratic Republic of Congo. Pierce. In Zimbabwe. external factors have exacerbated the already precarious power situation in Sub-Saharan Africa. High international oil prices have also put enormous pressure on all of the oilimporting countries of Sub-Saharan Africa. and Foster 2008). Both of those countries have experienced blackouts in recent years. Madagascar. Power from backup generators is much more expensive than grid power (figure 1. and Zimbabwe have maintained low prices that are well below costs (Sadelec 2006). High Power Prices That Generally Do Not Cover Costs Power in Sub-Saharan Africa is generally expensive by international standards (figure 1. Other countries. and High Oil Prices In recent years. Liberia. Conflict. South Africa. short-term contracts understand the potentially greater economic cost of power shortages. There are exceptions: Angola. Malawi. countries in conflict perform worse in the development of infrastructure than do countries at peace (Yepes. Furthermore. which increases the weighted average cost of power to consumers above the figures quoted previously. especially those dependent on diesel and heavy fuel oil for their power-generation needs. Zambia. Ghana. and almost as high as in the high-income countries of the Organisation for Economic Co-operation and Development. and Uganda—have had to switch to expensive diesel power. such as Nigeria and South Africa. .

2005 0. Note: OECD = Organisation for Economic Co-operation and Development.4 0.5 $/kWh 0. ga Ni l ge r M al i So ut h Eu ro pe grid power La tin unit cost of self-generation OE CD .6 0.7 0.0 Average Cost of Grid and Backup Power in Sub-Saharan Africa Co Source: Briceño-Garmendia 2008 and authors’ calculations of own-generation costs based on Foster and Steinbuks 2008. A ng Z fric o.04 0. oz io am pi bi a q M ue al a Ni wi ge Ug ria an Cô Les da te oth d’ o Iv Na oire m ib Gh ia an a Bo Cha ts d w Ta an nz a an M Ke ia ad n ag ya as Bu car rk Rw ina Ca an m d Ca er a pe oo Ve n rd Co B e ng eni o.16 $/kWh 0. Figure 1.1 0.10 0.08 0.3 0.9 Average Residential Electricity Prices in Sub-Saharan Africa and Other Regions.2 0.00 th Am e er Ca ic a Su ribb an ea d bSa n ha ra n Af ric a ia sia c Pa cif i As lA ut h So an ia As an d Ce nt ra d st Ea Source: Briceño-Garmendia and Shkaratan 2010.8 0. n R Se ep ne . am a De b m ia .20 0.12 0.R M Eth ep.Africa Unplugged 13 Figure 1.

5 average effective tariff ($/kWh) 0.1 0.11).15 per kWh tend to set prices somewhat below this level. 0.4 0. Against average operating cost ($ per kWh) 0.11 Average Power Sector Revenue Compared with Costs a. Figure 1.14 Africa’s Power Infrastructure Although electricity in the region is relatively expensive.3 0.5 average revenue ($/kWh) 0.1 0.5 .3 0.2 0.4 0.2 0.3 0.2 0.1 0. Against average incremental cost ($ per kWh) 0.4 average operating cost ($ per kWh) b. Countries with average operating costs in excess of $0. The close correlation between average effective tariff7 and average cost across the countries of Sub-Saharan Africa (as high as 58 percent) indicates that for the most part they price their power with the intent of breaking even.2 0.5 0.4 average incremental cost ($ per kWh) Source: Briceño-Garmendia and Shkaratan 2010.3 0. most SubSaharan Africa countries are doing little more than covering their average operating costs (figure 1.1 0.

Thus. They do not make use of the distribution network and hence do not create such high costs for the power utility. Nevertheless. revenues would cover costs only if tariffs were fully collected and if the power system moved toward a more efficient production structure. which makes the relevance of the discounts dubious. reflects the fact that high-voltage customers take their supply directly from the transmission grid.and medium-voltage customers does cover costs. . First. operators collect far less per unit of electricity from customers than they charge. power development has been done using smallscale and inefficient generation technologies. The limited evidence available suggests that the average revenue raised from low. it is unclear whether these lower tariffs for large. It is more difficult to assess whether tariffs for commercial and industrial customers are high enough to cover costs. Growing demand has begun to absorb excess capacity. This relative price differential. Numerous countries have historically charged highly discounted tariffs of just a few cents per kWh to large-scale industrial and mining customers. whereas high-voltage customers tend to pay less. Thus. Ghana. tariffs charged to commercial and industrial consumers are important sources of revenue for the utility. These arrangements were intended to secure base-load demand to support the development of large-scale power projects that went beyond the immediate demands of the country. which is not uncommon around the world.Africa Unplugged 15 A simple comparison of average revenues and average operating costs misrepresents the prospects for long-term cost recovery for two reasons. for many countries in Sub-Saharan Africa. which could be superseded as countries become able to trade power with one another.8 Households account for the majority of power utility sales in many African countries but only about 50 percent of sales revenue because of poor collections and underpricing. high-voltage customers are actually covering costs. a comparison of the average tariff that operators charge (but do not necessarily collect) with the average incremental cost of generating power provides a more accurate picture of the situation. owing to major failures in utility revenue collection. however. thereby harnessing larger-scale and more efficient forms of production. in some countries. Second. such as the aluminum smelting industry in Cameroon. This is because historically. In the past the state or donors have subsidized the share of capital investment that tariffs could not cover. Regardless. the average total cost associated with power developments in the past is actually higher than the average incremental cost of producing new power in the future. and South Africa and the mining industry in Zambia.

infrastructure accounts for 30–60 percent of the effect of investment climate on firm productivity—well ahead of most other factors. better access to electricity lowers costs for businesses and increases investment. Calderón finds that if African countries were to catch up with the regional leader. would bring gains of 2. Venkataraman 1990). Drought. Escribano.2 percent per year. Catching up with the East Asian median country. conflict.12). In summary. chronic power problems—including insufficient investment in generation capacity and networks. and system expansion)—have created a power crisis in Sub-Saharan Africa. especially through their detrimental effect on firm productivity. and high costs and prices (which further hinders maintenance. Brodman 1982. In several countries— including Côte d’Ivoire. their per capita economic growth rates would increase by an average of 2. driving economic growth (Reinikka and Svensson 1999). Electricity also improves literacy and primary school completion rates because students can read and study when there is no natural light (Barnes 1988.16 Africa’s Power Infrastructure Deficient Power Infrastructure Constrains Social and Economic Development Based on panel data analysis. the power sector accounted for 40–80 percent of the infrastructure effect (figure 1. poor reliability. Deficient power infrastructure and power outages dampen economic growth. Better provision of electricity improves health care because vaccines and medications can be safely stored in hospitals and food can be preserved at home (Jimenez and Olson 1998). Similarly. Using enterprise survey data collected through the World Bank’s Investment Climate Assessments. Foley 1990. . refurbishment. the Democratic Republic of Congo. The overall deficiency of the power sector has constrained economic and social development. the Republic of Korea. Sub-Saharan Africa has generally lagged behind other regions of the world in terms of infrastructure and power sector investment and performance. Mauritius. This book investigates how these problems and challenges might be addressed. stagnant or declining connectivity. including red tape and corruption. and Peña (2008) find that in most countries of Sub-Saharan Africa.6 percent per year. Infrastructure is also an important input into human development. in terms of infrastructure stock and quality. Although the extent of the problems and challenges differs across regions and countries. Guasch. Calderón (2008) provides a comprehensive assessment of the impact of infrastructure stocks on growth in SubSaharan Africa between the early 1990s and the early 2000s. and high oil prices have exacerbated the crisis. and Senegal—the effect would be even greater. In half of the countries analyzed.

12 of Firms Contribution of Infrastructure to Total Factor Productivity (TFP) a. Overall contribution of infrastructure Namibia Botswana Swaziland Mauritius South Africa Kenya Madagascar Tanzania Niger Burkina Faso Mauritania Cameroon Mali Eritrea Zambia Ethiopia Uganda Senegal Benin Malawi 0 20 40 60 80 percentage contribution to TFP infrastructure others 100 (continued next page) .Africa Unplugged 17 Figure 1.

12 (continued) b. Guasch. Note: ICT = information and communication technology. .18 Africa’s Power Infrastructure Figure 1. Infrastructure contribution by sector Eritrea Ethiopia Botswana Swaziland Namibia Mali Uganda Zambia Kenya Senegal Madagascar South Africa Malawi Mauritania Niger Burkina Faso Cameroon Benin Tanzania Mauritius 0% 20% 40% 60% 80% percentage contribution to TFP electricity transportation water customs clearance ICT 100% Source: Escribano. and Peña 2008.

5. Taras Pushak.” Background Paper 2.Africa Unplugged 19 Notes 1. 6. References AICD (Africa Infrastructure Country Diagnostic). Emergency power is a term for expensive. Banerjee. buying fuel. Mozambique is planning investments in coal power stations. Affordability and Alternatives: Modern Infrastructure Services in Sub-Saharan Africa. even with the advent of emergency generators. Sierra Leone has a population of 6 million but only 28. Quentin Wodon. The country relies heavily on an overpriced emergency diesel-based power supply contract for its electricity needs. DC: World Bank. As a result. Washington. Mauritius. short-term leases for generation capacity. Thus. For example. 2. 2008. Load shedding occurs when the power grid is unable to meet demand. Niger. 3. in Sierra Leone. excluding the time that the plant was shut down for routine.000 electricity customers. 2008. planned maintenance. and Tanzania also have small coal-generation plants. and customers’ supply is cut off. 7. The UCLF is the percentage of time over a year that the generation plant is not producing power. Washington. Hellal Uddin. Small deposits were also recently discovered in countries such as Ghana and Uganda. Spending on emergency power can displace expenditures on social services such as health and education. Namibia. and Vivien Foster. the government of Sierra Leone has not been able to meet the minimum targets for expenditures in health and education that are required for continued budget support by the European Union and other donors. One of the casualties of insufficient revenue is maintenance expenditure. many former customers in the eastern districts remain without power. 4. Amadou Diallo. AICD Power Sector Database. Clarence Tsimpo. World Bank. “Access. or purchasing spares (often resorting to cannibalizing parts from functional equipment). Sudeshna. DC. Utility managers often have to choose between paying salaries. . Africa Infrastructure Country Diagnostic. For example. 8. Effective tariffs are prices per kWh at typical monthly consumption levels calculated using tariff schedules applicable to typical customers within each customer group. the overhead distribution network for the low-income eastern part of Freetown has been cannibalized for spare parts to repair the network of the high-income western part of the town.

J. Washington. Washington. and Jakob Svensson. DC. Daniel Camos. DC. Brodman. “Power Tariffs: Caught between Cost Recovery and Affordability. Reinikka.” Working Paper 9. Alvaro. Boulder: Westview Press. South Africa.gov/docs/legosti/fy98/25233. Washington. DC.eia. Resources for the Future. Washington. “Infrastructure and Growth in Africa. “Paying the Price for Unreliable Power Supplies: In-House Generation of Electricity by Firms in Africa. Ritva. 1990. Collier and R. Reinikka. London: Panos Institute. and Maria Shkaratan.. DC: World Bank.” In Power Systems in Asia and the Pacific. 1988.gov/emeu/international. 1998. “Rural Electrification in the Asian and Pacific Region. “Quasi-Fiscal Costs: A Never Ending Concern. and Jevgenijs Steinbuks. DC. Africa Infrastructure Country Diagnostic. Venkataraman. 2008. Antonio. Cecilia Briceño-Garmendia. World Bank. Janice.” Sadelec. 2007. Douglas F. Ltd. London: Beacon Press. Electric Power for Rural Growth: How Electricity Affects Rural Life in Developing Countries.” Working Paper 3. 1990. Golden. and Maria Shkaratan.” Discussion Paper D-73L. Department of Energy. ed. Luis Guasch. Johannesburg. “Electricity Prices in Southern and East Africa (Including Selected Performance Indicators). 2008. P. and Government in Uganda’s Recovery. DC. Krishnaswami. http://www.” In Assessing an African Success: Farms. “Confronting Competition: Firms’ Investment Response and Constraints in Uganda. Briceño-Garmendia. EIA (Energy Information Administration). Ltd. Eberhard.” U. http://www . 1982.” Background Paper 6. Escribano. Foster.” Working Paper 20. Washington. “Impact of Infrastructure Constraints on Firm Productivity in Africa.” Internal Note. “International Energy Data. Calderón. 2006. World Bank. Cecilia. Briceño-Garmendia. Gerald. “Underpowered: The State of the Power Sector in Sub-Saharan Africa. Foley. CO. “Renewable Energy for Rural Health Clinics.20 Africa’s Power Infrastructure Barnes. Africa Infrastructure Country Diagnostic. Firms. with Emphasis on Rural . Africa Infrastructure Country Diagnostic. and Jorge Peña. 2007. and Ken Olson. Statistical Review of Energy. DC. World Bank.doe. Fatimata Ouedraogo.nrel. World Bank. Africa Infrastructure Country Diagnostic.pdf. Sadelec. Anton. Jimenez. DC.S. World Bank. Africa Infrastructure Country Diagnostic.” Working Paper 2. 2008. 207–34. 2008. 2008. Cesar. BP (British Petroleum). “Rural Electrification and the Commercial Sector in Indonesia. Electricity for Rural People. Washington. Vivien Foster. World Bank. Cecilia. 1999. Washington.” National Renewable Energy Laboratory. Washington. Vivien. 2010.

Washington.Africa Unplugged 21 Electrification. DC: World Bank. DC. and Vivien Foster.” Policy Research Working Paper 4912. 2008. Economic and Social Commission for Asia and the Pacific. Enterprise Survey Database. World Bank. . Washington. 2008. Yepes. Tito. “Making Sense of Africa’s Infrastructure Endowment: A Benchmarking Approach. New York: United Nations. ed. Justin Pierce. ———. 310–32.

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23 . Regional trade would allow countries to substitute hydropower for thermal power. a few large exporting countries would serve many power importers. In particular. East. West. Ethiopia. and Central Africa. Under regional power trade. Our modeling indicates that the annual costs of power system operation and development in the region could fall by $2. Integrating physical infrastructure is therefore necessary to promote regional economic integration and enable industries to reach economies of scale.CHAPTER 2 The Promise of Regional Power Trade Africa consists of many small isolated economies. and Guinea would emerge as the major hydropower exporters. regional integration would allow countries to form regional power pools. The Democratic Republic of Congo. The greater share of hydropower associated with regional trade would also reduce annual carbon dioxide emissions by 70 million tons. The returns to cross-border transmission investment could be 20–30 percent in most power pools and can be as high as 120 percent in the Southern African Power Pool (SAPP). which would lead to a substantial reduction in operating costs—despite the requisite investments in infrastructure and cross-border transmission capacity. which can already be found at varying stages of maturity in Southern.7 billion.

countries that lack adequate domestic energy resources could replace this capacity with the much cheaper hydro and gas resources of neighboring countries. A comparison of operating costs disaggregated into four categories reveals the negative consequences of technically inefficient power .01 to $0. At the same time. For example. Both are poor countries with a gross domestic product (GDP) of less than $30 billion. Expensive diesel or heavy fuel oil generators account for about one-third of installed capacity in Eastern and Western Africa (figure 2.07 per kilowatt-hour (kWh).24 Africa’s Power Infrastructure Yet the magnitude of the investments needed to develop their exporting potential is daunting relative to the size of their economies. The small market size of most countries in Sub-Saharan Africa contributes to severely inflated generation costs. For example. as many as 16 African countries would benefit (from a purely economic standpoint) from the opportunity to reduce costs by importing more than 50 percent of their power. In many cases.1b). and 11 countries have national power systems of less than 100 MW. Uneven Distribution and Poor Economies of Scale Only a small fraction of the ample hydropower and thermal energy resources in Sub-Saharan Africa have been developed into power generation capacity. 61 percent of regional hydropower potential is found in just two countries: the Democratic Republic of Congo and Ethiopia.1a). The largest beneficiaries of regional trade would be smaller nations that lack domestic hydropower resources. Savings for those countries range from $0. For these countries. contingent on neighboring countries developing sufficient surplus power to export. The uneven distribution of resources in the region has forced many countries to adopt technically inefficient forms of generation powered by expensive imported fuels to serve their small domestic power markets. Few countries in the region have sufficient demand to justify power plants large enough to exploit economies of scale (figure 2. Some of the region’s least expensive sources of power are far from major centers of demand in countries too poor to develop them. 33 out of 48 countries in Sub-Saharan Africa have national power systems that produce and consume less than 500 megawatts (MW). the cost savings generated by regional trade would repay the requisite investment in cross-border transmission in less than a year.

WAPP = West African Power Pool. MW = megawatt. EAPP = East African Power Pool. SAPP = Southern African Power Pool.The Promise of Regional Power Trade 25 Figure 2. Generation technology as percentage of installed capacity 100 % of installed capacity 80 60 40 20 0 CAPP hydro EAPP SAPP WAPP power system gas coal overall other diesel b.1 Profile of Power Generation Capacity in Sub-Saharan Africa a. the average operating cost of predominantly diesel-based power systems can be as high as $0. Similarly. operating costs in countries with small national power systems (less than 200 MW installed capacity) are much higher than in countries with large national power systems (more than 500 MW .2). generation (figure 2.14 per kWh—almost twice the cost of predominantly hydro-based systems. Note: CAPP = Central African Power Pool. For example. Scale of production as percentage of installed capacity 100 % of installed capacity 80 60 40 20 0 CAPP EAPP <10 MW 100–500 MW SAPP WAPP power system >500 MW overall 10–100 MW Source: Eberhard and others 2008.

regional power trade has many potential benefits. kWh = kilowatt hour. 2005 0.05 0. By scale of power system 0.00 0. Island states face a further cost penalty attributable to the high cost of transporting fossil fuels.10 0.20 0.05 0.00 $/kWh a.20 0. EAPP = East African Power Pool.05 0. four regional power pools in Sub-Saharan Africa have already been established to promote mutually beneficial cross-border trade in electricity. The theory was that enlarging the market for electric power beyond national borders would stimulate capacity investment in countries with a comparative m ed iu lo la nd -lo co isl ra ll . WAPP = West African Power Pool.2 Disaggregated Operating Costs for Power Systems in Sub-Saharan Africa.00 ds pr ed om ov e l ta as ov er al l W cit cit cit an er pa pa pa ov ck ed y y y al l ca ca ca gh m w hi Source: Eberhard and others 2008.15 0. Despite Power Pools. In fact.15 0.15 $/kWh $/kWh 0.20 0. Note: CAPP = Central African Power Pool.20 d.15 $/kWh 0. By geographical characteristics 0.10 0. SAPP = Southern African Power Pool.00 b. By technology in a hy ntl dr y o in a di ntl es y el PP PP AP P PP ll CA SA EA ra ov e ed om pr c. installed capacity).26 Africa’s Power Infrastructure Figure 2. By regional power pool 0.10 0. Low Regional Power Trade Based on the economic geography of the power sector in Sub-Saharan Africa.05 0.10 0.

Rep. Rep.3).3 Electricity Exports and Imports in Sub-Saharan Africa. power trade among countries in the region is still very limited. Arab Rep. 2005 Uganda Côte d’Ivoire Congo. The pools would also smooth temporary irregularities in supply and demand in national markets. Most trade occurs within the SAPP. 12 14 16 imports . Despite high hopes for the power pools. Dem. largely between South Africa and Mozambique (figure 2. Note: TWh = terawatt-hour. Zambia Togo Benin Morocco Ghana Swaziland Namibia Botswana Zimbabwe Mozambique South Africa 0 2 4 6 8 10 Terawatt-hour (TWh) exports Source: Eberhard and others 2008. Lesotho Kenya Burundi Rwanda Tanzania Egypt. Furthermore.The Promise of Regional Power Trade 27 advantage in generation. Niger Algeria Congo. Figure 2.

No country that relies on oil or diesel generators exports electricity. WAPP also aims to achieve closer regulatory integration in West Africa. SAPP has also developed a short-term energy market that enables daily Internet trading. in which countries make no further investment in cross-border Table 2.97 28.04 Percentage electricity traded 0. Botswana. EAPP = East African Power Pool.7 5.1). Yet despite numerous successes in promoting regional power trade.7 CAPP EAPP SAPP WAPP 8.1 A few countries are highly dependent on imports.1 Regional Trade in Electricity. Namibia.63 Exports (TWh) 1. natural gas (Côte d’Ivoire and Nigeria).28 Africa’s Power Infrastructure South Africa reexports much of the electricity it imports from Mozambique back to that country’s aluminum smelter.1 2. They examine two basic scenarios: trade stagnation. SAPP = Southern African Power Pool. and Niger imports from Nigeria. .28 22.80 0. or coal (South Africa). and Rwanda depend on imports from the Democratic Republic of Congo. Mozambique. overall trading volume in the region remains small (table 2. Power trade in East Africa is negligible.63 Source: Eberhard and others 2008. The region’s major exporters generate electricity from hydropower (the Democratic Republic of Congo. Benin. and Swaziland all depend on imports from South Africa. In SAPP. The Potential Benefits of Expanded Regional Power Trading Rosnes and Vennemo (2008) performed detailed simulations to estimate the potential benefits of regional power trade in Sub-Saharan Africa over a 10-year period from 2005 to 2015. Togo. The countries of Central Africa engage in minimal power trading. although Burundi.01 0.80 13. 2005 Consumption (TWh) Imports (TWh) 0. WAPP = West African Power Pool. the Republic of Congo.1 9.71 1. the second-largest pool).41 233.18 25. In the West African Power Pool (WAPP. and Zambia). Note: CAPP = Central African Power Pool. The region’s power pools have made progress in developing standard agreements that will allow trade to grow. and Burkina Faso import power from Côte d’Ivoire and Ghana.74 2. Detailed regulatory guidelines to facilitate cross-border transactions have been prepared by the Regional Electricity Regulators Association (RERA). TWh = terawatt-hour.

Because trade reduces the use of thermal power plants. clearly benefit from regional power trade. compared with 5–6 percent in SAPP and East African/Nile Basin Power Pool (EAPP/Nile Basin) and only 3.4). To explore the sensitivity of the analysis to changes in assumptions. which generally struggle to raise sufficient investment capital to meet their infrastructure needs. the gains from trade in EAPP/Nile Basin increase from about $1 billion to almost $3 billion. annualized power system costs in the trading regions would be 3–10 percent lower. In SAPP. Developing countries.4 percent in WAPP (although savings in some countries in this region are much higher).7 billion. Under the trade expansion scenario. The savings would be the largest in the Central African Power Pool (CAPP) at 10.3 percent of the annual cost and 7. For example.2 percent of the annual cost when operation of existing equipment is excluded.02–0.The Promise of Regional Power Trade 29 transmission. the gains from trade increase as fuel prices rise and more hydropower projects become profitable. including fuel. The 10 largest power importing countries in the trade expansion scenario would reduce their long-run marginal cost (LRMC) of power by $0. The overall return on trade expansion in Sub-Saharan Africa is 27 percent. power trade generates operating cost savings equivalent to 1 percent of regional GDP in EAPP/Nile Basin and almost 0. which generates further savings. for a lower—but still generous—return of 20–33 percent. which is considerable compared with investments of similar magnitude. which requires more investment in the short run but substantially reduces operating costs. The annual savings for Sub-Saharan Africa total an estimated $2. countries must make additional capital investments to facilitate cross-border transmission.07 per kWh (figure 2. the additional investment is recouped over three to four years. Power trade also reduces the investment requirements of importing countries. In the other three regions. Smaller countries that rely on thermal . several subscenarios were considered beyond the base case. for example. The simulation involved various assumptions regarding input prices. which is equivalent to 5. In the trade expansion scenario. and trade expansion.5 percent of regional GDP in CAPP.3 percent. The savings come largely from substituting hydro for thermal plants. For example. The resulting operating cost savings can therefore be viewed as a substantial return on investment. in which trade occurs whenever the benefits outweigh the costs associated with system expansion. when the price of oil rises to $75 per barrel (instead of $46 per barrel in the base case). the additional investment is recouped in less than a year and yields a return of 167 percent.

reaping the full benefits of power trade will require a political willingness to depend heavily on power imports. cents per kWh 7 6 5 4 3 2 1 0 ge r An go la Ch ad Bu ru nd Se i ne ga l M C Eq ong ali ua o. but the size of the investments to realize these export volumes is daunting. each would need to invest more than $0. Liberia.01 per kWh. and Mozambique (table 2. Sudan. which would cost in ea . these countries are Democratic Republic of Congo.S. stand to gain the most.7 billion per year. Note: kWh = kilowatt hour. Based on a profit margin of $0. Guinea-Bissau. the net export revenue for the top three exporters would account for 2–6 percent of their respective GDP. In descending order of export potential.000 MW of interconnectors would need to be developed to allow power to flow freely across national borders. Nevertheless. As many as 16 African countries would benefit economically by importing more than 50 percent of their power needs. Some 22. Chad. Ethiopia. Niger. power.2). such as Burundi. Cameroon. The future of power trade depends on the health of the power sector in a handful of key exporting countries endowed with exceptionally large and low-cost hydropower resources. and Senegal. The first three account for 74 percent of the potential exports under trade expansion. Such investments are unlikely to be feasible without extensive cross-border financing arrangements that allow importing beneficiaries to make up-front capital contributions. to Re ria p lG .30 Africa’s Power Infrastructure Figure 2.4 Savings Generated by Regional Power Trade among Major Importers under Trade Expansion Scenario 8 savings in U. equivalent to more than 8 percent of GDP. Guinea. ui M ne oz am a bi Si er que ra Le on Le e so th Na o m So ib ia ut h Af ric a Ga bo n Ke ny a au iss er Lib ia -B Ni Gu Source: Derived from Rosnes and Vennemo 2008. To develop sufficient generation capacity for export.

South Africa continues to import large volumes of power. Rep.8 7. The EAPP/Nile Basin region experiences a similar shift in generation capacity. more than $500 million a year over the next decade.1 6.2 Top Six Power Exporting Countries in Trade Expansion Scenario Potential net exports (TWh per year) 51.5 2. For countries with the most to gain from power imports. Note: GDP = gross domestic product. Malawi. the hydropower share of the generation capacity portfolio in SAPP rises from 25 to 34 percent. Ethiopia Guinea Sudan Cameroon Mozambique Source: Derived from Rosnes and Vennemo 2008. Dem. Botswana.8 Required investment $million per year 749 1.4 0.3 17. TWh = terawatt-hour. for example.003 786 1.4 13. Ethiopia and Sudan.7 1.1 2.5).8 Country Congo.7 2.The Promise of Regional Power Trade 31 Table 2. Lesotho.3 and figure 2. Mozambique continues to be a significant exporter. Zambia.5 23. The share of hydropower rises from 28 to 48 percent of the generation capacity portfolio. rising demand would provide incentives for several countries to develop their significant hydropower potential. although imports still account for only 10 percent of domestic consumption. Hydropower from the Democratic Republic of Congo flows southward along three parallel routes through Angola. which partially displaces gas-fired power capacity in the Arab Republic of Egypt. In addition. and Mozambique (table 2. In the trade expansion scenario.0 5. What Regional Patterns of Trade Would Emerge? If regional power trade were allowed to expand. investments in cross-border transmission have exceptionally high rates of return and typically pay for themselves in less than a year. The return on investment in interconnectors is as high as 120 percent in SAPP and 20–30 percent for the other power pools. Countries such as Angola.2 0.9 Net revenue $million per year 519 263 174 131 68 59 % GDP 6.032 267 216 % GDP 8.8 5.3 0. and Namibia subsequently rely on imports to meet more than 50 percent of their power demand.9 26. the region’s . The Democratic Republic of Congo becomes the region’s major exporter of hydropower and exports more than three times its domestic consumption.

3 SAPP Power Exports by Region in Trade Expansion Scenario TWh 51. Mozambique Lesotho Malawi Zambia Zimbabwe Namibia Botswana Angola South Africa WAPP Guinea Nigeria Côte d’Ivoire Gambia. Exports exceed domestic consumption in both countries.5 –1.4 2.9 5.1 0. the share of hydropower in WAPP does not rise significantly. cost-effective.32 Africa’s Power Infrastructure Table 2.4 –1.7 0. Nevertheless.0 0. TWh = terawatt-hour. SAPP = Southern African Power Pool.3 –6.7 –1.6 –0.0 –0. Egypt and Kenya import significant volumes of power (between one-fifth and one-third).9 –1. Rep. but Burundi is the only country to become overwhelmingly dependent on imports (about 80 percent).9 –0.7 –2.7 –1. major power exporters. Under trade expansion. Note: CAPP = Central African Power Pool. TWh 26. send their power northward into Egypt (see figure 2.1 2. WAPP = West African Power Pool.3 –4. EAPP/Nile Basin = East African/Nile Basin Power Pool.8 –42. Arab Rep.2 –0.2 % Domestic demand –227 –13 –61 –22 –191 0 78 22 32 Congo.9 0.4 % Domestic demand –369 –33 68 56 1 17 2 93 65 10 EAPP/Nile basin Ethiopia Sudan Uganda Tanzania Rwanda Djibouti Burundi Kenya Egypt.0 –1.1 — –1. — = Not available.8 –4.5 –1.0 –36.1 –0. Dem.8 2.6 % Domestic demand –564 –3 –12 –19 7 55 45 60 48 5 30 86 89 79 52 CAPP Cameroon Central African Republic Equatorial Guinea Gabon Chad Congo. Rep.9 –0.5 –3.0 –0. larger-scale hydropower in .2 13.5).8 –3.4 1.9 –0.4 % Domestic demand –84 0 100 42 102 4 Source: Derived from Rosnes and Vennemo 2008. The Guinea-Bissau Mauritania Benin Sierra Leone Togo Burkina Faso Senegal Niger Liberia Mali Ghana TWh 17. TWh 6.9 –9.

import a considerable share of their consumption: Chad and Equatorial Guinea import all of their domestic consumption from Cameroon. Second. Who Gains Most from Power Trade? Trade is responsible for the substantial differences in the LRMC of power among power pools (table 2. Other important river basins also belong to several states. and Mauritania are also avoided—and are replaced by hydropower in Guinea. Cameroon emerges as the major power supplier in CAPP and exports about half of its production. Although the benefits of regional power trade are clear. development of hydropower resources will require an established legal and regulatory framework to facilitate international cooperation and multisectoral management. Therefore. in addition to some hydropower in the Republic of Congo. and the Senegal runs through four neighboring states. For example. the share of hydropower increases from 83 percent to 97 percent. The development of hydropower capacity therefore depends on the ability of the riparian countries to come to agreements based on joint long-term interests. which emerges as the region’s major exporter and exports more than 5 times its domestic consumption. and the Republic of Congo imports about one-third of its consumption and Gabon almost half. hydropower must compete for water resources with other sources of demand: household consumption. First. Gas-fired power plants in Ghana. eight share the Zambezi.4). Benin. Water Resources Management and Hydropower Development Water resource management for hydropower is challenging for at least two reasons. These are discussed in the remaining sections in this chapter. Togo. with the largest—the Nile basin—divided among 10 countries. Africa has 60 river basins that are shared by two or more countries. and flood and drought management. except the Central African Republic. The other countries in the region.The Promise of Regional Power Trade 33 Guinea replaces more dispersed hydropower projects in other countries throughout the region. irrigation. numerous challenges emerge. Hydropower capacity in Cameroon replaces the heavy fuel oil (HFO) –fired thermal capacity in the other countries. it often requires multinational efforts and joint decision making by several countries. hydrological regulation. starting with the location of dams. in the trade expansion . In CAPP. nine countries share the Niger. For example. Many rivers with hydropower potential are international.

5 (b) EGYPT. ARAB REP. Cross-Border Power Trading in Africa in Trade Expansion Scenario (TWh in 2015) 34 (a) .Figure 2.

(c) (d) Source: Rosnes and Vennemo 2008. Note: TWh = terawatt-hour. 35 .

SAPP Trade expansion Trade stagnation Trade stagnation 0.07 Angola Botswana Congo. Lesotho Malawi Mozambique Namibia South Africa Zambia Zimbabwe 0.06 0.01 0 0 –0.08 0.05 0.01 SAPP average 0.08 0.06 0.04 0 0 –0.13 0.12 0.02 –0.11 0.12* Long-Term Marginal Costs of Power under Trade Expansion and Trade Stagnation a.11 0. Arab Rep.11 Difference 0 0.06 0.05 0 0 0.09 0.07 0.36 Table 2.4 $/Kwh b.03 0.06 0.08 0.12 0.19* 0.09 .01 0 0.13 0. Ethiopia Kenya Rwanda Sudan Tanzania Uganda Trade expansion 0.07 0.16 0.01 0 0.10* 0.12 0.04 0. Rep.13 0.01 0.07 0.07 0.04 0.12 0.08 0.01 EAPP/Nile Basin average Burundi Djibouti Egypt.06 0.12 0.06 0. Dem.11 0.06 0.02 0.15 0.05 0.09 0.01 0. EAPP/Nile Basin Difference 0.04 0.12 0.

01 0 –0. 37 .04 0.01 0.03 0.10 0.30 0.06 0.43 0.01 Trade stagnation Difference Trade expansion Trade stagnation WAPP average Benin Burkina Faso Côte d’Ivoire Gambia.11 0.07 0.01 0 –0.09 0. WAPP = West African Power Pool.13 0.10 0.01 0.07 0. The Ghana Guinea Guinea-Bissau Liberia Mali Mauritania Niger Nigeria Senegal Sierra Leone Togo 0.15 0.01 0.25 0.25 0.19 0.28 0.14 0.26 0.01 0 0.07 0.18 0. WAPP d.05 0 0.14 0.15 0.07 0.08 0.06 0.19 0.10 0.07 0. kWh = kilowatt-hour.06 0.11 Source: Derived from Rosnes and Vennemo 2008.09 0.15 0.10 0.19 0.47 0. SAPP = Southern African Power Pool.08 0.02 –0.01 0 0.04 0.07 0.09 0.11 0.c.13 0. Note: CAPP = Central African Power Pool. CAPP Difference Trade expansion CAPP average Cameroon Central African Republic Chad 0.16 0.25 0.11 0. EAPP/Nile Basin = East African/Nile Basin Power Pool.

Other countries (such as Burundi. although trade tends to narrow the range. and Chad in CAPP. cheap hydropower from Guinea supplies much of the power in the WAPP region (although not in Nigeria). Perhaps the most striking examples are in WAPP.06–0. Countries in other regions also benefit from substantial savings by importing—up to $0. which is considerably lower than $0. In reality. How Will Less Hydropower Development Influence Trade Flows? In the trade expansion scenario. Therefore. in an alternative scenario. the SAPP and CAPP regions have an estimated average LRMC of $0. Overall savings can be large even for countries with lower unit cost differentials. and Niger each can save up to $0. Trade benefits two types of countries in particular. Those countries include Democratic Republic of Congo in SAPP. In this scenario. Liberia. new trade patterns emerge in the WAPP region. only three projects (totaling 375 MW) can be completed in Guinea within the next 10 years (compared with 4. respectively.04–0.18 per kWh for EAPP/Nile Basin and WAPP. Malawi. Mauritania and Sierra Leone also become net exporters. Burundi in EAPP/Nile Basin.07 per kWh by importing electricity in the trade expansion scenario.38 Africa’s Power Infrastructure scenario. such as South Africa. where Guinea-Bissau.300 MW in the trade expansion scenario). Realistically.07 per kWh. Guinea in WAPP. expanded trade benefits countries with very low domestic power costs by providing them with the opportunity to generate substantial export revenue. the parties will need to negotiate terms of trade that will determine the value of exports. and Cameroon in CAPP. however. generating savings for each kilowatt-hour that is imported. Power export revenue under trade expansion is an estimated 6 percent of GDP in Ethiopia and 9 percent of GDP in the Democratic Republic of Congo. Sierra Leone. Ethiopia in EAPP/Nile Basin. The LRMC varies widely among countries within each power pool. Total annualized . Second. Ghana. First. it may not be feasible to develop such a huge amount of hydropower in one country and over such a short period. Côte d’Ivoire emerges as the region’s major power exporter.12 per kWh and $0.05 in Angola in SAPP. trade allows countries with very high domestic power costs to import significantly cheaper electricity. and Togo) in the trade expansion scenarios move from being self-reliant to importing heavily. and Ghana increases domestic production considerably to reduce net imports.

Technology Choices and the Clean Development Mechanism The Clean Development Mechanism (CDM) allows industrialized countries that have made a commitment under the Kyoto protocol to reduce greenhouse gases to invest in projects that reduce emissions in developing countries. carbon dioxide emissions fall by 70 million tons.The Promise of Regional Power Trade 39 costs increase by about 3 percent—or just over $300 million—compared with the trade expansion scenario. respectively. yet carbon dioxide emissions still fall by 20 million tons. What Are the Environmental Impacts of Trading Power? Trade expansion offers potential environmental benefits. the existing thermal plants that are used have lower efficiency and higher variable costs than new hydropower capacity. Rosnes and Vennemo (2008) analyze the potential for CDM in the power sector in SAPP under the tradeexpansion scenario. In addition. Based on a CER price of $15 per ton of carbon dioxide. reducing annual carbon dioxide emissions by about 40 million tons. The International Energy Agency recently estimated that emissions from power and heat production in Africa are 360 million tons. which leads to a huge tradeoff between capital costs and variable costs: Although capital costs are $500 million lower (mainly due to lower generation investments). and emissions savings are correspondingly lower: 5. Under the trade expansion.4 TWh in the EAPP/Nile Basin region. The cost of certified emission reduction credits (CERs) associated with a given project is calculated by dividing the difference in cost by the resulting reduction in emissions. include greenhouse gas emissions from hydropower in the form of methane from dams. . Reduction in thermal capacity is smaller in WAPP and CAPP. Power production rises by 2. the CDM stimulates investments in the Democratic Republic of Congo. The CDM facilitates financing to cover the difference in cost between a polluting technology and a cleaner but more expensive alternative. Malawi. In the trade expansion scenario. variable operating costs are $850 million (30 percent) higher. the share of hydropower generation capacity in SAPP rises from 25 to 34 percent. less hydropower is developed to replace thermal capacity. however. At the same time.6 million tons. or 20 percent of total emissions. These estimates do not.2 and 3.

economic. reducing hydropower production (in gigawatt-hours per megawatt of installed capacity) by up to 25 percent. of course. At the same CER price. Meeting the Challenges of Regional Integration of Infrastructure Increased regional power trade in Africa has clear benefits. It leads to increased reliance on thermal power.000 MW (producing 42 TWh) of hydropower capacity. Rosnes and Vennemo (2008) therefore performed a simulation to estimate the effect of climate change on costs in EAPP/Nile Basin. poses substantial political. Lower firm power would increase the unit cost of hydropower. however. trade expansion combined with the CDM generates emissions reductions of 76 million tons. How Might Climate Change Affect Power Investment Patterns? Because unpredictable weather patterns reduce hydropower’s reliability. They assumed that climate change affects both existing and new capacity. that is still less than the carbon reduction brought about by trade. Trade and CDM are not mutually exclusive. and increase the total annualized cost of the power sector. climate change could increase the costs of generating and delivering power in Africa.40 Africa’s Power Infrastructure Namibia. In this scenario. institutional. which reduces emissions by 40 million tons in SAPP. Although significant. and financial challenges for policy makers. The first step to meeting those challenges is to build political consensus among neighboring states that may have diverging national agendas or . and Zambia and adds 8. At the same time. a 25 percent reduction in firm hydropower availability would increase the annual costs of meeting power demand by a relatively low 9 percent. Developing sufficiently integrated regional infrastructure. cause gradual substitution away from hydropower. reliance on thermal power would increase by 40 percent in EAPP/Nile Basin. which exacerbates the climate problem. equivalent to 10 percent of the continent’s current emissions from power and heat production. Compared with trade stagnation. climate change is a sort of positive feedback loop: Sustainable power becomes less reliable and therefore more expensive. however. the CDM has the potential to reduce carbon dioxide emissions in SAPP by 36 million tons. In other words.

Policy makers will therefore need to set priorities to guide regional integration. Regional infrastructure cooperation is therefore a good first step toward broader integration. Any regional initiative requires national and international political consensus. however.The Promise of Regional Power Trade 41 even recent histories of conflict. The efficacy of regional infrastructure will ultimately depend on countries to coordinate associated regulatory and administrative procedures (box 2. multibilliondollar projects present considerable difficulties. infrastructure integration has more clearly defined benefits and requires countries to cede less sovereignty. The infrequency of regional meetings of heads of state contributes to a lack of follow-through. Improved advocacy. it should be possible to design compensation mechanisms that benefit all participating countries.1). Compared with economic or political integration. effective regional institutions will be needed to coordinate a cross-border infrastructure development program and ensure an equitable distribution of benefits. regional power trade benefits small countries with high power costs. The African Union (AU) has the mandate to coordinate the regional integration program defined by the 1991 Abuja Treaty. Power needs in the region are vast. which created the African Economic Community with regional economic communities as building blocks. Regional integration issues remain only a small part of parliamentary debate in most countries. The New Partnership for Africa’s Development (NEPAD) is the main vehicle for promoting regional integration but so far has not received sufficient support from political leaders to build consensus around financially and economically viable projects. Some countries have more to gain from regional integration than others. Building Political Consensus Developing appropriate regional infrastructure is only one aspect of regional integration. Thereafter. but broad principles apply. In particular. however. The NEPAD Heads . Benefit sharing was pioneered through international river basin treaties and has applications for integration of regional infrastructure. Even with clear priorities. Methods for building consensus vary. Africa will require improved high-level advocacy and leadership to promote regional integration for infrastructure development. As long as regional integration provides substantial economic advantages. Governments and international institutions must therefore provide leadership. funding and implementing extensive project preparation studies and arranging cross-border finance for complex. but resources are limited.

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Africa’s Power Infrastructure

Box 2.1

The Difficulties in Forging Political Consensus: The Case of Westcor
On October 22, 2004, the Energy Ministers of Angola, Botswana, the Democratic Republic of Congo, Namibia, and South Africa signed an Intergovernmental Memorandum of Understanding pledging cooperation on two projects: the establishment and development of the third phase of the Inga hydroelectric program in the Democratic Republic of Congo and the power export from there to the other four countries via a new Western Power Corridor transmission system. The chief executives of the five national utilities signed a similar memorandum of understanding among themselves. The Westcor company was established in September 2005 to take the project forward. It is registered in Botswana and has equal shareholdings by the five participating countries. Inga 3 was expected to deliver 3,500 MW. Additional hydroelectric plants in Angola and Namibia were also seen as possibilities. Inga is one of the most favorable hydro sites in the world. It is situated in the rapids coursing around a U-shaped bend in the massive Congo River. By cutting through the peninsula, a run-of-river hydroelectric operation can be developed without the construction of massive storage dams. Inga 1 (354 MW) and Inga 2 (1424 MW) were built many years ago and are being rehabilitated. A prefeasibility study was completed that suggested potentially attractive power costs. A detailed design was originally scheduled for 2008–09. Despite intensive political lobbying within the African Union, New Partnership for Africa’s Development, Southern African Development Community, Southern African Power Pool, and development finance institutions, funds have yet to be committed to conduct a full feasibility study. There are also considerable obstacles to the conclusion of regulatory, contractual, and financing agreements. In 2009, the government of the Democratic Republic of Congo announced that it was negotiating with BHP Billiton to assist in the development of Inga 3, including a large investment in an aluminum smelter that would be the main offtaker for the project. Westcor has subsequently closed its project office. In the absence of political consensus and meaningful commitment, the future of hydroelectric exports from Inga remains uncertain.
Source: Interviews conducted by the authors with staff in the Africa Energy Department of the World Bank, 2009.

The Promise of Regional Power Trade

43

of State Implementation Committee, established to remove political obstacles to projects, has not been effective and now meets less regularly than originally. A strong commitment from regional leaders is therefore essential to move projects forward. For example, when political differences threatened to derail the West Africa Gas Pipeline, only the shuttle diplomacy of Nigeria’s President Obasanjo kept the project on track. Stronger trust. Trust is important for regional integration—especially when some countries stand to benefit more than others. Countries may be able to build that trust by collaborating on small, well-defined projects. For example, a bilateral agreement for a cross-border power transaction may be easier to conclude than a large regional investment that requires multicountry off-take agreements. Frequent interaction among policy makers at all levels of government builds relationships that help overcome inevitable disagreements. Finally, supranational organizations can serve as honest brokers for sharing gains and resolving disputes. Credible information. Trust is easier to build when information is shared equally. Decision makers require accurate data to gauge the full costs and benefits of regional infrastructure investments, many of which involve allocating substantial funds and sacrificing some degree of sovereignty. Regional economic communities are then responsible for building consensus by ensuring that all stakeholders are aware of the potential benefits of investments. Otherwise, countries are unlikely to be willing to bear the full cost of public goods. A realistic and accurate assessment of the likely benefits and costs of regional integration will therefore help to build trust among countries.

Strengthening Regional Institutions
Africa has many regional institutions, but most are ineffective. The architecture supporting African integration comprises more than 30 institutions, including executive continental bodies, regional economic communities with overlapping membership, sectoral technical bodies, and national planning bodies. As a result, it is unclear who is responsible for strategy planning, project development, and financing. This has slowed the development of cohesive regional strategies, establishment of realistic priorities (such as regional infrastructure and trade integration), and design of technical plans for specific projects. The AU Commission has struggled to fulfill its mandate because of a lack of human and financial resources. Africa’s regional economic communities have limited capabilities and resources and, above all, weak

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Africa’s Power Infrastructure

authority to enforce decisions. Institutions would be more effective if governments were willing to cede a measure of sovereignty in return for greater economic benefits. Greater use of qualified majority rules (which has been an issue of debate for some time in many regional economic communities, although without resolution) in some areas of policy making would streamline decision making. Furthermore, member states often fail to pay their assessed contributions in full, which constrains financing. Regional economic communities have multiple functions, and infrastructure provision is not always at the forefront (ICA 2008). As a result, they often fail to attract and retain professional staff with the experience to identify and promote complex regional infrastructure projects. Regional special purpose entities or sectoral technical bodies—such as power pools—have been more effective than regional economic communities. A power pool has a clear mandate, sufficient autonomy to execute its responsibilities, a dedicated funding mechanism, and career opportunities that attract and retain high-caliber staff. It also receives substantial capacity building. The members of a power pool are national electricity utilities, which similarly have clear functions and roles within their national contexts and are less susceptible to immediate political pressures than are less technical public agencies. Some power pools have been more proactive in promoting the development of their power sector. For example, WAPP appears to be taking initiative in promoting investment and assisting in the establishment of a regional electricity regulator (box 2.2). By contrast, SAPP, despite a longer history, seems more concerned with protecting the interests of its member national utilities than with facilitating the entry of private investment. National agencies are also in need of capacity building and streamlined decision making. For complex regional infrastructure projects, several line ministries from each country are often involved, which complicates consensus building and obscures responsibilities. High-level government officials often fail to implement regional commitments.

Setting Priorities for Regional Infrastructure
The financial distress of many utilities in Africa has resulted in a substantial backlog of infrastructure investment. Authorities in Africa must therefore set effective investment priorities, especially considering the limited fiscal space and borrowing ability of many governments. Because infrastructure has a long life, unwise investments can burden governments with an ineffective project that will also require costly maintenance.

The Promise of Regional Power Trade

45

Box 2.2

The West African Power Pool (WAPP) and New Investment
Unlike other power pools in Africa, WAPP is responsible for developing new infrastructure. The WAPP Articles of Association require WAPP to ensure “the full and effective implementation of the WAPP Priority Projects.” The WAPP Executive Board is responsible for developing a regional transmission and generation master plan. Within the WAPP Secretariat, the Secretary General negotiates directly with donors to finance feasibility studies for new projects and subsequently secures grant financing for feasible projects. WAPP has already obtained funding for feasibility studies from several donors, including the World Bank and U.S. Agency for International Development. WAPP often works with multilateral development banks to secure grant or credit financing for development projects. For example, grants and credits from the World Bank and KfW account for all funding of investments for the Coastal Transmission Backbone. In other cases, WAPP has created a special purpose vehicle that allows members to take equity stakes in projects, including a number of regional hydro generation projects.
Source: Castalia Strategic Advisors 2009.

Although our modeling has indicated clear overall benefits for expanded regional trade, many large regional projects are difficult to develop: Financing sums are large, policy and regulatory environments are diverse, and agreements have to be forged between affected stakeholders. Some observers may argue that it is easier to begin by developing smaller national projects that have lower financing requirements and less complex regulatory and decision-making environments. However, these may be more costly in terms of power generated. Therefore, it still makes sense to prioritize regional projects and first develop those that have the highest economic returns and still have a reasonable chance of reaching financial closure. For many years, regional power pools have been developing regional power plans with lists of possible projects. Yet they have struggled to agree on priorities: All members want their pet projects on the short list, and national utilities have also been protective of their market dominance (box 2.3). Suitable criteria for priority projects include predicted economic returns and scope for private participation.

46

Africa’s Power Infrastructure

Box 2.3

Difficulties in Setting Priorities in SAPP
In Southern Africa, energy ministers from the Southern African Development Community (SADC) asked the Southern African Power Pool (SAPP) to prepare a priority list for power projects in the region. SAPP, in turn, asked utilities to provide information on the power projects located in their area. By late 2005, SAPP had prepared a priority list based on seven weighted criteria: project size, leveled energy cost, transmission integration, economic impact, percentage of offtake committed, regional contribution, and number of participating countries. Projects were divided into four categories: rehabilitation, transmission, short-term generation, and long-term generation. SAPP presented the priority list to SADC energy ministers, but they failed to reach an agreement. Individual ministers generally favored projects located in their country, and inevitably some countries had a less significant presence on the list. SAPP then presented an amalgamated list of all possible power projects in the region at an investor conference in 2007. SAPP failed to demonstrate the necessity and viability of the projects, and as a result none of them received financing. Having twice failed to design an acceptable priority list, SAPP hired consultants to prepare a least-cost pool plan and prioritize projects. The recommendations were again controversial, and SAPP failed to achieve consensus on the priority list. With the region still in need of infrastructure investment, a group that included SADC, SAPP, Development Bank of Southern Africa, and RERA (the Regional Electricity Regulatory Authority of the Economic Community of West African States) asked consultants to prepare a list of short-term regional power projects that required financing. The focus of this list was on getting bankable projects, given that most utilities within SAPP cannot support the required investments on their balance sheet. The consultants sought projects that met four criteria: financial close within 24 months, least-cost rationale, regional impact, and environmental considerations. Developers and project sponsors presented the final list at an investor conference in mid-2009, but none of the projects has yet reached financial close.
Source: Interviews conducted by the authors with staff in the Africa Energy Department of the World Bank, 2009.

Economic returns. Projects with the highest returns may not always be new infrastructure. Strategic investments that improve the performance of existing infrastructure systems, such as installing power interconnectors between countries with large cost differentials, are often the most cost effective.

The Promise of Regional Power Trade

47

Scope for private participation. The prospect of a larger regional market can attract more interest for private financing and public-private partnerships, which provides a possible solution to the region’s substantial financing gaps. Encouraging private sector involvement requires government cooperation to facilitate investment. In fact, public control in many countries continues to stifle private investment. For many years, the membership of power pools, such as SAPP, was restricted to state-owned national utilities. The rules have changed, but independent power projects still face many obstacles to gaining full membership in power pools. Priority-setting exercises are under way or planned. For example, a joint AU–African Development Bank study, the Program for Infrastructure Development in Africa, aims to develop a vision of regional infrastructure integration on the continent. The study will need to take account of other ongoing processes such as the Africa–European Union Energy Partnership, which is working to gain consensus on an electricity master plan for Africa. In addition, many regional economic communities and other technical regional institutions have 10-year investment plans that provide many opportunities for external financiers. Priority setting depends on transparency in decision making and agreement on selection criteria. Decisions must be based on sufficiently detailed data and reasonable assumptions, and results should be publicly available. Small investments in better information at the country and regional levels will have significant benefits for decision making, especially given the size of public and private funds at stake.

Facilitating Project Preparation and Cross-Border Finance
Project design is a complex process. The appraisal phase establishes social, economic, financial, technical, administrative, and environmental feasibility (Leigland and Roberts 2007). For regional projects, coordination among national agencies with different procedures, capacity, and administrative constraints adds to the complexity. As a result, the project preparation costs for regional projects tend to be higher, and the process can take longer than for national projects. Preparation costs for regional projects are typically around 5 percent of total financing—approximately double the cost of preparing national projects. These costs are incurred when the success of the project and the likelihood of a sufficient return from the investment are still uncertain. Regional institutions and donors have tried to address these challenges and have established more than 20 project preparation facilities, many of which explicitly support regional activities. Unfortunately, available project preparation resources do not

48

Africa’s Power Infrastructure

match the regional needs. African countries need to commit more funds and people with the right technical, legal, and financial skills for infrastructure planning and project implementation. Timely execution of project preparation activities and a steady supply of new projects also encourage participation of the private sector. For operators relying on private financing, a firm planning horizon is therefore even more critical than for the public sector. Multilateral institutions have been developing specific mechanisms for funding regional projects. The World Bank has five criteria for regional projects to qualify for concessional funding from the International Development Association (IDA): At least three countries must participate, although they can enter at different stages; countries and the relevant regional entity must demonstrate strong commitment; economic and social benefits must spill over country boundaries; projects must include provisions for policy coordination among countries; and projects must be priorities within a well-developed and broadly supported regional strategy. A recent evaluation of World Bank regional integration projects concluded that regional programs have been effective (World Bank 2007). The African Development Bank adopted similar principles in 2008, although requiring only two countries to participate. To encourage greater country ownership, both institutions use a one-third, two-thirds principle, whereby participants are expected to use one IDA or African Development Fund credit from their country allocation, supplemented by two credits from regionally dedicated resources. Currently 17.5 percent of the African Development Fund and 15 percent of IDA resources in Africa are dedicated to regional programs. For projects to be eligible for financing from the European Union–Africa Infrastructure Trust Fund, they must be sustainable and have African ownership. They must also be cross-border projects or national projects with a regional impact on two or more countries. Regional projects funded by the Development Bank of Southern Africa must either involve a minimum of two countries or be located in a single country with benefits to the region. Small, poor countries with the potential to develop large hydro projects supplying multiple countries face considerable obstacles in financing these projects. For example, the countries must sign secure power purchase agreements with large power loads to provide predictable revenue streams. Large, financially viable utilities; industrial customers in neighboring countries; or new adjacent energy-intensive investments, such as aluminum smelters, are potential sources for anchor loads, but they are

Political. the legal. development finance institutions offer limited financing instruments for middleincome countries. Although recipients of funds from the African Development Fund and the IDA can leverage their country allocations by participating in regional projects. In 2008 the ECOWAS Regional Electricity Regulatory . As countries move from bilateral to multilateral power exchanges. Further challenges remain. Some projects with significant regional spillovers—such as the Ethiopia-Sudan interconnector and a thermal power generation project in Uganda—may not involve three or more countries and therefore do not qualify for concessionary regional financing.The Promise of Regional Power Trade 49 not always available. To ensure its efficient use. and effective cross-border trading contracts. The four power pools in Sub-Saharan Africa are at different stages of development. however. Worldwide experience in developing power pools has led to consensus on three key building blocks for success: a common legal and regulatory framework. and the 2007 ratification of an overarching Energy Protocol will help promote security for investors and open access to national transmission grids across the region. The WAPP was granted special status by the Economic Community of West African States (ECOWAS) in 2006 to reinforce its autonomy. The alternative is to combine multiple cross-border power off-take agreements. and an equitable commercial framework for energy exchanges. How such concessional resources are allocated and whether enough of the overall allocation is dedicated to regional projects remain issues of debate. IDA guidelines do not permit grants to regional organizations or supranational projects. and administrative environment must be improved. a durable framework for systems planning and operation. a commercially acceptable framework will be essential. This is problematic for projects involving Botswana and South Africa as well as North Africa. and physical barriers limit power trade—and therefore market size—throughout Africa. which will be challenging. third-party access regulations. In addition. which could benefit from connectivity with countries south of the Sahara. This limits the World Bank’s ability to provide capacity building for weak regional agencies. Developing Regional Regulatory Frameworks Physical infrastructure will not produce economic growth on its own. regulatory. regulatory. those receiving a small allocation may be reluctant to use a large percentage on one regional project with unclear benefits. Regional power infrastructure requires coordinated power pricing.

DC: World Bank.esmap. These were formally noted by a Southern African Development Community (SADC) meeting of energy ministers in April 2010. “International Experience with Cross Border Power Trading. AICD Power Sector Database.” http://www. Note 1. South Africa had excess generation capacity that was made available for a new aluminum smelter built in the port city of Maputo. Castalia Strategic Advisors. which the private sector has found too risky because of their high capital costs. Daniel Camos. Eberhard. A Report to the ECOWAS Regional Electricity Regulatory Authority. Development finance institutions should consider accelerating investments in cross-border transmission links and large hydroelectric projects. RERA is now disseminating the guidelines among its member regulatory agencies. In Southern Africa. RERA has developed guidelines for cross-border power projects. and Maria Shkaratan. Although the overall savings in the annualized cost of the power sector under trade are relatively small (less than 10 percent). Cecilia Briceño-Garmendia.50 Africa’s Power Infrastructure Authority was established to regulate cross-border electricity exchanges between member states. Bibliography AICD (Africa Infrastructure Country Diagnostic). but those investments would be quickly repaid as countries gain access to cheaper power. Investment in the large Cahora Bassa hydroelectric plant in Mozambique was justified on the basis of exports of electricity to South Africa. Vivien Foster. 2008. Subsequently. 2008. particularly in Southern Africa. In the short run. Washington. Conclusion Cross-border trade in power has significant potential to lower costs and stimulate investment.org/files/P111483_ AFR_International%20Experience%20with%20Cross-Border%20Power% 20Trading_Hughes. long payback periods. greater investments in crossborder transmission links will be needed to accommodate the higher volume of trade.pdf. 2009. “Underpowered: The State of the .org/esmap/sites/esmap. and risks related to the enforceability of power-purchase agreements. Anton. Fatimata Ouedraogo. the gains for individual countries may be substantial.

2008. Washington. World Bank. and Haakon Vennemo.The Promise of Regional Power Trade 51 Power Sector in Sub-Saharan Africa. World Bank. Washington. and Andrew Roberts.” Background Paper 5. Africa Infrastructure Country Diagnostic. Leigland. 2007. Orvika. “Mapping of Donor and Government Capacity-Building Support to African RECs and Other Regional Bodies. James. “The African Project Preparation Gap: Africans Address a Critical Limiting Factor in Infrastructure Investment. DC. Tunis. Africa Infrastructure Country Diagnostic. The Development Potential of Regional Programs: An Evaluation of World Bank Support of Multicountry Operations. World Bank. DC.” Background Paper 6. Washington. ICA (Infrastructure Consortium for Africa). DC: World Bank. “Powering Up: Costing Power Infrastructure Spending Needs in Sub-Saharan Africa. Rosnes. . Washington. 2008. World Bank. DC.” PPIF Note.” Report of Economic Consulting Associates to the Infrastructure Consortium for Africa. 2007. Independent Evaluation Group.

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In the decade before 2005. We assume that over a 10-year period the continent should be expected to redress its infrastructure backlog. In all cases. 53 .CHAPTER 3 Investment Requirements Meeting Africa’s infrastructure needs will require substantial investment. potential generation projects in the Central. EAPP/Nile Basin. and attain a number of key social targets for broader infrastructure access. In this chapter. Most new capacity would be used to meet nonresidential demands from the commercial and industrial sectors.000 megawatts (MW) a year—just to meet Africa’s suppressed demand. keep pace with projected economic growth. Projections of future physical infrastructure requirements provide the basis for estimates of spending requirements in this chapter. the spending estimates account for both growth-related and social demands for infrastructure and maintenance and rehabilitation costs.000 MW per year. keep pace with the demands of economic growth. Installed capacity will need to grow by more than 10 percent annually— or more than 7. East/Nile Basin. or less than 1. SAPP. and provide additional capacity to support efforts to expand electrification. and West African power pools (CAPP. and WAPP. Southern. expansion averaged barely 1 percent annually. respectively) are identified and ranked according to cost effectiveness.

the Arab Republic of Egypt for 70 percent in EAPP/Nile Basin. National authorities and international organizations have drawn up plans to increase access. Rosnes and Vennemo (2008). yet more than two-thirds of its population lacks access to electricity.2 Cape Verde. Modeling Investment Needs Nowhere in the world is the gap between available energy resources and access to electricity greater than in Sub-Saharan Africa. as part of the Africa Infrastructure Country Diagnostic study. and hydropower potential. Demand has three components: market . developed a model to analyze the costs of expanding the power sector over the course of 10 years under different assumptions. and the Central African Power Pool. To inform decision making. and rehabilitation of existing generation and transmission assets about 15 percent. the overall costs for the power sector between 2005 and 2015 in Sub-Saharan Africa are a staggering $41 billion a year—$27 billion for investment and $14 billion for operations and maintenance. Each power pool has dominant players. which mode of power generation is appropriate in each setting. South Africa accounts for 80 percent of overall power demand in SAPP. Nigeria for two-thirds in WAPP. and Mauritius are also included in our study as island states. and the sensitivity of power investment decisions to broader macroeconomic conditions. their impact on decision making. such as rising oil prices and looming climate change. but policy makers must make key decisions to underpin these plans. They must also realistically assess the effect of major global trends.54 Africa’s Power Infrastructure Based on these assumptions. gas. the East African/Nile Basin Power Pool. Development of new generating capacity constitutes about half of investment costs. The model simulates optimal (least cost) strategies for generating. For example. and distributing electricity in response to demand increases in each of 43 countries participating in the four power pools of Sub-Saharan Africa: the Southern African Power Pool. SAPP alone accounts for about 40 percent of total costs. and whether individual countries should move ahead independently or aim for coordinated development. The region is rich in oil. The cost estimates are based on projections of power demand over the 10 years between 2005 and 2015. Madagascar.1 the West African Power Pool. such as how rapidly the continent can electrify. Coverage is especially low in rural areas. and the Republic of Congo and Cameroon for a combined 90 percent of power demand in CAPP. transmitting.

and social demand. is estimated based on data for blackout duration and frequency from the World Bank’s enterprise surveys (table 3. market demand accounts for the great bulk of demand growth over the period. In all scenarios. First. In their model.2). and so they assume that social demand will include suppressed demand from this source in each scenario. In most low-income countries. access rates increase by roughly one percentage point per year in each region—an ambitious but still realistic target. In the regional target access scenario. on the other hand. Based on historic trends. Suppressed demand from blackouts. which is based on political targets for increased access to electricity. Social demand for electricity includes the expected demand of all new connections in the household sector in 2015 (table 3. Waiting lists are a direct result of slow connection and expansion. Estimating Supply Needs To estimate supply.1). They then adjust electricity demand in the base year (2005) accordingly. the model simulates the least expensive way of meeting projected demand. even the constant access scenario implies a number of new connections and therefore greater demand in kilowatt-hours (kWh). in the national targets scenario. Second. frequent blackouts and brownouts reduce consumption but not notional demand. Calculations are based on cost assumptions for various investments. people who are on a waiting list to get connected are not captured in baseline demand estimates. Rosnes and Vennemo (2008) account for suppressed demand differently depending on its source. suppressed demand created by frequent blackouts and the ubiquitous power rationing. including refurbishment of existing capacity . access rates reflect targets set by national governments for urban and rural electricity access. access rates remain at their 2005 level. demand is projected to grow at 5 percent per year in Sub-Saharan Africa and reach 680 terawatt-hours (TWh) by 2015. notional demand exceeds supply.Investment Requirements 55 demand associated with different levels of economic growth. In the constant access scenario.3 The difference between the two is suppressed demand. suppressed demand will immediately absorb a certain amount of new production even before taking account of income growth or structural economic changes. Because of population growth. structural change. Ultimately. and population growth. which arises for two primary reasons. Rosnes and Vennemo (2008) examine three scenarios for electricity access. Finally.

94 Senegal 44 5.4 5.2 24.5 8.9 463.8 6.6 10.4 Social demand 2015 14.33 Gabon 40 5.94 Ghana 61 12.8 1.56 Africa’s Power Infrastructure Table 3. 39 4.55 Western African Power Pool Côte d’Ivoire 46 5.3 7.7 5.052 1. Note: Social demand is based on national connection targets.15 Zambia 40 5.0 144. Rep.9 702.2 24.0 680.2 Projected Market.0 10. and Total Net Electricity Demand in Four African Regions TWh Total net demand 2005 258.20 Tanzania 67 6.03 Congo.803 250 189 241 616 134 Southern African Power Pool Angola 92 19.0 94.1 Total net demand 2015 397. TWh = terawatt-hour.5 Region SAPP EAPP/Nile Basin WAPP CAPP Total Source: Rosnes and Vennemo 2008. Social.48 East African/Nile Basin Power Pool Kenya 86 8.3 11.0 614.94 Central African Power Pool Cameroon 26 4.0 5.20 Source: Rosnes and Vennemo 2008.101 613 924 950 Down time (% of year) 20.5 219. Table 3.1 Blackout Data for Selected Countries Outages (days/year) Average duration (hours) Outages (hours per year) 1. CAPP = Central African Power Pool.780.8 Suppressed demand in 2005 (GWh) 435 351 602 157 366 208 84 365 979 10.9 3.3 13 17 64 17 82 7.8 100.6 17.6 31. . EAPP = East African/Nile Basin Power Pool.46 Uganda 71 6. 182 3.31 Congo.3 10. Rep.63 South Africa 6 4.5 Annual average growth rate (%) 4.59 Nigeria 46 5.67 Sierra Leone 46 5. Dem. SAPP = Southern African Power Pool.465 1.0 169.3 2.8 69.5 0. WAPP = West African Power Pool.0 66.101 1.101 1.0 5.4 Market demand 2015 383.6 435. Note: GWh = gigawatt-hour.8 659.0 24.5 20.7 401.

The model includes four modes of thermal generation—natural gas.382 81. these will also require maintenance.366 Regional target access rate 43. Note: MW = megawatt.425 Source: Adapted from Rosnes and Vennemo 2008. Existing capacity that is refurbished before 2015 is included in the “refurbished capacity. a.906 37. A lower growth scenario assumes lower gross domestic product (GDP) growth. and diesel—and four renewable generation technologies—large hydropower.906 36. The model can be run under a number of scenarios with varying assumptions to highlight the policy implications of each.945 65. Expansion is possible through investments in both new capacity and refurbishment of existing capacity to extend its life. heavy fuel oil. “Installed capacity” refers to installed capacity as of 2005 that is not refurbished before 2015. The investment costs for each technology include both capital and variable operating costs (including fuel and maintenance).3 Projected Generation Capacity in Sub-Saharan Africa in 2015 in Various Scenarios MW Lowgrowth scenario National targets for access rates.906 35.906 35. coal. two trade scenarios were simulated.953 Trade stagnation scenario National National targets for targets for access rates access rates 43. wherever the benefits of trade outweigh Table 3.906 37. Initial supply is based on the existing generation capacity in the base year of 2005. trade expansion 43. As mentioned previously.561 77. for example.535 70. In the trade expansion scenario.” .723 Trade expansion scenario Generation capacity (MW) Installed capacitya Refurbished capacity New capacity Constant access rate 43.917 74. solar photovoltaic. and geothermal. although new investment is not. Operation of existing nuclear capacity is also considered. mini-hydro.722 43. trade will expand wherever it is worth the cost—that is. the feasibility of meeting three different electrification targets in each region is examined (table 3. Expanding access will also require investment to extend and refurbish the transmission and distribution (T&D) grid and enhance off-grid options.Investment Requirements 57 for electricity generation and construction of new capacity for crossborder electricity transmission.3). To assess the effect of trade on investment and operating costs.

58 Africa’s Power Infrastructure the costs of the additional infrastructure needed to support expanded trade.000 MW in WAPP. the model’s projections indicate that economic growth will drive most of the growth in demand. although they are particularly large in WAPP and CAPP. which can increase (in the trade expansion scenarios) or even switch direction compared with the 2005 trade pattern. the region requires more than 33.6 billion a year— $27. or 250 percent of 2005 capacity. About half of the investment cost is for development of new generation capacity and another 15 percent for rehabilitation of existing generation and transmission assets. EAPP/Nile Basin has minimal refurbishment needs but requires 17. Overall Cost Requirements The overall costs for the power sector in Africa (including Egypt) between 2005 and 2015 (based on the trade expansion scenario and national targets for access rates) are an estimated $47.000 MW of new generation capacity—almost equal to total capacity in 2005.9 billion for investment and $19. .400 MW in CAPP. the region will need about 82. and 4.4 provides a summary of new connections that will need to be made to meet national electrification targets by 2015 in the different regions. In another scenario—trade stagnation—no further investment in cross-border grids is made. or 180 percent of 2005 capacity. In addition. respectively. an increase of about 70 percent over 2005 capacity. The model has guidelines for endogenously determining trade flows. SAPP alone accounts for about 40 percent of costs. The 2005 capacity in SAPP was 48. Investment requirements are challenging in every region. Fortunately. More than half of 2005 capacity must be refurbished in both WAPP and CAPP—7. New capacity requirements in WAPP and CAPP are also significant: 18.5). much of the capacity operating in 2005 will need to be refurbished before 2015. Therefore.7 billion for operations and maintenance (table 3. Table 3. To meet national electrification targets in 2015 under the trade expansion scenario. Because many power installations in Africa are old. each region’s financial strength will grow to meet new investment needs as they arise. however. Approximately 28.000 MW of new capacity— approximately equal to the region’s installed capacity in 2005.000 MW of new generation capacity.000 MW.000 MW of generation capacity will have to be refurbished by 2015.000 and 900 MW.

The variation among regions under trade expansion is even more pronounced here: 1. Madagascar. The overall cost of developing the power system appears high but not unattainable relative to the GDP of each of the trading regions.2 percent of GDP under trade expansion and 4.6).5 20. Annualized operating costs range from 1. The costs of operating the entire power system are of a similar order of magnitude. respectively.8 percent in CAPP (table 3. 1.2 57. and 3.2 21. Regional annualized capital investment costs under trade expansion exhibit considerable variation: 2 percent of GDP in SAPP. 4. WAPP = West African Power Pool. under trade expansion.2 percent under trade stagnation. 2.4 percent under trade expansion. however. The regional figures for SAPP and WAPP are similar: 3. Total annualized costs of system expansion and operation are.2 percent of the region’s GDP under trade stagnation to 2. Island states are Cape Verde.7 percent and 6 percent of GDP under trade expansion and trade stagnation. therefore.4 percent under trade expansion. and Mauritius.2 percent in CAPP.4 percent in WAPP.6 percent in EAPP/Nile Basin.5 1. 2005–15 Pool CAPP EAPP/Nile Basin SAPP WAPP Island statesa Total New household connections (millions) 2. Total costs in EAPP/Nile Basin are higher: 5.1 percent in EAPP/Nile Basin. both GDP and power investment .9 percent and 4.1 for definitions of this and other cost categories) range from 2. Annualized capital investment costs (see box 3.4 New Household Connections to Meet National Electrification Targets. 3.4 percent under trade stagnation. SAPP = Southern African Power Pool.Investment Requirements 59 Table 3.0 12. 2.8 percent in WAPP. and a negligible 0.1 percent under trade stagnation.7 percent of GDP under trade expansion to 2.2 percent. Around twothirds of overall system costs are associated with generation infrastructure and the remaining one-third with T&D infrastructure.7 percent of GDP in SAPP. Note: CAPP = Central African Power Pool. and 1. They are lower in CAPP: 2 percent under trade expansion and 2. a. Among countries within each region. EAPP/Nile Basin = East African/Nile Basin Power Pool.7 percent and 4.4 Source: Adapted from Rosnes and Vennemo 2008. respectively.

Madagascar.227 8. WAPP = West African Power Pool.004 18. T&D = transmission and distribution. and Mauritius.386 15. CAPP = Central African Power Pool.359 4.049 311 19.527 74 14.140 Rehabilitation New generation 860 5.401 12.60 Table 3.238 245 27.685 Total expenditure Total operations and maintenance New T&D 292 3.a 2005–15 Pool 159 6.427 CAPP EAPP/Nile Basin SAPP WAPP Island statesb Total 1. Notes: Assuming national targets for access rates in the trade expansion scenario.950 76 485 2. . Island states are Cape Verde.287 556 47.5 $ million Investment Total investment 1.378 4.554 1.944 3.544 3. EAPP/Nile Basin = East African/Nile Basin Power Pool. Including the Arab Republic of Egypt. SAPP = Southern African Power Pool. a.634 Source: Adapted from Rosnes and Vennemo 2008.198 10.334 2. b.383 Required Spending for the Power Sector in Africa.042 8.807 8.701 156 10.010 15 4.

Burundi. Source: Rosnes and Vennemo 2008. This includes both new investment and refurbishment costs. The formula is as follows: annualized capital cost = investment cost × r/[1–(1+r)–T]. Annualized capital investment costs plus annual variable costs for new capacity. The total annualized capital cost refers to both the cost of new generation capacity and the refurbishment of existing capacity. The total cost of expanding the power system to meet demand in 2015. As a result. Total annualized cost of system expansion. Mozambique. The capital investment spending needed each year to meet demand in 2015. but not variable costs.1 Definitions Overnight investment costs. where r is the discount rate (assumed to be 12 percent) and T is the economic lifetime of the power plant (assumed to be 40 years for hydropower plants. Annual variable cost. investment requirements exceed 6 percent of GDP in the Democratic Republic of Congo. and Zimbabwe under both trade expansion and stagnation. and Ethiopia in EAPP/Nile Basin. in certain scenarios some countries face power spending requirements that are very burdensome relative to the size of their economies (figure 3. requirements vary widely. for example. Annualized capital investment costs plus total annual variable costs (for both existing capacity in 2005 and new capacity). Variable costs associated with operation of existing capacity in 2005 (generation or transmission) are not included. Total annualized costs of system expansion and operation. The costs of fuel and variable costs of operation and maintenance of the system. Annualized capital investment costs. as well as investments in and refurbishment of T&D assets. and 25 years for natural gas plants). In SAPP. This includes both existing capacity in 2005 that will still be operational in 2015 and new capacity that will be developed before 2015.Investment Requirements 61 Box 3.1). 30 years for coal plants. Spending is similarly high in Egypt. taking into account both the discount rate and the varying economic lifetimes of different investments. About half of the countries in WAPP have investment requirements of almost 10 percent of GDP—Guinea and Liberia stand .

4 1.9 2.4 Central African Power Pool Estimated Cost of Meeting Power Needs of Sub-Saharan Africa under Two Trade Scenarios Total Sub-Saharan Africa (% GDP) 4. GDP = gross domestic product.4 2.5 5. Note: Assumes sufficient expansion to meet national electrification targets.4 1.7 15.2 2.6 4.0 2.3 9.4 ($billion) 12.5 1.6 4.5 Trade expansion Total estimated cost Capital costs Operating costs Generation T&D Trade stagnation Total estimated cost Capital costs Operating costs Generation T&D 19.7 2.0 4.6 6.2 2.4 1.7 8.4 0.0 1.9 19.1 5.5 4.6 27.3 1.5 10.7 2.4 3.3 25.1 7.4 12.5 18.6 24.5 16.4 2.9 1.8 1.7 11.8 0.9 1.3 8.5 ($billion) (% GDP) 5.2 2.4 1.8 7.2 0.2 4.6 2.2 1. T&D = transmission and distribution.0 8.1 2.5 1.2 1.1 0.4 1.0 2.7 0.7 (% GDP) ($billion) 47. .0 6.5 Southern African Power Pool Scenario ($billion) (% GDP) 18.7 2.4 Source: Rosnes and Vennemo 2008.7 32.5 4.7 3.1 50.6 1.8 10.3 3.6 1.0 0.8 17.9 2.2 1.0 1.4 10.0 6.0 1. Subtotals may not add to totals because of rounding.6 East African/Nile Basin Power Pool Western African Power Pool ($billion) (% GDP) 4.2 2.6 4.62 Table 3.7 29.0 1.0 8.7 4.2 1.6 2.2 0.7 1.7 6.9 3.8 12.4 2.4 11.0 9.2 2.2 6.6 0.

a di pi un io ur th B E c. ca Re fri blic o. l A pu ng tra Re Co en 63 Source: Rosnes and Vennemo 2008. Southern African Power Pool 25 20 15 10 5 0 A T E p gy t.R w Af bi am Za b es M ts h L N em zam m ut Bo Zi .D o So M go n Co ti Re 8 7 6 5 4 3 2 1 0 p. . West African Power Pool d. East African/Nile Basin Power Pool 25 20 15 10 5 0 a.Figure 3.S ra au a e kin er ne M ine ôt ur Si ui u C B G G trade expansion l ia or a at ine u u Eq G Ga bo n C trade stagnation er am oo n ad Ch C n p.1 Overall Power Spending by Country in Each Region percent GDP b. Central African Power Pool 30 25 20 15 10 5 0 r e ia o u al ia e a o n li ia u ia as eni Ma tan issa ger ige voir han eon mb og issa eg ber T B en Li N ’I G L Ga aF B ri -B Ni d a. i a a a e e ia ho ep bi aw ric ib an qu abw ot m al . o ng Rw an Su ib Dj Ar a Ug za an Ke ab la da da ou n a nd a ni a ny .

Existing capacity that is refurbished before 2015 is included in the definition of “refurbished capacity.729 40 52 0 8 Trade expansion scenario Constant access rate Generation capacity (MW) Installed 17.7 provides an overview of generation capacity and the capacity mix in SAPP in all scenarios in 2015.168 33 60 0 7 Trade stagnation scenario National National targets for targets for access rates access rates 17.300 MW of new capacity to meet demand under trade expansion in 2015. only the Republic of Congo requires investments of more than 5 percent of GDP. The next sections explore investment requirements and costs in more detail for each region. An additional 28. MW = megawatt. SAPP will require almost 31. 2015 Lowgrowth scenario National targets for access rates.136 28. trade expansion 17.136 28. As a result.046 33.046 20.” SAPP = Southern African Power Pool. Constant Access Rates under Trade Expansion In this scenario.7 Generation Capacity and Capacity Mix in SAPP.013 25 66 2 7 Source: Rosnes and Vennemo 2008.136 Refurbishment 28.136 28. Note: “Installed capacity” refers to installed capacity as of 2005 that is not refurbished before 2015.000 MW of existing capacity will need to be refurbished.029 New investments 31.319 34 59 0 7 17. The rest of this section provides a description of three trade expansion scenarios. . The SAPP Table 3. Investments in new generation capacity in South Africa amount to Table 3.035 32. More detailed output tables for each country can be found in appendix 3 at the end of this book.297 Generation capacity mix (%) Hydro 33 Coal 60 Gas 0 Other 7 Regional target access rate 17.136 28. In CAPP. development there has a strong effect on the rest of the region.64 Africa’s Power Infrastructure out with requirements of almost 30 percent.4 South Africa accounts for about 80 percent of electricity demand in SAPP.148 32.

countries that are rich in hydropower develop substantial new capacity: 7. to the rest of the region.422 2.Investment Requirements 65 18.546 Source: Rosnes and Vennemo 2008. In general.659 18.991 12. 21.589 7.242 7.985 9.674 643 58 9. Therefore.674 3. The Democratic Republic of Congo and Mozambique. Investments in new capacity account for $30.995 3.577 16.711 3.587 20.995 3.200 MW in the Democratic Republic of Congo. Coal-fired power plants account for the largest share of capacity investments in South Africa. Note: SAPP = Southern African Power Pool. In addition.200 MW in Mozambique. The investment cost of expanding the generation system in SAPP is almost $38 billion (table 3.644 7.3 billion. 2005–15 Lowgrowth scenario Trade expansion scenario Regional target Constant access rate access rate Generation Investment cost Refurbishment cost T&D Investment cost Cross-border transmission lines Distribution grid Connection cost (urban) Connection cost (rural) Refurbishment cost Total 30. Table 3. refurbishment is much cheaper than developing new capacity.8 $ million Overnight Investment Costs in SAPP. and hydropower and pumped storage for 2.572 16. Elsewhere in SAPP.304 Trade stagnation scenario National National targets for access targets for rates.000 MW.775 64.058 12. on the other hand.000 MW.653 0 12. and refurbishment costs account for $7.606 3.775 72.5 billion.384 3.775 52. respectively.277 7. and 2.200 MW in Zimbabwe.574 19.775 67.874 National targets for access rates 32. 3.775 73. and the new capacity allows the country to meet domestic demand. Open-cycle gas turbine generators5 account for another 3. .103 7.577 23.8).985 9.544 3. In 2005.700 MW of capacity is refurbished. T&D = transmission and distribution.009 12.008 31. Zimbabwe imported 14 percent of its electricity. trade access expansion rates 34.985 9.082 5.547 9.995 3. export 50 and 6 TWh.674 2.674 3.700 MW (60 percent of the region’s total).210 1.

including $5. The direct cost of connecting new customers to the grid is only $0.8 billion. refurbishment. compared with only 10 percent in the constant access rate scenario. operation. Annual variable operating costs (including fuel.9 billion.8). The total annualized cost of system expansion is 2.2 billion in T&D and connection. and the Democratic Republic of Congo.6 billion in generation and $3. the annual variable costs of the new coal-fired power plants are 0. Namibia. or $380 million in annualized costs. Annualized capital costs are $8. and the total annualized cost of system expansion and operation is 3. more than 90 percent of which would be spent in urban areas. and 8.1 billion) accounts for the remaining costs. and operation of existing and refurbished power plants ($3.2 percent in Mozambique. The cost of connecting new households accounts for the majority of the additional costs—about $3 billion. Zambia. Coal power plants in South Africa are an exception: Refurbishing them is almost as expensive as investing in new plants.5 billion in annualized capital costs.8 percent of GDP in the Democratic Republic of Congo.2 billion) and the grid ($3. The additional costs necessary to bring power from power plants to consumers—the costs of T&D and connection—are also substantial: Investments to expand and refurbish the grid total $16 billion (see table 3.7 billion.3 billion. and maintenance) are $8.2 percent of the region’s GDP in 2015.5 percent in Zimbabwe. Regional Target for Access Rate: Electricity Access of 35 Percent on Average Compared with the constant access rate. Costs vary widely among countries. or about $0. meeting the average regional target for electricity access (35 percent) requires an additional investment of almost $3.66 Africa’s Power Infrastructure despite the large funding gap between the two. although the costs of generation-capacity expansion are only 0. The costs of generation-capacity expansion are particularly high in countries with large hydropower development: 5. Grid-related costs (investments.4 percent. refurbishment and new investment make roughly the same contributions (in MW) to new capacity.6 percent of GDP. Total overnight investment costs are therefore slightly more than $64 billion. and operation) are high in countries such as Zimbabwe. Finally. Rural areas account for about 40 percent of connection costs. . Operation of new power plants accounts for approximately $2 billion.7 percent of GDP in 2015 in South Africa. 6.

000 MW of new capacity in Egypt. Investment costs are $0. When variable costs of existing capacity are included. the total annualized costs of system expansion and operation rise to 3. The EAPP/Nile Basin Table 3. The rest of this section provides a description of three trade expansion scenarios. As a result. Variable costs of operating the system are only $75 million higher each year. The largest contributors to this increase are the costs of T&D and connection. Elsewhere in EAPP/Nile Basin. EAPP/Nile Basin will require 23. the annualized cost of system expansion is 2. the total annualized cost of system expansion and operation rises to 3. For example.8 billion higher ($120 million in annualized costs) compared with the constant access rate scenario. National Targets for Electricity Access Compared with the constant access rate scenario. . the need for refurbishment in EAPP/Nile Basin— which is much lower than in SAPP—may have been underestimated. This estimate is based on information about the age of facilities and conditions assembled for this study.3 billion ($0. development there is of considerable importance for the rest of the region.3 percent of the region’s GDP in 2015.Investment Requirements 67 The region also requires additional generation capacity to meet increased demand. meeting national targets requires an additional investment of $9.9 billion in annualized costs) of the additional costs. The additional costs of investment in generation capacity are $2 billion higher ($280 million in annualized costs). Egypt imports about 40 percent of its electricity (55 TWh) and accounts for approximately 80 percent of total demand in the EAPP/Nile Basin. or almost $1. In addition. The additional costs of operating the system (variable costs) are much lower— $50 million annually.3 billion. The annualized cost of system expansion is 2.7 percent of GDP.4 percent of the region’s GDP in 2015.3 billion in annualized costs.6 percent of GDP.9 provides an overview of generation capacity and the capacity mix in EAPP/Nile Basin in 2015 in all scenarios. Natural gas–fired power plants account for almost 7. Overall. connecting new households to the grid accounts for about $7. Constant Access Rates under Trade Expansion In this scenario. Therefore.000 MW of existing capacity must be refurbished. more than 1. When variable costs of existing capacity are included.000 MW of new capacity to accommodate market demand growth in 2015.

of which investments in the grid account for $7.132 1. but in the refurbishment figure.972 28 3 64 5 22. or 40 percent of the total grid investment. and refurbishment costs are negligible.375 23. The annual variable costs of operating the system amount to $5.045 Generation capacity mix (%) Hydro 49 Coal 2 Gas 47 Other 2 Regional target access rate 22. countries with hydropower resources develop substantial new capacity: 8.84 billion.3 billion for T&D and connection.132 Refurbishment 1.369 New investments 23. Note: “Installed capacity” in this table refers to capacity in place in 2005 but not refurbished before 2015.637 48 2 49 4 22. To meet projected demand. Operation of new power plants accounts for most of this ($4. and 300 MW in Rwanda. and Ethiopia and Sudan become large net exporters. Existing capacity that is refurbished before 2015 is included not in the installed capacity figure. Refurbishment of the existing grid requires $3. Annualized capital costs are. .132 1.150 MW in Ethiopia.9 Generation Capacity and Capacity Mix in EAPP/Nile Basin.3 billion.68 Africa’s Power Infrastructure Table 3. approximately $5. MW = megawatt.200 MW each in Tanzania and Uganda. 3. 2015 Trade stagnation scenario Low-growth scenario Trade expansion scenario Constant access rate Generation capacity (MW) Installed 22.3 billion: $4 billion for generation capacity and $1.39 billion).132 1.2 billion.700 MW in Sudan. therefore. Data include Egypt. Expanding the generation system over 10 years will cost more than $29 billion (see table 3. 1. Kenya and Tanzania invest in some coal-fired power plants.132 1. In addition.540 48 2 45 4 Source: Rosnes and Vennemo 2008. Total overnight investment costs in EAPP/Nile Basin are $40. The costs of T&D and connection total $11 billion.375 24. generation capacity in 2015 must be more than twice the 2005 level.375 25. Rural areas account for 80 percent of connection costs. Investments in new capacity accounts for almost all of this.381 17.5 billion. trade targets for targets for access rates access rates expansion 22. EAPP/Nile Basin = East African/Nile Basin Power Pool. The cost of connecting new customers is $3 billion.10).639 47 2 48 3 National targets for National National access rates.

fuel costs are 3 percent of GDP. Investments in T&D lines and variable costs account for the rest.6 percent of the region’s GDP in 2015. and operation of existing and refurbished power plants ($0.013 3.275 398 26.599 3.372 0 3. Adding the variable costs of system operation.072 5. investments in generation capacity used for exports account for two-thirds of these costs.430 937 3.5 percent of GDP.Investment Requirements 69 Table 3.342 63.702 17. costs are 2.8 percent of its GDP.2 percent of its GDP in total—the highest figure in the region.320 3.342 48.301 964 2. Total annualized costs in Ethiopia are 9. Costs are particularly low in Burundi and Djibouti—between 1 percent and 2 percent of GDP.793 18. the total annualized cost of system expansion and operation is 4. T&D = transmission and distribution.484 674 3. The cost of system expansion in Egypt—the largest country in the region—is 3.385 1.342 40.735 31.802 398 16. The total annualized cost of system expansion is therefore 3. EAPP/Nile Basin = East African/Nile Basin Power Pool.599 3.317 Trade stagnation scenario Low-growth scenario Source: Rosnes and Vennemo 2008.159 3.913 396 7.667 398 27.5–3.342 61.263 7. Note: Data include Egypt. 2015 Trade expansion scenario Constant access rate Generation Investment cost Refurbishment cost T&D Investment cost Cross-border transmission lines Distribution grid Connection cost (urban) Connection cost (rural) Refurbishment cost Total 28.072 5.702 17.973 National targets for National National access rates. trade targets for targets for access rates access rates expansion 32. In other countries in the region.342 50.200 Regional target access rate 30.621 399 26. .549 1.2 percent of GDP.599 3. Capital costs are only 0.072 2.10 $ million Overnight Investment Costs in the EAPP/Nile Basin. However.702 17.69 billion) and the grid ($0.072 5.76 billion) account for the rest.037 5.9 percent. but because the new capacity is gas fired.

The rest of this section provides a description of three trade expansion scenarios. National Targets for Electricity Access Meeting national targets requires $24 billion more in investment compared with the constant access rate scenario. As a result. investment costs are $2 billion higher ($270 million in annualized costs) than in the constant access rate scenario.290 MW in Guinea. the total annualized cost of system expansion and operation is 5.4 percent of GDP.000 MW of new capacity to meet market demand growth in 2015.11 provides an overview of generation capacity and the capacity mix in WAPP for all scenarios in the region in 2015.290 MW in Nigeria. Rural areas account for 60 percent of the connection costs. Connecting new households to the grid accounts for $20 billion ($2.70 Africa’s Power Infrastructure Regional Target for Access Rate: Electricity Access of 35 Percent on Average Compared with the constant access rate scenario. or about $1. Almost all of this is hydropower: 10. Excluding the costs of operating the existing system. and .3 billion in annualized capital costs. and the variable costs of operating the system are $1 billion higher than in the constant access rate scenario. Because the costs of operating the existing system are only 0. Rural areas account for 75 percent of connection costs.8 billion ($520 million in annualized costs). the total annualized cost of expanding the system amounts to 4. The region also requires additional generation capacity to meet increased demand. Overall.5 percent of GDP.000 MW in Ghana. Constant Access Rates under Trade Expansion In this scenario. the total annualized cost of system expansion and operation increases to 5 percent of GDP in 2015. or approximately $3 billion in annualized capital costs.1 billion in annualized costs).4 billion annualized costs) of the additional costs. WAPP Table 3. WAPP requires almost 16. 4. Variable costs of operating the system are also $700 million higher annually. the total annualized cost of system expansion is 5. The additional costs of investment in generation capacity are $3. Connecting new households to the grid accounts for the majority of additional costs—$9 billion ($1. 1. The largest contributors to the increase are the costs of T&D and connection.1 percent.7 percent of the region’s GDP. In the national targets scenario. meeting the international target for electricity access (35 percent on average) requires an additional investment of almost $11 billion.

Nigeria is not centrally situated and would require large investments in transmission lines to allow for large exports.000 MW of hydropower (2. 5.239 73 1 19 7 4.842 16.162 16.850 in Nigeria). Guinea. Note: “Installed capacity” refers to installed capacity as of 2005 that is not refurbished before 2015. 130 MW in Côte d’Ivoire.530 MW of existing capacity is refurbished: almost 4. This means that the available hydropower resources become fully exploited6 in Nigeria.535 17.11 Generation Capacity and Capacity Mix in WAPP.530 New investments 15.096 6. Nigeria accounts for two-thirds of electricity consumption in the region.096 Refurbishment 5. developments in Nigeria that influence electricity demand (such as economic development and the politically determined electricity access targets) have a large impact on the total cost of electricity sector development in the rest of the region.003 77 1 16 6 4.096 5. . MW = megawatt. 2015 Trade stagnation scenario Low-growth scenario Trade expansion scenario Constant access rate Generation capacity (MW) Installed 4. Existing capacity that is refurbished before 2015 is included in the “refurbished capacity. The ample gas resources that could be used to develop gas-fired power plants are more expensive than hydropower in other countries. However. trade targets for targets for access rates access rates expansion 4. 1. Nigeria uses its large and relatively cheap hydropower resources to meet domestic demand growth.200 MW of natural gas–fired power in Nigeria.096 6.972 18.Investment Requirements 71 Table 3. and Ghana.” WAPP = West African Power Pool. First. and some offgrid technologies are built in rural areas.979 Generation capacity mix (%) Hydro 82 Coal 1 Gas 13 Other 4 Regional target access rate 4.186 80 1 12 7 Source: Rosnes and Vennemo 2008. Hence. Second.096 6.634 79 1 14 5 National targets for National National access rates.7 One coal-fired power plant (250 MW) is also built in Senegal.8 In addition to investments in new generation capacity. and 410 MW of heavy fuel oil (HFO) –fueled thermal power plants in various countries. Nigeria does not have a big impact on the trade patterns and resource development in the rest of the region for two reasons.

634 9.366 23. or less than 20 percent of the total grid cost.955 1. 2005–15 Lowgrowth scenario Trade expansion scenario National Regional targets for access target Constant rates access rate access rate Generation Investment cost Refurbishment cost T&D Investment cost Cross-border transmission lines Distribution grid Connection cost (urban) Connection cost (rural) Refurbishment cost Total 21.909 7.247 25.206 912 5.909 5. T&D = transmission and distribution.496 28.909 3.72 Africa’s Power Infrastructure Ghana accounts for 15 percent and Côte d’Ivoire accounts for 6 percent of the region’s demand. The investment cost of expanding the generation system in WAPP is slightly more than $23. but the cost of refurbishment is only $1.11).992 1. The costs of T&D and connection are almost equal to the costs of new generation capacity: $23.12 $ million Overnight Investment Costs in WAPP.429 22.758 Source: Rosnes and Vennemo 2008.698 612 6. Guinea accounts for almost 20 percent of the region’s production and exports more than eight times its domestic demand (mostly competitively priced hydro power).373 Trade stagnation scenario National National targets for access targets for rates. Table 3. Only 6 percent of this last figure is related to international transmission lines.822 1. Investments in new T&D lines account for more than $17 billion of this.3 billion for investments to expand and refurbish the grid (table 3. In contrast with Nigeria.128 1.518 26. these countries import about half of their electricity.909 7.057 62.057 64.634 9.634 9. The direct cost of connecting new customers to the grid is $4. .254 4.332 7.329 6.12). Note: WAPP = West African Power Pool.329 6.615 23. Investments in new capacity account for the majority of this ($22 billion).399 968 11.3 billion (table 3.813 941 11.022 11.329 6.363 17.632 1.057 55. trade access expansion rates 25.872 0 11.268 6. Rural areas account for 86 percent of this total.057 53.511 29.057 46.241 1.4 billion.3 billion.

In The Gambia. The annualized capital cost of meeting market demand in 2015 is $6 billion: almost $3 billion in T&D and connection and $3. National Targets for Electricity Access Compared with the constant access rate scenario. Almost half of this amount is spent in rural areas. The total annualized cost of system expansion is 2. connecting new households . or approximately $3 billion in annualized costs.2 percent of GDP.1 percent of the region’s GDP in 2015.3 billion).1 billion in generation.Investment Requirements 73 Total overnight investment costs are $46.7 billion higher ($200 million in annualized costs) than in the constant access rate scenario. vary widely among countries in the region. For example.25 billion in annualized capital costs. The total annualized cost of system expansion is therefore equivalent to 2.6 percent of GDP. Including variable costs of existing capacity lifts the total annualized cost of system expansion and operation to 3. both the grid-related cost (investment and variable) and variable generation cost contribute to raising the total cost to 7 percent of GDP.2 billion. Guinea invests in hydropower for export purposes. or about $1. the total annualized cost of system expansion and operation is 3. About half of this is related to operating new power plants. The region also requires additional generation capacity to meet increased demand: Investment costs are $1. meeting the regional target for electricity access (54 percent on average) requires additional investment of almost $7 billion. Adding the variable operation costs of existing capacity.5 percent of GDP. The largest contributors to this increase are the costs of T&D and connection. and the grid cost makes up another 1 percent of GDP.3 billion) and the grid ($1. and the total investment costs are 20 percent of GDP. Investment patterns. For example. In Senegal. Regional Target Rate: Electricity Access of 54 Percent on Average Compared with the constant access rate scenario. Variable operating costs are 12 percent higher (almost $400 million annually) because part of the new generation capacity is supplied by fossil fuels (diesel in rural areas and refurbishment of gas-fired power plants in Nigeria). Connecting new households to the grid accounts for the majority of additional costs—more than $5 billion ($600 million in annualized costs). variable fuel costs of existing HFO-fueled capacity are 4.6 billion in this scenario. and the other half is related to operating existing and refurbished power plants ($0.4 percent of the region’s GDP in 2015. The annual variable operating costs are $3. and therefore costs. meeting national targets requires an additional investment of $18 billion.

430 MW in Cameroon.6 billion in annualized costs). The rest of this section provides a description of three trade expansion scenarios.2 percent of GDP.9 percent of the region’s GDP in 2015.833 83 0 0 17 260 906 3. Rural areas account for more than half of connections. MW = megawatt. and 24 MW in the Central African Republic.915 97 0 0 3 Source: Rosnes and Vennemo 2008. . Existing capacity that is refurbished before 2015 is included in the “refurbished capacity.318 MW in the Republic of Congo.143 97 0 0 3 National targets for National National access rates. CAPP Table 3. 2015 Trade stagnation scenario Low-growth scenario Trade expansion scenario Constant access rate Generation capacity (MW) Installed 260 Refurbishment 906 New investments 3.” CAPP = Central African Power Pool. The region also requires additional investment in generation capacity to meet increased demand: Investment costs are more than $5 billion higher ($650 million in annualized costs).856 Generation capacity mix (%) Hydro 97 Coal 0 Gas 0 Other 2 Regional target access rate 260 906 4. Constant Access Rates under Trade Expansion CAPP requires 3.395 97 0 0 3 260 1. The variable operating costs are $850 million annually. Note: “Installed capacity” refers to installed capacity as of 2005 that is not refurbished before 2015. the total annualized costs of system expansion and operation rise to 4. trade targets for targets for access rates access rates expansion 260 906 4. This means that the available hydropower Table 3.74 Africa’s Power Infrastructure to the grid involves an extra investment of $12.5 billion ($1. The total annualized cost of system expansion is 2.856 MW of new capacity to meet market demand growth in 2015.13 provides an overview of generation capacity and the capacity mix in CAPP for all scenarios. All of this is hydropower:9 2.13 Generation Capacity and Capacity Mix in CAPP.081 3. 84 MW in Gabon. 1. When variable costs of existing capacity are included.

615 272 2.457 Trade stagnation scenario National National targets for access targets for rates.311 355 205 1.057 349 286 412 10 222 7.6 TWh) to the Republic of Congo and exports small amounts to Gabon.299 6. and Equatorial Guinea. Investments in new capacity account for Table 3.14 $ million Overnight Investment Costs in CAPP. It is assumed that imports from the Democratic Republic of Congo to the Republic of Congo remain at their 2005 levels. Therefore.766 272 2.157 272 1. Chad. and the Republic of Congo accounts for only 29 percent. Cameroon accounts for 600 MW of refurbished capacity. the Republic of Congo. . Cameroon exports more than one-third of its production (5. and the Central African Republic account for the rest. the development of these two countries has a strong effect on the rest of the region.5 TWh per year). Note: CAPP = Central African Power Pool.14).010 740 222 8.010 740 222 9.570 Source: Rosnes and Vennemo 2008. trade access expansion rates 5.036 0 286 1.348 312 286 1. and Cameroon accounts for onethird.196 6. The Republic of Congo accounts for more than one-half (54 percent) of electricity demand in CAPP in 2015. 2005–15 Lowgrowth scenario Trade expansion scenario National Regional targets for access target Constant rates access rate access rate Generation Investment cost Refurbishment cost T&D Investment cost Cross-border Distribution grid Connection cost (urban) Connection cost (rural) Refurbishment cost Total 5. and Gabon. Gabon has 10 percent of the region’s total demand. T&D = transmission and distribution.540 5.645 272 1. but the other countries have minimal electricity demand. Cameroon accounts for 64 percent of total electricity production in the region in 2015.10 In addition.Investment Requirements 75 resources are fully exploited in Cameroon.010 740 222 8. more than 900 MW of existing capacity must be refurbished. The investment cost of expanding the generation system in CAPP is almost $6 billion (table 3.981 301 2. but this is a small volume (less than 0.648 317 286 753 292 222 8.

1 billion. The rest is related to operating existing and refurbished power plants ($30 million) and the grid ($70 million). most of which (over $1 billion) is investment in new T&D lines.3 percent of GDP in the Republic of Congo. or $0. or about $140 million in annualized capital costs.4 billion. Connecting new households to the grid accounts for about .6 percent of GDP. A third of this last figure is related to international transmission lines. Grid-related costs (including investments. The total annualized cost of system expansion is about $1 billion. The costs of T&D and connection are much lower than the costs of building new power plants and account for less than 20 percent of total investment costs. which are relatively inexpensive. The direct cost of connecting new customers to the grid is 40 percent of the total grid investment cost. the total annualized cost of system expansion and operation is 1. equivalent to 1. maintenance. the costs of expanding generation are high in countries with relatively large hydropower development: 3 percent of GDP in the Republic of Congo and 1. The annualized capital cost of meeting market demand through 2015 is therefore almost $1 billion: $780 million in generation and almost $160 million in T&D and connection.4 percent of the region’s GDP in 2015. Chad and Equatorial Guinea do not invest in any new generation capacity. refurbishment. Their costs are related to grid expansion.3 percent of GDP in Cameroon as well. meeting the international target for electricity access (44 percent on average) requires an additional investment of $1.3 billion. about $50 million of which is related to operating new power plants. The costs of expanding and refurbishing the grid are $1. while the cost of refurbishment is only $0. mainly because new cross-border lines need to be built to make the large imports possible. This is mainly due to connecting new customers to the grid. Finally. Investment patterns and costs vary widely among countries in the region.6 percent in Cameroon. In particular. and new connection. Regional Target for Access Rate: Electricity Access of 44 Percent on Average Compared with the constant access rate scenario.6 billion). The Republic of Congo also imports a substantial amount of electricity.3 billion.76 Africa’s Power Infrastructure the majority of this ($5. and operation) account for another 0. Grid-related costs are 0. Annual variable operating costs amount to $150 million. Urban areas account for 98 percent of connection costs. in addition to investments in the domestic and cross-border grids. Total overnight investment costs in CAPP in the constant access rate scenario are slightly more than $7 billion. Adding the variable operation costs of existing capacity.

Mali. Côte d’Ivoire. Kenya. Burkina Faso. Botswana. the Central African Republic. Tanzania. CAPP: Cameroon. The total annualized cost of system expansion is therefore 1. Zambia. EAPP: Burundi. Ethiopia. The Gambia. More than 40 percent of the total costs of new connections are spent in rural areas. Sudan. connecting new households to the grid involves an extra cost of about $1. Chad. Variable operating costs are slightly higher because some of the new generation capacity in rural areas is based on off-grid diesel generators (there is also some mini-hydro and solar photovoltaic in the rural areas). and Uganda. Almost 30 percent of the total connection costs are spent in rural areas. 3. and Zimbabwe. For example. South Africa. This corresponds to $300 million in annualized costs. Guinea. Sierra Leone. Egypt.8 percent of GDP in 2015. 2. Ghana. Notional demand refers to the aggregate quantity of goods and services that would be demanded if all markets were in equilibrium. The largest contributors to this increase are the costs of T&D and connection.Investment Requirements 77 $0. Nigeria. compared with only 2 percent in the constant access rate scenario.3 billion more in investment than keeping the access rate constant at current levels.5 billion higher ($66 million in annualized costs) than in the constant access rate scenario. Niger. the Republic of Congo. The total annualized cost of system expansion is therefore 1. Data for Sub-Saharan Africa exclude Egypt. National Targets for Electricity Access Meeting national targets requires $2. The region also requires additional generation capacity to meet increased demand: Investment costs are $0. WAPP: Benin. Equatorial Guinea. Namibia. and Gabon.6 percent of the region’s GDP in 2015. Including the variable operating costs of existing capacity increases the total annualized cost of system expansion and operation to 2 percent of GDP.6 billion ($80 million annually) of total additional costs. Notes 1. The membership of the power pool is as follows: SAPP: Angola.3 billion ($165 million in annualized costs). . Mozambique. compared with only 2 percent in the constant access rate scenario. The region also requires additional generation capacity to meet demand: Investment costs are almost $1 billion higher ($126 million in annualized costs). Mauritania. Senegal. Liberia. Lesotho. the Democratic Republic of Congo. Malawi. Guinea-Bissau. Including variable costs of existing capacity lifts the total annualized cost of system expansion and operation to 1. Rwanda. Djibouti.8 percent of GDP. and Togo.

78

Africa’s Power Infrastructure

4. This includes both power plants that were operational in 2005 but will need to be refurbished before 2015 and plants that were not operational in 2005. 5. South Africa has already committed to building 3,000 MW of capacity in open-cycle gas turbine generators. This capacity is therefore included exogenously in the model. 6. Fully exploited refers to the assumed maximum potential for hydropower in the model. In most cases, this maximum potential has been set equal to identified projects and plans, even though the full hydropower potential of a country may be much larger. The identified projects serve as a proxy for developments that are realistic in the time frame in focus here (the next 10 years, formally before 2015). 7. Because we use only one (average) investment cost per technology per country, not individual costs per project, cheaper resources are often fully utilized in one country before the more expensive resources are developed in a neighboring country. The cost of building international transmission lines counteracts this to some extent. 8. In addition, there are tiny investments in off-grid technologies in rural areas. 9. There are negligible investments in off-grid technologies in rural areas. 10. See note 6 for a definition of “fully exploited.”

Reference
Rosnes, Orvika, and Haakon Vennemo. 2008. “Powering Up: Costing Power Infrastructure Spending Needs in Sub-Saharan Africa.” Background Paper 5, Africa Infrastructure Country Diagnostic, World Bank, Washington, DC.

CHAPTER 4

Strengthening Sector Reform and Planning

Since the 1990s reform has swept across the power sector in developing regions. Sub-Saharan Africa is no exception. New electricity acts have been adopted that envisage the reform of state-owned electricity utilities and permit private sector participation. Thus far, however, the private sector has had only limited involvement in reforms. Various short-term private management contracts were awarded, but few have resulted in sustainable improvements in the performance of national utilities. Only a few private leases and concessions survive, mostly in Francophone West Africa. The private sector has been involved primarily in the generation sector. Sub-Saharan Africa’s deficit in generation capacity and lack of investment resources has opened the door for independent power projects (IPPs). Power sector reforms originally followed the prescription of industry unbundling, privatization, and competition, but electricity markets that meet these criteria are nowhere to be found in Africa. Instead, the region has seen the emergence of hybrid markets in which incumbent state-owned utilities often retain dominant market positions and IPPs are introduced on the margin of the sector. Attracting investment to hybrid power markets presents new challenges. Confusion arises about who holds responsibility for power sector
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planning, how procurement should be managed, and how to allocate investment among state-owned utilities and IPPs. These challenges need to be addressed if the generation sector in Sub-Saharan Africa is to benefit from the promised new private investment. Independent electricity or energy regulatory agencies have also been established in most Sub-Saharan African countries. They were originally intended to protect consumers, facilitate market entry, and provide price certainty for investors, but they are now criticized for inconsistent decision making and for exacerbating regulatory risk. Independent regulation depends on adequate political commitment and competent, experienced institutions. Without these prerequisites, other forms of regulation may be preferable, such as those that curtail regulatory decision-making discretion with more specific legislation, rule, and contracts. Some regulatory functions may also be outsourced to expert panels.

Power Sector Reform in Sub-Saharan Africa
Power sector reform in Sub-Saharan Africa has been widespread. There have been attempts to improve the performance of state-owned utilities, new regulatory agencies have been created, private management contracts and concessions have been awarded, and private investment has been sought in the form of IPPs. As of 2006, all but a few of the 24 countries of Sub-Saharan Africa covered by the Africa Infrastructure Country Diagnostic (AICD) had enacted a power sector reform law, three-quarters had introduced some form of private participation, two-thirds had privatized their state-owned power utilities, two-thirds had established a regulatory oversight body, and more than one-third had independent power producers (figure 4.1). About onethird of the countries have adopted three or four of those reform components, but few have adopted all of them, and the extent of reform remains limited. In most countries, for example, the national state-owned utility retains its dominant market position. Private sector cooperation is either temporary (for example, a limited-period management contract) or marginal (in the form of independent power producers that contract with the state-owned national utility). In most cases, the national utility is the mandated buyer of privately produced electricity while still maintaining its own generation plants. There is no wholesale or retail competition in Africa.1 Many countries are reconsidering whether certain reform principles and programs—notably the unbundling of the incumbent utility to foster

Strengthening Sector Reform and Planning

81

Figure 4.1

Prevalence of Power Sector Reform in 24 AICD Countries

reform law

other PSP SOE corporatization regulatory oversight IPPs operating vertical unbundling 0 20 40 60 80 percentage of countries 100

Source: Eberhard 2007. Note: “Other PSP” means forms of private sector participation other than independent power projects (IPPs), namely, concessions or management contracts. AICD = Africa Infrastructure Country Diagnostic; SOE = state-owned enterprise.

competition—are appropriate for Sub-Saharan Africa.2 Besant-Jones (2006), in his global review of power sector reform, concludes that power sector restructuring to promote competition should be limited to countries large enough to support multiple generators operating at an efficient scale, which excludes most countries of Sub-Saharan Africa. Even South Africa and Nigeria, which are large enough to support unbundling, have not seen much progress. An examination of the database on private participation in infrastructure (PPI) maintained by the Public-Private Infrastructure Advisory Facility (PPIAF), which covers all countries in Sub-Saharan Africa, unearthed nearly 60 medium- to long-term power sector transactions involving the private sector in the region (excluding leases for emergency power generation). Almost half are IPPs, accounting for nearly 3,000 megawatts (MW) of new capacity and involving more than $2 billion of private sector investment (table 4.1). Côte d’Ivoire, Ghana, Kenya, Mauritius, Nigeria, Tanzania, and Uganda each support two or more IPPs. A few IPP investments have been particularly successful, including the

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Table 4.1 Overview of Public-Private Transactions in the Power Sector in Sub-Saharan Africa Type of private participation Number of Investment canceled in facilities Number of transactions transactions ($ million)

Countries affected

Management Chad, Gabon, Gambia, Ghana, or lease Guinea-Bissau, Kenya, Lesotho, contract Madagascar, Malawi, Mali, Namibia, Rwanda, São Tomé and Príncipe, Tanzania, Togo Concession Cameroon, Comoros, Côte d’Ivoire, contract Gabon, Guinea, Mali, Mozambique, Nigeria, Sao Tomé and Príncipe, Senegal, South Africa, Togo, Uganda Independent Angola, Burkina Faso, Republic of power Congo, Côte d’Ivoire, Ethiopia, project Ghana, Kenya, Mauritius, Nigeria, Senegal, Tanzania, Togo, Uganda Divestiture Cape Verde, Kenya, South Africa, Zambia, Zimbabwe Overall
Source: World Bank 2007; AICD 2008. Note: — = data not available; n.a. = not applicable.

17

4

5

16

5

1,598

34 7 74

2 — 11

2,457 n.a. 4,060

Tsavo IPP in Kenya (box 4.1) and the Azito power plant in Côte d’Ivoire (box 4.2). Gratwick and Eberhard (2008) predict that although IPPs have sometimes been costly because of technology choices, procurement problems, and currency devaluation, they will nevertheless continue to expand generation capacity on the continent. Some have been subject to renegotiation. Several factors contribute to the success of IPPs: policy reforms, a competent and experienced regulator, timely and competitive bidding and procurement processes, good transaction advice, a financially viable off-taker, a solid power-purchase agreement (PPA), appropriate credit and security arrangements, availability of low-cost and competitively priced fuel, and development-minded project sponsors. The other half of the PPI transactions in Sub-Saharan Africa have been concessions, leases, or management contracts, typically for the operation of the entire national power system. Many of these projects have

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Box 4.1

Kenya’s Success with Private Sector Participation in Power
Private sector participation in the power sector in Kenya started with the Electric Power Act of 1997. Since then Kenya has implemented important electricity reforms. The act also introduced independent economic regulation in the sector, which is important for creating a more predictable investment climate to encourage public sector participation. It has since become government policy that all bids for generation facilities are open to competition from both public and private firms and that the national generator does not receive preferential treatment. The sector was unbundled in 1998 with the establishment of the Kenya Electricity Generating Company (KenGen, generation) and Kenya Power and Lighting Company (KPLC, transmission and distribution). Now KenGen and KPLC are 30 percent and 50 percent privately owned, respectively. The Electricity Regulatory Board was established in 1998. It was converted into the Energy Regulatory Commission and granted new powers in 2007. To date the government has not overturned a decision of the board or commission, and it maintains a significant degree of autonomy. It has issued rules on complaints and disputes, licenses, and tariff policy. The regulator also oversees generation expansion planning. KPLC manages the procurement and contracting process with IPPs, subject to approval by the regulator of power purchase agreements. Five independent power producers supply an increasing proportion of the country’s electricity, and three additional IPPs have recently been bid out. A proposed wind farm has also recently been licensed (but not yet built). An independent evaluation by the University of Cape Town (Gratwick and Eberhard 2008) concluded that IPPs had a positive outcome on the development of Kenya’s power sector. The public sector developed very little generation capacity in the decade preceding reforms. The performance of KenGen’s existing plant is inferior to adjacent IPPs. The Tsavo IPP in Kenya is a particularly good example of an investment that came through an international competitive bidding process and subsequently produced reliable and competitively priced power.
Source: Authors’ compilation based on background materials provided by the World Bank’s Africa Energy Department staff, 2009.

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Box 4.2

Côte d’Ivoire’s Independent Power Projects Survive Civil War
Compagnie Ivoirienne de Production d’Electricité (CIPREL) was among the first IPPs in Africa. CIPREL began producing power in 1994 with a 210 MW open-cycle plant fired by domestically produced natural gas. SAUR Group and Electricité de France (EDF) were major shareholders. At the time, Côte d’Ivoire’s investment climate was among the best in the region, and the economy was growing at an annual rate of 7.7 percent. This favorable climate, coupled with CIPREL’s success, stimulated interest in the second IPP, Azito, during its international competitive bid in 1996. Ultimately a consortium headed by Cinergy and Asea Brown Boveri was selected to develop the plant, and the deal was safeguarded by a sovereign guarantee and a partial risk guarantee from the World Bank. In 2000 Azito’s 330 MW gas-fired, open-cycle plant came online, becoming the largest IPP in West Africa. Just months after Azito’s deal was finalized and well before the plant was completed, Côte d’Ivoire suffered a political coup. During the years of civil unrest between 1999 and 2007, the revenues of the national utility, Compagnie Ivoirienne d’Electricité (CIE), declined by approximately 15 percent, reducing the state’s ability to invest in much-needed electricity infrastructure. Yet the turmoil had no impact on the IPPs, and they continued to produce electricity and make payments to CIE. Both IPPs are keen to expand their interest in the generation sector. Why have IPPs in Côte d’Ivoire fared so well? A stable currency pegged to the euro (and earlier to the French franc) minimizes the exchange-rate risks that have taxed other Sub-Saharan African IPPs. Cohesive power sector planning after the droughts of the 1980s helped the country achieve a good mix of hydro and thermal power sources. The country has a sufficient power supply for itself and for exports to its neighbors in their times of need. The political instability was also confined to the north of the country, where there are fewer consumers than in the south. This allowed the utility to collect sufficient revenues, even when they stopped flowing in from rebel-controlled areas. The availability of domestic gas also helped keep power prices down. The sponsors of the IPP (SAUR and EDF) have been involved throughout the power supply chain, which may explain why there have been no disruptions and why interest continues. Development partners (the World Bank via the International Development Association and the International Finance Corporation; the West African Bank for Development; Promotion et Participation pour la Cooperation Economique; and firms with a development mandate, such as IPS and Globeleq have played a critical role in finalizing and sustaining the deals.
Source: Gratwick and Eberhard 2008.

Gabon. Tanzania. because the private management contractor would neither acquire equity nor incur commercial risk. Because the state retained full ownership of the assets. Kenya. Cape Verde. Losing the War The only remaining private management contracts in the power sector in Sub-Saharan Africa are in Madagascar and The Gambia. and enjoy the resulting financial and operational improvements. and Uganda. and Rwanda). After the expiration of management contracts in several other countries (including Namibia. Nor have they proven sustainable. the government could avoid the political objections that inevitably accompany divestiture. Furthermore. Long-term private leases or concessions have survived only in Cameroon. and at least five more were allowed to expire after their initial term (in Gabon and Mali management contracts were followed by concessions).3 Management contracts were once regarded as the entry point for PPI. Private Management Contracts: Winning the Battle. Malawi. management contracts have not been able to overcome the broader policy and institutional deficiencies of the sector. Although widely used (there are 17 contracts in 15 countries in the region) and usually productive in terms of improving utility collection rates and revenues and reducing system losses. Côte d’Ivoire. utilities reverted to state operation. Mali. regard it as a first step toward greater liberalization and privatization of the utility and not an end in itself.Strengthening Sector Reform and Planning 85 been unsuccessful. which have been involved in almost all management contracts. In reality. Donors and development finance institutions. Yet only in Gabon and Mali did management contracts mark the beginning of further . Why has it proven difficult to implement and retain support for an ostensibly simple management contract? The disconnect among stakeholder expectations bears a large part of the responsibility. either through generating sufficient revenue or through improving investment ratings and attracting private debt. management contracts have proved complex and contentious. Moreover. Of the 17 African management contracts. it should be simple for governments to hire competent professionals. they have failed to generate much-needed investment funds. pay them a fee for their services (plus bonuses for fulfillment of specified performance targets in most cases). four were canceled before their expiration date. Lesotho. about one-third of the contracts are either in distress or have already been canceled.

Labor relations improved despite the layoff of more than 1. and raise tariffs—African managers in state-owned utilities had not had the same freedom. Between 1996 and 2002. Management contracts may have proved easier to sustain had they been accompanied or followed by large amounts of external investment funding.000 new connections were installed (at a pace far greater than the previous expansion rate). including greater labor productivity. on the other hand. For example. The utility introduced a poverty tariff for consumers using 50 kilowatt-hours a month or less (Ghanadan and Eberhard 2007).300 workers. and labor productivity soared without a change in the size of the workforce (Clark and others 2005). Based on the promising results from these and other management contracts. They were not able to do so. 30. Assessments of the impact of African electricity management contracts indicate improved performance. were more skeptical. collection rates rose from 67 to 93 percent. system losses fell by 5 percent. however. costs fell by 30 percent. saw them not as easy first steps but as undesirable obligations that they needed to fulfill to receive crucial donor funding. and annual revenues rose by 35 percent. partly because of poor initial conditions and partly because they . donors concluded that they were an effective method for improving utility performance. between mid-2002 and mid-2005 under the management contract in Tanzania. better collection rates. donors viewed the contracts as part of a larger reform process and expected them to be extended long enough to allow parallel policy and institutional changes to take root.86 Africa’s Power Infrastructure liberalization. whose departure was eased by a generous severance package. they could achieve similar performance at a much lower price. and reduced system losses. Some country officials. cut service to delinquent customers. the number of customers doubled. Working capital overdrafts were cleared. African governments. Even in countries where concessions or divestitures were clearly not an option (mostly because of popular or political opposition to privatization). northern part of Namibia also produced significant gains. A management contractor in the rural. They acknowledged that performance had improved but argued that they were largely a result of foreign managers being allowed to lay off excess staff. however. and the utility even secured small loans from private commercial banks (contingent on the continued presence of the management contractors). The main counterargument was therefore that if public managers were given the same authority as management contractors. or had they substantially improved service quality or reduced costs enough to provide investment capital from retained earnings for network rehabilitation and expansion.

the management contractor in Tanzania earned $8. For example. they cannot overcome the obstacles posed by broader policy and institutional weaknesses. Moreover. and the contracts were allowed to lapse. and the Swedish donor. the performance improvements are gradually distributed to unaware and unorganized consumers.5 million in fixed fees and $8. the utilities have an average of only about 150 customers per employee. The significant political backlash convinced policy makers that the benefits of management contracts did not outweigh the costs. They also protested the substantial contractor fees. . Yet most customers were unaware of or indifferent to financial improvements and were instead concerned with service quantity. costs. and the need to purchase expensive power from IPPs.9 million in performance-based fees during its 56 months in operation. paid a large portion of the performance-based reward). and cost recovery are also poor. changes were gradual and modest. soaring oil prices. whereas the costs immediately affect a vocal and organized few. Sector Reform. Commercial efficiency. For example. and reliability of supply. Critics of privatization and private participation—including some who had been displaced from management posts by the management contracts—objected to continued load shedding and the indignity of relying on foreign managers. collection rates. quality. Although management contracts can improve the efficiency and sustainability of utilities. Sector Performance Sub-Saharan Africa lags behind other regions in installed capacity. Many other performance indicators are also subpar. and price.Strengthening Sector Reform and Planning 87 often coincided with cost-raising factors beyond the control of utility managers such as regional drought. electricity production. African management contracts appear to have won the economic battles but lost the political war. the Swedish International Development Cooperation Agency. They must therefore be restructured to be sustainable and more widely palatable. whose protests often overcome rational debate. In these areas. African ministries of finance were doubtless pleased with the financial and efficiency gains observed under the management contracts. Transmission and distribution (T&D) losses average 25 percent. (Those fees were a small fraction of the financial gains produced under the management contract. compared with an average of more than 500 in the high-income member countries of the Organisation for Economic Co-operation and Development. access rates.

In this model the state-owned utility remains intact and occupies a dominant market position. Note: T&D = transmission and distribution. Performance differential is statistically significant at the 1 percent level. The Search for Effective Hybrid Markets The 1990s reform prescription of utility unbundling and privatization followed by wholesale and retail competition was not effective in Africa. Nevertheless.2 Effect of Management Contracts on Performance in the Power Sector in Sub-Saharan Africaa Connection per employee (number) Implicit collection rates (% of electricity billed) T&D loss (% of generation) Cost recovery (% of billing) 0 20 40 60 80 100 120 140 other 160 180 200 management contract Source: Vagliasindi and Nellis 2010.88 Africa’s Power Infrastructure Figure 4. it does not always improve all performance indicators (figure 4. however.2). Countries with management contracts fail to make any major or sustained improvements (except in labor productivity). reveal that utilities in countries with IPPs almost always fare better and that concessions are far more effective than management contracts in improving performance. Disaggregated data on PPI. The new reality is therefore one of hybrid power markets. Power sector reform should improve utility performance (Gboney 2009). although PPI generally has a positive effect on performance. a. whereas private sector participation (typically in . Most of the region’s power systems are too small to support meaningful competition.

Traditionally the state-owned utility bore responsibility for planning and procurement of new power infrastructure. motivate planning. If this is the case. Yet rigorous analysis that assigns appropriate costs to capital seldom supports such claims. Where still present. Few countries in Africa have an explicit security of supply standard. planning. which are compounded by widespread power shortages and an increasing reliance on emergency power throughout the region.3 explores South Africa’s difficulties with planning in the power sector.Strengthening Sector Reform and Planning 89 the form of IPPs) compensates for the lack of investment on the part of governments and utilities. those functions were often moved to the ministry of energy or electricity. Africa’s hybrid electricity markets pose new challenges in policy. in many cases generation expansion planning has collapsed.4 and the incumbent state-owned national utility has typically assumed the responsibility as supplier of last resort. planning tends to take the form of outdated. resulting in poorly executed plans. however. and potential investors should benefit from regular disclosure of information regarding demand growth and investment opportunities. then regulators would be in a better position to assess the need for investment in new capacity. However. and not the interests of the utility. With the advent of power sector reforms and the introduction of IPPs. Planning needs to be dynamic and flexible. however. and procurement. a governance and oversight mechanism would be needed to ensure that national interests. If monitoring were institutionalized. It is often uncertain where responsibility for ensuring adequate and reliable supply lies in hybrid power markets. At the same time. rigid master plans that do not reflect the changes in price and availability of fuel and equipment and the resulting least-cost options. especially if the transmission and system operations are unbundled from generation. The national utility generally has much greater access to resources and professional staff than either the energy ministry or the regulator. It therefore may be the most pragmatic choice to be the authority for national planning. few government departments or regulators explicitly monitor adequacy and reliability of supply. Box 4. which undermine the entry . The allocation of responsibility for capacity expansion should be carefully considered. planning should not preclude the emergence of innovative solutions from the market. and even fewer require utilities to regularly disclose public reports regarding their security of supply. Incumbent state-owned utilities often argue that they are able to supply power more cheaply or quickly than private alternatives (even if they lack the resources to do so). regulation. A simultaneous transfer of skills did not always occur.

In the meantime. and forward options—not unlike NordPool in Scandinavia or PJM on the East Coast of the United States. on which the regulator bases its licensing of generators. which proposed that Eskom be unbundled. although some cogeneration contracts have been concluded. IPPs would be allowed to enter the market. but these will begin to come online in 2012. and Eskom once again assumed responsibility for expanding generation capacity. The government has reassigned responsibility for power sector planning to Eskom. The Ministry of Energy is also (continued next page) . Eskom was traditionally the supplier of last resort in South Africa and had responsibility for power sector planning and new investments. It has since ordered new large-base-load power stations. but so did the Ministry of Energy and the regulator—and each differed from the other. This was largely possible because massive overinvestment in the 1970s and 1980s generated substantial spare capacity. By this point. Now confusion arose as to who was responsible for these functions. From 2001 to 2004 consultants worked to design a power exchange and bilateral power market with associated financial contracts for differences. No new private investment was possible in this context of market uncertainty and in the absence of clear contracting frameworks. although the Ministry of Energy decides which of Eskom’s planning scenarios to adopt. Although this arrangement has provided some certainty regarding the allocation of responsibilities for planning. Eskom continued to develop plans. growing demand and a lack of new capacity were eroding reserve margins. and competition introduced. In 1998 the government published a white paper on energy policy. In 2004 the government abandoned its plans to establish a power exchange. It generates 96 percent of the country’s electricity and through 2006 has provided reliable and secure power supplies. South Africa has experienced power rationing and blackouts. The consultants’ plan was never implemented. At the same time. During this time the government prohibited Eskom from investing in new capacity because the market would provide new private investment. The Ministry then promulgates and publishes the official plan. futures. So far no new IPPs have been contracted. At the same time. the official plan is prescriptive rather than indicative and potentially excludes many innovative investment solutions from the private sector.3 Power Sector Planning Dilemmas in South Africa The state-owned national utility Eskom dominates South Africa’s power market. 30 percent be sold.90 Africa’s Power Infrastructure Box 4. Eskom was four years behind in its investments.

buying. Theoretically. which provides some of the most costly power in the region (when it is operational. because a rigorous bidding process provides credibility and transparency and results in more competitively priced power. a coal field) or if the project is unique is some way (for example. it highlights the importance of clearly allocating responsibility for planning and procurement functions. unsolicited bids sometimes allow private investors to offer innovative generation alternatives. and the original project developer can subsequently improve their offer to beat the most competitive bid. Unsolicited bids can lead to expensive power. unsolicited bids could be subjected to a Swiss challenge whereby the project is bid out competitively. This is unfortunate. the development of methane resources in Lake Kivu in Rwanda). most African utilities have not supplied adequate investment in much-needed generation capacity. Governments should therefore opt for . transmission. of IPPs. and establishing governance mechanisms to ensure that decisions on capacity expansion and procurement are made transparently. The case of South Africa illustrates the complexity and difficulty of involving both state-owned utilities and IPPs in hybrid power markets. developing flexible and up-to-date plans. When authorities finally begin procurement.3 (continued) developing a proposal to unbundle the planning. and system operation functions from Eskom. However. because an unresolved arbitration process has recently closed the plant). This has been the case in Tanzania and Rwanda.Strengthening Sector Reform and Planning 91 Box 4. In particular. they may not take the trouble to conduct international competitive bidding. and in the national interest. The failure to order new plants on a timely basis discourages investors and results in power shortages that prompt recourse to expensive emergency power. fairly. the Swiss challenge would be difficult to implement if the project developer owns associated fuel resources (for example. and they generally cover the project development costs. Poor understanding of the hybrid market prevents policy makers from devising clear and transparent criteria for allocating new building opportunities among the incumbent state-owned utility and IPPs. In practice. however. Regardless. Source: Authors. The best example of that is IPTL in Tanzania.

92 Africa’s Power Infrastructure international competitive bids when feasible but should also develop policies for handling unsolicited bids. . For example. Above all. For various reasons. Table 4. Hybrid markets also require clarity on the IPP off-take arrangements. They must also improve their planning capabilities. Development finance institutions and bilateral donors can provide advice and expertise to governments and utilities on establishing transparent frameworks and procedures for contracting and reaching financial closure with project sponsors and private investors. the generation plant for the national utility may be largely depreciated and paid for (for instance. In most cases. despite higher prices). Yet it is not always clear whether this implies that the national utility has exclusive purchasing rights. For example. establish clear policies for allocating new investment opportunities among the stateowned utilities and IPPs. IPPs should be permitted to seek their own customers. and prices may not necessarily reflect costs. IPPs will require off-take agreements with incumbent national utilities that aggregate demand and average prices for customers. To maximize their benefit. Customers are thus likely to seek their power from the stateowned utility rather than buying directly from the IPP (unless security of supply concerns make power from IPPs more attractive. Otherwise lending to public utilities may unintentionally deepen hybrid markets’ inherent contradictions and crowd out private investment. the sector requires stronger public institutions that can engage effectively with the private sector. old hydroelectric facilities). however. power from IPPs in Sub-Saharan Africa is likely to be more expensive than from the national utility.2 provides a list of common policy questions in the sector and corresponding solutions. Hybrid power markets will not disappear from the African landscape in the near future. Yet they must be careful to pay sufficient attention to the peculiarities of the hybrid market. Some countries have used the single-buyer model with the national utility as the buyer. are IPPs required to sell only to the national utility. Surprisingly few African countries have explicitly defined their power market structures or procedures for negotiating and contracting PPAs with IPPs. African governments and their development partners must establish a robust institutional foundation for the single-buyer model with clear criteria for off-take agreements. or could they also contract separately with large customers or across borders? Countries should therefore make it clear that the central purchasing function of the national utility does not imply exclusivity. and commit to competitive and timely bidding processes.

Establish clear cost recovery mechanism for national utilities with captive customers who contract with IPPs and decide when PPA costs can be passed on to customers. technological expertise. Source: Authors.Strengthening Sector Reform and Planning 93 Table 4. not a rigid master plan.S. or financing or contracting capability). flexible. according to fuel source. Ensure that PPAs. how? Who is responsible for contracting IPPs? Can IPP PPA costs be passed on by national utility to customers? Will IPPs be fairly dispatched by the incumbent state-owned utility? Clarify market structure. Build local capacity to negotiate effectively with private investors. standard is one cumulative day of outage per 10 years. grid codes. Test competitiveness of procurement. but this will require governance mechanisms to provide oversight and guidance on planning assumptions and criteria. and regularly updated. . Who is responsible for security and adequacy of supply? Who is responsible for generation expansion planning? How are investment opportunities in new generation allocated between the national utility and IPPs? Who is responsible for initiating procurement of new generation plant and when? Is competitive bidding required. Ensure adequate governance and oversight to ensure timely initiation of fair and transparent procurement. or can unsolicited offers be considered and. PPA = power-purchase agreement. or utility. Planning should be indicative. Note: IPP = independent power project. dynamic. (The U. if so.) Assign responsibility for reporting to utilities and monitoring supply adequacy to regulator. Superior access to resources and professional staff may make the national utility the pragmatic choice. Establish under what circumstances and how unsolicited bids can be considered. Allow willing buyer-seller contracts between IPP and large customers and cross-border trades and contracting. Establish a procurement function (either in a PPP unit or linked to system operator or transmission function) that is informed by needs identified in planning process. Employ international competitive bidding processes whenever possible. Establish clear and transparent criteria for allocating new investment opportunities to either national utility or IPPs (for example.2 Question Common Questions in Hybrid Power Markets and Their Policy Solutions Policy options Develop standard for security and adequacy of supply. regulator. Assign responsibility to ministry. Establish nonexclusive central purchasing function (possibly attached to system operator or transmission) that aggregates demand and signs PPAs. one day per year may be reasonable for countries in Sub-Saharan Africa. and market rules have fair take or pay and dispatch provisions.

Although the national utility can play a useful role in aggregating demand and entering into long-term contracts with new investors. with the incumbent state-owned utility designated as the single buyer of electricity from IPPs. and encourage efficient. Furthermore.94 Africa’s Power Infrastructure Hybrid power markets. An analysis of data collected in the initial sample of 24 AICD countries indicates that the power sector performs better in countries with regulators than those without (figure 4. Despite the better performance of countries with regulators. Cost recovery calculations can vary based on numerous assumptions that may affect estimates. Mozambique. low-cost. have become the most common industry structure in Africa. . or reserve margins. Regulation was originally intended to ensure financial viability. Including sunset clauses in PPAs would encourage IPPs to trade at least part of their production on a power exchange in the future. Such an arrangement would require nondiscriminatory access to the grid.3). countries that lack regulators (such as Benin. It may be advantageous to migrate to a more short-term market in the future. Thought also needs to be given to the long-term implications of signing 25. it is far from clear whether regulation has catalyzed new private investment. Chad. Large customers should also have choice and should be able to contract directly with IPPs or import power. and reporting on T&D losses is not always reliable. attract new investment. T&D losses. Yet the same countries show no obvious improvements in cost recovery.or 30-year contracts with IPPs. Governments hoped that independent regulation would insulate tariff setting from political influence and improve the climate for private investment through more transparent and predictable decision making. few advantages are found in assigning it exclusive buying rights. Perhaps a better description of such a model is a central nonexclusive buyer rather than a single buyer. IPPs should be able to enter into willing seller-buyer arrangements and supply directly to both the national utility and large customers. and Sudan) are among the poorest on the continent and face many additional challenges that affect the performance of their power sectors. Burkina Faso. Instead. These apparent contradictions can be explained. The Possible Need to Redesign Regulatory Institutions Most countries in Sub-Saharan Africa have established nominally independent regulatory agencies for their power sector. and reliable service provision. the Democratic Republic of Congo.

with many resigning under pressure before completing their full term. utilities.Strengthening Sector Reform and Planning 95 Figure 4.3 Power Sector Performance in Countries with and without Regulation access (% of households) Connections per employee (number) T&D loss (% of generation) 0 20 40 60 80 100 120 140 160 180 regulation Source: Vagliasindi and Nellis 2010. which are often necessary to cover costs. Tariff setting remains highly politicized. The Challenges of Independent Regulation Utility regulation in developing countries has clearly coincided with the emergence of new problems. investors. Inexperienced regulators tend to make unpredictable or noncredible decisions. Turnover among commissioners has been high. In some ways. Establishing independent regulatory agencies may be particularly risky for all stakeholders (governments. The disconnect between law (or rule) and practice is often wide. In many cases. Alternatively regulators may have been given excessively wide discretion and overly broad objectives and must make difficult decisions with important social and political consequences (Eberhard 2007). Note: T&D = transmission and distribution. and customers) in sectors that are being reformed. and governments are sensitive to popular resentment against price increases. it is not surprising to find political interference and pressure on regulators. no regulation Some critics argue that regulatory agencies have exacerbated the very problems that they were meant to address while creating regulatory risk for investors. regulators are far from independent and are subject to pressure from governments to modify or overturn decisions. . especially when prices are not already high enough to ensure sufficient revenue.

Tenenbaum. tariff-setting systems) in legal instruments such as basic law. The law or . Many are still quite fragile and lack capacity. Gabon. Long-term contracts must accommodate for the possibility of unexpected events. licenses. Côte d’Ivoire. management. For example. however. Cameroon. This does not imply that independent regulation is undesirable.96 Africa’s Power Infrastructure Governments in developing countries often underestimate the difficulty of establishing new public institutions. complementary. or hybrid regulatory options and models (such as regulatory contracts or outsourcing of regulatory functions) may be a better starting point. Regulation by Contract Most of the Sub-Saharan countries that were previously British colonies have independent regulators that operate within a system of common law with wide discretionary powers over decision making. Because of limited institutional capacity in the sector. political expediency. transitional. In the French legal tradition. and few are older than 10. Regulatory agencies can successfully coexist with incomplete regulatory contracts that require additional regulatory mechanisms. The reality is that developing countries are often only weakly committed to independent regulation and face capacity constraints (Trémolet and Shah 2005). concession contracts. fragile institutions. Many regulatory institutions in developing countries are no more than a few years old. Independent regulation requires strong regulatory commitment and competent institutions and people. those countries that were previously French colonies have tended to rely on regulatory contracts. Regulatory contracts comprise detailed predetermined regimes (including multiyear. On the other hand. a general legal framework and an understanding between the parties to facilitate renegotiation is used to restore financial sustainability in extraordinary circumstances. and PPAs (Bakovic. and organization and creating new professional capacity are lengthy processes. and Woolf 2003). the English legal tradition usually dictates specifying in advance the events that will trigger renegotiation. and capacity constraints necessitate limits on regulatory discretion. On the other hand. They are generally constructed for private participation but may also be used to improve the performance of stateowned utilities. It may be prudent in such cases to acknowledge that weak regulatory commitment. and Mali all have electricity concession contracts that incorporate core regulatory functions. Building enduring systems of governance. secondary legislation.

who perform tariff reviews. Any policy directives or other communications from the minister to the regulator or expert panel must be made publicly available. Shukla. The sector minister (or other relevant authority) may request reconsideration of the recommendations but must do so within a specified period. and publishing performance data. Uganda provides a good example of successful coexistence of the two regulatory forms. analyzing.Strengthening Sector Reform and Planning 97 contract could explicitly define the role of the regulator—for example. in periodic tariff setting. merging these two distinct legal traditions can create problems. Nevertheless. . Outsourcing Regulatory Functions Countries may also outsource regulatory functions to external contractors. The country has an independent regulator. benchmarking. Two main models of regulatory outsourcing are found. For example. monitoring of performance. he or she must provide a written public explanation. Power sectors that are beset by challenges or problems relating to a regulator’s independence. but the generation and distribution components of the power sector have been privatized in concession agreements. funded from an earmarked budget outside the line ministry. Outsourcing might also be used when it is cost effective (Trémolet. the electricity concession in Gabon relies on external parties to monitor and verify performance indicators specified in its contract. The regulator or expert panel holds public consultations with any stakeholders affected by its recommendations (Brown and others 2006). even if a contract specifies a tariff-setting formula. and Venton 2004). the regulator might feel obligated by its legislative mandate to intervene in the public interest. clarifying regulatory roles and functions is essential. or mediation and arbitration. The same is true for regulatory contracts that need additional support for effective administration. Otherwise. The first involves hiring outside consultants to provide technical support to regulators or the parties subject to a regulatory contract. If the minister rejects or modifies the recommendations. or legitimacy are good candidates for regulatory outsourcing. The strongest version of the second model requires the advisory regulator or expert panel to clearly explain its recommendations in publicly available documents. Governments can also contract separate advisory regulators or expert panels. compliance monitoring. the recommendations are enacted. The regulator can also enhance the transparency of regulatory contracts by collecting. capacity. For example. In these cases. and dispute resolution.

which would aid the integration of regional networks. a good first step might be a set of low-discretion regulatory contracts without a regulatory agency (figure 4. Others argue that some regulatory discretion is inevitable. institutional development. regulatory functions could be contracted to an expert panel. They would also provide greater continuity and consistency in specialist support and assist in harmonizing regulatory regimes. but they are not mutually exclusive and often coexist (figure 4. . They should also fit the country’s levels of regulatory commitment.5). Countries with unique needs can also adopt a hybrid regulatory model. A Model to Fit the Context The context of a country’s particular power sector should determine the level of regulatory discretion. or even desirable. and legal arrangements of the country. Regional economic bodies or regulatory associations could use expert panels to provide technical assistance to numerous national regulators. For a country with weak regulatory commitment and capacity. constitutional. Unlike conventional arbitration mechanisms. The challenge is therefore to establish governance arrangements and procedures that allow a “nontrivial degree of bounded and accountable discretion” (Stern and Cubbin 2005). Toward Better Regulatory Systems The different regulatory models embody varying degrees of regulatory discretion. and human resource capacity.4). In other countries with strong regulatory commitment but weak institutional development and capacity. a government could supplement an independent regulatory agency or regulatory contract by outsourcing some regulatory functions. For example.98 Africa’s Power Infrastructure Governments may also hire expert panels to arbitrate disputes between regulators and utility operators or those arising from contested interpretations in regulatory contracts. Regulatory models and governance systems should be securely located within the political. expert panels have the specialist expertise needed to analyze comprehensive tariff reviews and use procedures that are less formal and adversarial. How can countries choose among these options or decide on the appropriate combination? Some observers have argued that the fundamental challenge in regulatory design is to find governance mechanisms that restrain regulatory discretion over substantive issues such as tariff setting (Levy and Spiller 1994).

As noted.Strengthening Sector Reform and Planning 99 Figure 4. the context simply may not call for an independent regulator. arbitration Source: Eberhard 2007. No regulatory model is ideal.5) in which the regulatory model adapts to accommodate changing circumstances. While regulatory commitment in a country grows. customer service. regulatory contracts can coexist with independent regulatory oversight. In fact. Eventually. dispute resolution Regulator (or ministry) administers contract (such as a concession contract) Regulation by contract Regulatory regime (including tariff setting) prespecified in detail in legal instrument Advisory regulators Expert panels Regulator outsources some support functions Government policy and legal framework Independent reviews Regulatory contract provides for external contractors Government policy and legal framework Outsourcing of regulatory functions to third parties Consultants or expert panels undertake or assist with tariff reviews. quality of supply.4 Coexistence of Various Regulatory Options Regulation by agency Independent regulator sets tariffs and regulates access. the government could contract strong advisory panels or establish a separate regulatory agency. The responsibilities and functions of the regulatory agency could expand as sufficient institutional and resource capacity accumulates. Yet another possibility is a transitional path (as indicated in figure 4. standard setting. and an . perhaps with limited discretion at first. the government could outsource some regulatory functions. monitoring. and a country’s regulatory reform process may not always lead to a full-fledged independent regulatory agency.

More effective regulation of incumbent state-owned utilities will remain a critical challenge.100 Africa’s Power Infrastructure Figure 4. In the end. competent regulatory institutions in developing countries will always be a challenge. Improved financial performance also helps utilities to raise private debt and fund capacity expansion. generation (KenGen) has been separated . however. The quantities traded. designing and implementing legitimate. Each country therefore must choose from a menu of regulatory options to create a hybrid model that best fit its particular situation. Notes 1.5 high Choice of Regulatory Model Based on the Country Context low regulatory commitment strong advisory regulators expert panels regional regulators ? independent regulator contracting-out if cost-effective country X regulatory contracts low regulatory contracts with contracting-out high institutional and human resource capacity Source: Adapted from Brown and others 2006. Nevertheless. Regulators can play a useful role in ensuring that tariffs are cost reflective while improving efficiencies and encouraging utilities to reduce costs. Uganda is one of the exceptions where generation. expert panel or a well-designed regulatory contract would suit the country’s needs. These issues are discussed further in chapters 6 and 7. are extremely small. The only exception is a short-term energy market in the Southern African Power Pool. establishing an effective regulatory system is essential to the region’s strategy of increasing private participation in the power sector. transmission. The model must be flexible enough to evolve according to growth in a country’s regulatory commitment and capacity. and distribution were fully unbundled. 2. In Kenya.

Cape Town. 2008. 2008. 3. London. A. Typically expressed as a loss-of-load probability and an associated generationreserve margin. Bernard W. World Bank. Eberhard. Clark. PPIAF.. Washington. Bernard Tenenbaum. DC. E. and Njeri Wamakonya. DC: World Bank. DC: World Bank. Tonci. World Bank. Transmission and Distribution Sectors. Paper 7. DC. Besant-Jones. 2003.. local governments in Namibia and South Africa assume some responsibility for distribution. Eberhard.Strengthening Sector Reform and Planning 101 from transmission and distribution (KPLC). Handbook for Evaluating Infrastructure Regulatory Systems. and Defne Gencer. South Africa. “Power Sector Reform in Africa: Assessing the Impact on Poor People. Anton Eberhard. Graduate School of Business. Bibliography AICD (Africa Infrastructure Country Diagnostic). K. William K. Bakovic. The author of this section is John Nellis (2008). City University. 2007. and Fiona Woolf. “Electricity Utility Management Contracts in Africa: Lessons and Experience from the TANESCO-NET Group Solutions Management Contract in Tanzania. Power Sector Database. 2005. Gratwick.” Development Policy Review 26 (3): 309–38. R.” ESMAP Report 306/05. 4. Jon Stern. Washington. DC. “Reforming Power Markets in Developing Countries: What Have We Learned?” Energy and Mining Sector Board Discussion Paper Series.” Thesis to be submitted in fulfillment of the PhD degree. N. University of Cape Town. 2009. 2006. Washington. DC. J. Gboney. Brown. Washington. Alix.” MIR Working Paper. Paper 19.. “Regulation by Contract: A New Way to Privatize Electricity Distribution?” Energy and Mining Sector Board Discussion Paper Series. although the separate entities still coordinate with each other. Ghana has unbundled its transmission company and has a separate distribution company. “Matching Regulatory Design to Country Circumstances: The Potential for Hybrid and Transitional Models. For historical reasons. World Bank. and A. 2007. World Bank. Tenenbaum. Mark Davis. 2006. “Econometric Assessment of the Impact of Power Sector Reforms in Africa: A Study of the Generation. and Anton Eberhard. Ghanadan. Washington. Washington.” Gridlines Note 23. Management Program in Infrastructure Reform and Regulation. Nigeria has technically unbundled its utility. “An Analysis of Independent Power Projects in Africa: Understanding Development and Investment Outcomes. . Ashley C.

Washington. 1994. DC. World Bank.” Unpublished research paper. Sophie. “The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Telecommunications Regulation. 2007. Washington. Spiller. Economics and Organization 10 (1): 201–46. Vagliasindi.” Journal of Law. and John Nellis. World Bank. Washington. “Contracting Out Utility Regulatory Functions. Sophie. . Maria. Washington. and P. World Bank. 2010. 2004. DC. “Wanted! Good Regulators for Good Regulation. DC: World Bank. 2005. DC. Nellis.” AICD Working Paper 22. “Evaluating Africa’s Experience with Institutional Reform for the Infrastructure Sectors. PPIAF.” Policy Research Working Paper Series 3536.” Unpublished research paper. John. B. “Private Management Contracts in Power Sector in Sub-Saharan Africa.” Internal note. Jon. and John Cubbin. Stern. Private Participation in Infrastructure (PPI) Database. Washington. “Regulatory Effectiveness: The Impact of Regulation and Regulatory Governance Arrangements on Electricity Industry Outcomes. World Bank. World Bank. and Niraj Shah.. World Bank. PPIAF. 2008. Trémolet. Washington. DC. Trémolet.102 Africa’s Power Infrastructure Levy. and Courtenay Venton. Africa Infrastructure Country Diagnostic. 2005. Padmesh Shukla. DC.

stagnant over the past decade. In these circumstances.CHAPTER 5 Widening Connectivity and Reducing Inequality Coverage of electricity services in Sub-Saharan Africa. it is desirable to rethink the design of utility subsidies to target them better and to accelerate service expansion. coverage expansion is not just about network rollout. Second. 103 . Third. A need exists to address demand-side barriers such as high connection charges. Reversing this situation will require rethinking the approach to service expansion in four ways. demand-side barriers may be a factor. which suggests that in addition to supply constraints. Fourth. whether African governments can afford to subsidize them. progress in rural electrification cannot rely only on decentralized options. Many of those who remain without a connection live reasonably close to existing networks. it is important to remove unnecessary subsidies to improve cost recovery for household services and ensure that utilities have the financial basis to invest in service expansion. First. The business-as-usual approach to expanding service coverage in Africa does not seem to be working. if not. skews strongly toward higher-income households and urban areas. it requires a sustained effort by national utilities supported by systematic planning and dedicated rural electrification funds (REFs). the key questions are whether African households can afford to pay for modern infrastructure services such as electricity—and.

Connection rates are less than 30 percent in Africa. compared with approximately 65 percent in South Asia and more than 85 percent in East Asia and the Middle East. Growth in electricity coverage 35 percent of households 30 25 20 15 10 5 0 1990–95 1996–2000 2001–05 b. because urban agglomeration greatly facilitates the extension of infrastructure networks.104 Africa’s Power Infrastructure Low Electricity Connection Rates Coverage of electricity services in Africa is very low by global standards. The overall trend masks the fact that the percentage of households with connections in urban Figure 5.1 Patterns of Electricity Service Coverage in Sub-Saharan Africa a. Eberhard and others 2008. Africa’s low coverage of infrastructure services to some extent reflects its relatively low urbanization rates.1). latest year available 100 percent of households 80 60 40 20 0 rural national urban all countries low-income countries middle-income countries Source: Banerjee and others 2008. . Household surveys show only modest gains in access to modern infrastructure services over 1990–2005 (figure 5. Coverage by geographic area.

1 examines Ghana’s electrification program.2). and Senegal—have made some progress. Coverage increased from approximately one-third of the population to more than two-thirds in less than a decade (Marquard and others 2008). The most dramatic increase in electricity connections was seen in South Africa after the advent of democracy in 1994. least cost. Funding sources for REFs may be levies. Half the countries in the Africa Infrastructure Country Diagnostic (AICD) sample have REAs (rural electrification agencies). Mixed Progress. followed by higher-density rural areas. especially when combined with small-scale hydropower facilities (ESMAP 2007). The pace of service expansion differs across countries. political pressures trump these criteria. are more attractive options in remote areas. Minigrids.Widening Connectivity and Reducing Inequality 105 areas has actually declined.50–0. however. The majority of countries have full or partial capital subsidies for rural connections and explicit planning criteria (usually population density. (Box 5. and close to half of their people now have access. where feasible. Uganda’s electrification rate stands at 8 percent and Chad’s at 4 percent (figure 5. donor contributions. Ghana. For example.75 per kilowatt-hour (kWh). which presents significant challenges in raising access rates.6 percent a year. Incumbent national utilities—mostly state owned and vertically integrated—are responsible for urban (and often rural) electrification. It is obviously cheaper to electrify urban areas. Although many new connections are being made in urban areas. Côte d’Ivoire. or combinations of these. declining urban coverage largely reflects service providers’ inability to keep pace with average urban population growth of 3. however. fiscal transfers. or financial or economic returns).) These are exceptions. A significant trend during the past decade. and more than two-thirds have dedicated REFs. Off-grid technologies such as solar photovoltaic panels become an option in remote areas but are still very expensive—typically $0. In some cases. the region’s rural areas still account for approximately two-thirds of the total population. How effective have these institutional and funding mechanisms been in accelerating rural electrification? On average. despite Many Agencies and Funds Despite accelerating urbanization. has been the establishment of special-purpose agencies and funds for rural electrification. and most countries of SubSaharan Africa lag far behind. A few countries—such as Cameroon. greater progress has been .

an indigenous industry to supply products for the electrification program has not taken off. efforts under the NES had led to the electrification of more than 3. were able to be connected by purchasing low-voltage distribution poles and demonstrate the readiness of a minimum number of households and businesses to receive power. the NES continues and is cofinanced by development finance institutions and local Ghanaian banks. Electricity Company of Ghana and the Volta River Authority. Ghana’s recent electrification experience may be instructive for neighboring countries. with an increasing emphasis on minigrids and standalone systems. and rural rates at approximately 20 percent. The first two five-year phases of the plan were undertaken between 1991 and 2000. SHEP was further supported by a 1 percent levy on electricity tariffs. Urban rates of access hover near 80 percent. when Ghana’s access rates were estimated at 20 percent and the grid supply covered only one-third of the country’s land area. With access of the population to electricity at less than 25 percent in the region. Project costs of $185 million were covered largely via concessionary financing from several multilateral and bilateral donors. however. were charged with implementation. having been unable to sustain itself financially. SHEP is now considered defunct.000 communities. Nevertheless. the Self-Help Electrification Programme (SHEP) was noteworthy in advancing the aims of the NES. A rural electrification agency was not used. Furthermore. electrification efforts were intensified under the National Electrification Scheme (NES). Starting in 1989. Source: Clark and others 2005. As of 2004.1 Ghana’s Electrification Program Ghana boasts a national electrification rate of nearly 50 percent.106 Africa’s Power Infrastructure Box 5. SHEP was the means by which communities. which was designed to connect all communities with a population of more than 500 to the national grid between 1990 and 2020. . Mostert 2008. Contrary to expectations. In addition to the central role of the utilities and the prominence of concessionary lending. within a certain proximity to the network and otherwise not targeted for near-term electrification. The National Electrification Master Plan subsequently laid out 69 projects that would span 30 years to realize the stated policy goal. the country’s two stateowned utilities.

no correlation could be found between the proportion of utility income derived from nonresidential electricity sales and the level of growth in residential connections.2 Available South Africa Nigeria Côte d’Ivoire Senegal Cameroon Ghana Namibia Benin Zambia Madagascar Kenya Ethiopia Mozambique Tanzania Burkina Faso Uganda Niger Malawi Lesotho Rwanda Chad Electrification Rates in the Countries of Sub-Saharan Africa. Having a clear set of electrification criteria also makes a difference. provided the national utility is reasonably efficient (Mostert 2008). Countries with higher urban populations also tend to have higher levels of rural electrification. . A recent review of electrification agencies in Africa has concluded that centralized approaches. because urban customers tend to crosssubsidize rural electrification (figure 5. for the most part have been more effective than decentralized approaches involving several utilities or private companies.4). in which a single utility is responsible for national rural electrification.3). Latest Year 0 10 20 30 40 50 60 percentage of households connected to electricity grid 70 Source: Eberhard and others 2008.Widening Connectivity and Reducing Inequality 107 Figure 5. made in those countries with electrification agencies and especially those with dedicated funds (figure 5. Surprisingly. One would have expected that increased revenue from industrial and commercial customers would also allow for the crosssubsidization of rural electrification.

Funds. and Rates in Sub-Saharan Africa 108 no policy policy 50 0 2 4 6 8 10 growth in percentage of rural connections d.3 b. Annual growth in rural connections by presence or absence of agency or fund REA + REF REA. no REF REF. no REF REF. Annual growth in rural connections according to presence or absence of rural electrification policy Rural Electrification Agencies. Incidence of rural connections by presence or absence of agency or fund REA + REF REA. no REA 0 10 20 30 40 percentage of countries c. Prevalence of various measures to promote rural electrification no subsidy partial subsidy full subsidy REA + REF REA. the overall percentage increase in households with access remains low.Figure 5. no REF REF. no REA 15 15 0 5 10 growth in percentage of rural connections a. no REA no REF. . REF = rural electrification fund. Note: REA = rural electrification agency. Annual growth in new connections may seem high but comes off a low base. no REA no REF. no REA 0 5 10 percentage of rural connections Source: Eberhard and others 2008.

does not match the situation in many .4 Countries’ Rural Electrification Rates by Percentage of Urban Population 100 90 percentage of urban population 80 70 60 50 40 30 20 10 0 0 5 10 15 20 25 percentage of rural connections 30 35 40 R2 = 0. and rural electrification rates remain very low. agencies) tend to perform better in electrification. the findings of the Mostert study (2008) would appear to contradict our previous findings that countries with electrification funds (and.7092 Source: Eberhard and others 2008.Widening Connectivity and Reducing Inequality 109 Figure 5. on the one hand. with considerable success. that Mostert’s categorization of countries that rely on central utilities for electrification. on the other. Côte d’Ivoire and Ghana are examples of countries that have made good progress with a centralized approach to rural electrification. It should be noted. At first glance. These are obviously very poor countries. but it is also noteworthy that they have allowed their REFs to recruit multiple private companies on a project-by-project basis rather than make their national utilities responsible for extending access. versus those with REFs and REAs. In contrast. decentralized rural electrification has been more successful in Mali and Senegal. to a lesser extent. Exceptions may be identified. however. South Africa has also relied mainly on its national utility. to undertake rural electrification. countries such as Burkina Faso and Uganda have made slow progress. for example. however. Eskom.

110 Africa’s Power Infrastructure countries where the two approaches complement one another. The purpose of the fund is to ring-fence subsidy sources from commercial revenue earned by the utility. Conversely. Under business as usual. For electricity. which suggests that most new connections have gone to more affluent households. The lesson is that it may be unrealistic to allocate responsibility for all electrification to separate electrification agencies. and the . the vast majority of households with coverage belong to the more affluent 40 percent of the population. coverage of electricity services is well below 10 percent. coverage is far from universal. and Mozambique. By projecting current service expansion rates forward and taking into account anticipated demographic growth. In most countries.1). given that even among households with greater purchasing power. South Africa has an electrification fund. This is not entirely surprising. As a result. approximately half the population without access to the service lives close to power infrastructure. the power infrastructure is physically close to 93 percent of the urban population. The coverage gap for urban electricity supply is about demand as much as supply. Guinea. Coverage varies dramatically across households with different budget levels (figure 5. but Eskom is responsible for rural electrification. inequality of access has increased over time. The results are sobering.5). Among the poorest 40 percent of the population. fewer than 45 percent will reach universal access to electricity in 50 years (Banerjee and others 2008). Electrification funds create transparency around subsidies and thus help avoid situations where utilities face mixed social and commercial incentives. but only 75 percent of those connect to the service (table 5. Decentralized rural electrification often makes most sense when applied to the implementation of off-grid projects and as a way of exploiting the private initiatives of small-scale entrepreneurs and motivated communities. Mostert (2008) cites successful examples of this approach in Ethiopia. but that these agencies should focus mainly on minigrid or off-grid options that complement the efforts of the main utility charged with extending grid access. it is possible to estimate the year during which countries would reach universal access to each of the modern infrastructure services. Inequitable Access to Electricity Electricity coverage in Sub-Saharan Africa is low and skewed to more affluent households. Universal access to electricity services is still many decades away for most countries in Sub-Saharan Africa. For example.

Widening Connectivity and Reducing Inequality 111 Figure 5. Connection is defined as the percentage of the population that connects to infrastructure when it is available. but often clear budget constraints are present. In calculating the distribution of the infrastructure coverage gap attributable to demand and supply factors. Table 5. Coverage is defined as the percentage of the population that has the infrastructure service. the connection rate of the top budget quintile in each geographical area is taken to be an upper bound on potential connection absent demand-side constraints. Coverage of Modern Infrastructure Services Is below 10 Percent 100 percentage coverage 80 60 40 20 0 Q1 Q2 Q3 budget quintile Q4 Q5 Source: Banerjee and others 2008.5 For the Poorest 40 Percent of Households.1 Proportion of Infrastructure Electricity Coverage Gap in Urban Africa Attributable to Demand and Supply Factors Percentage. It may appear paradoxical that households do not universally take up connections to modern infrastructure services once networks become physically available. Poor . it is essentially the product of access and connection. coverage gap is as much about demand (affordability) as supply. Note: Access is defined as the percentage of the population that lives physically close to infrastructure. population-weighted average Decomposition of coverage Access Low-income countries Middle-income countries Overall 93 95 93 Connection 73 86 75 Coverage 69 81 71 Proportion of gap attributed to: Supply 50 39 48 Demand 50 61 52 Source: Banerjee and others 2008. This phenomenon can often be directly observed in African cities where informal settlements flanking major road corridors lack power service even though distribution lines are running overhead.

energy. though in some countries this can be 15–25 percent. Affordability of Electricity—Subsidizing the Well-Off African households get by on very limited household budgets. As household budgets increase. the range is from nearly $60 in the poorest quintile to $340 in the richest quintile (table 5. The tenure status of households may also impede connection to modern infrastructure services. even in Africa’s most affluent households. household budgets in middle-income countries are roughly twice those in low-income countries. kerosene. Talukdar.2).112 Africa’s Power Infrastructure households cannot afford high connection charges and rely instead on more accessible substitutes such as wood fuel. and bottled gas. with little left over for other items. The average African household of five persons has a monthly budget of less than $180. Poorest quintile 59 53 79 Second quintile 97 80 155 Third quintile 128 103 181 Fourth quintile 169 135 282 Richest quintile 340 258 609 177 139 300 .2 Monthly Household Budget 2002 dollars Income group National Overall Low-income countries Middle-income countries Source: Banerjee and others 2008. charcoal. infrastructure services absorb a growing share and rise from less than 4 percent among the Table 5. and Jack 2008). Most African households spend more than half of their modest budgets on food. Expenditure on infrastructure services absorbs a significant share of the nonfood budget. purchasing power is fairly modest in absolute terms. Across the spectrum. and transport) averages 7 percent of a household’s budget. Of course. Even among owner occupiers. Thus. Spending on infrastructure services (including utilities. lack of formal legal titles can also affect connection to services (Gulyani. A study of slum households in Dakar and Nairobi finds that electricity coverage is more than twice as high among owner occupiers as among tenants. slow progress in connections to electricity distribution networks cannot be explained only by demand or affordability constraints: Poorly performing utilities also have large backlogs in connecting users who are willing to pay.

suggests problems of payment culture alongside any affordability issues. In terms of absolute expenditure.6). Nonpayment directly limits the ability of utilities and service providers to expand networks and improve services by undermining their financial strength. A significant nonpayment rate. households in the richest quintile spend almost $40 per month. Given such low household budgets. even among the richest quintiles. this difference is even more pronounced: Whereas households in the poorest quintile spend on average no more than $2 per month on all infrastructure services. From household surveys. an estimated 40 percent of people connected to infrastructure services do not pay for them. Nonpayment rates range from approximately 20 percent in the richest quintile to approximately 60 percent in the poorest quintile (figure 5.6 Infrastructure Services Absorb More of Household Budgets as Incomes Rise household expenditure ($/month) 9 8 budget share (%) 7 6 5 4 3 2 1 0 Q1 Q2 budget share Source: Banerjee and others 2008.08 per kWh and an Figure 5. The cost of a monthly subsistence consumption of power can range from $2 (based on a low-cost country tariff of $0. 40 35 30 25 20 15 10 5 0 Q3 quintile Q4 Q5 household expenditure . a key question is whether households can afford to pay for modern infrastructure services.Widening Connectivity and Reducing Inequality 113 poorest to more than 8 percent among the richest (figure 5. Those that do not pay include clandestine collections and formal customers who fail to pay their bills.7). Overall. it is possible to compare for each quintile the percentage of households that report paying for the service with the percentage of households that report using the service. One measure of affordability is nonpayment for infrastructure services.

By looking at the distribution of household budgets. An affordability threshold of 3 percent of household budgets gauges what utility bills might be affordable to African households. They would not be affordable. the Democratic Republic of Congo. the only ones enjoying access. because very few poor consumers are connected to the service. it is possible to calculate the percentage of households for whom such bills would absorb more than 3 percent of their budgets and thus prove unaffordable. However. The affordability problems associated with a universal access policy would be particularly great for a handful of the poorest low-income countries— Burundi.16 per kWh and a more typical modest household consumption of 50 kWh) (figure 5. Ethiopia. Guinea-Bissau. Tanzania.7 About 40 Percent of Households Connected Do Not Pay 100 90 80 70 60 50 40 30 20 10 0 percentage of households til e nt ile til e til e in ui in in qu tq qu qu Source: Banerjee and others 2008. monthly bills of $8 would remain perfectly affordable for the richest 20–40 percent of the population. broader poverty impacts may be seen as 2n 3r 4t h 5t h 1s d d qu in til e . however. absolute minimum consumption of 25 kWh) to $8 (based on a high-cost country tariff of $0. Detailed analysis of the effect of significant tariff increases of 40 percent for power in Mali and Senegal confirms that the immediate poverty impact on consumers is small.114 Africa’s Power Infrastructure Figure 5.8). Niger. Monthly bills of $2 are affordable for almost the entire African population. Monthly bills of $8 would remain affordable for most of the population of the middleincome African countries. Malawi. and Uganda—where as much as 80 percent of the population would be unable to afford a monthly bill of $8. In low-income countries. for the poorest 60–80 percent that currently lack access if services were extended to them.

Estache.2). Boccanfuso and Savard 2000. the effects of higher power prices work their way through the economy.9). power tariffs recover only 87 percent of full costs. usually most of the resulting subsidy benefits the nonpoor. Because electricity subsidies are typically justified by the need to make services affordable to low-income households. tariffs for power are heavily subsidized in most African countries. Moreover. indicating a very pro-rich distribution (figure 5. a key question is whether subsidies reach such households.6 billion a year. The resulting implicit service subsidies amount to as much as $3. Notwithstanding these findings. or 0.Widening Connectivity and Reducing Inequality 115 Figure 5. these subsidies largely bypass low-income households not even connected to services.8 $2 to $8 percentage of households spending more than 5% of their monthly budget 100 90 80 70 60 50 40 30 20 10 0 Subsistence Consumption Priced at Cost Recovery Levels Ranges from 2 4 6 8 10 12 14 16 $ per month upper bound for subsistence consumption lower bound for subsistence consumption low-income countries middle-income countries Source: Banerjee and others 2008. 2005). and these second-round effects on wages and prices of goods in the economy as a whole can be more substantial (Boccanfuso. This targeting compares . and Savard 2009. On average. Tariff structure design could help subsidize consumption by poor households (box 5.56 percent of Africa’s gross domestic product (GDP) (Foster and Briceño-Garmendia 2009). Results across a number of African countries show that the share of subsidies going to the poor is less than half their share in the population. However. This result is hardly surprising given that connections to power services are already highly skewed toward more affluent households.

Two-thirds of African countries define the first block at 50 kWh/month or less. where consumption is correlated with ownership of power-consuming devices. The use of linear rates is more common in countries with prepayment systems such as Malawi. . where the first unit of electricity consumed costs the same as the last unit consumed. at 50 kWh/month. This assumes that poorer customers will have lower consumption levels. Kenya. Source: Briceño-Garmendia and Shkaratan 2010. and one-third are single block or linear rates. decreasing block tariffs (DBTs) have lower unit charges for higher consumption-level blocks. and South Africa. Two-thirds of the prevailing electricity tariff structures in Sub-Saharan Africa are IBTs. This is a reasonable assumption in the power sector. Electricity tariff structures can also be linear. at 40 kWh/month. Cape Verde and Côte d’Ivoire. The fixed charge is usually determined by the level of development of the network. and Burkina Faso. Ghana and Zambia have a large first block (300 kWh). Mozambique. the location. and Tanzania.116 Africa’s Power Infrastructure Box 5. service costs. more of which are owned by wealthier households. Ethiopia. About half the countries in Africa have adopted two-part tariffs that combine fixed charges with block energy pricing. the combination is known as two-part electricity tariffs. The Democratic Republic of Congo and Mozambique also define a modest threshold level for their first block (100 kWh). Cameroon.2 Residential Electricity Tariff Structures in Sub-Saharan Africa Electricity tariff structures often take the form of increasing block tariffs (IBTs) in which a lower unit price is charged within the first consumption block and higher prices in subsequent consumption blocks. and—when subsidization practice applies—the purchasing power of the consumer. at 15 kWh/month. In contrast. Countries in this group include Uganda. Block tariff schemes are commonly supplemented by fixed charges. The conventional regulatory wisdom is that IBTs are designed as “lifeline” or “baseline” tariffs trying to align the first block of low consumption to a subsidized tariff and higher levels of consumption to higher pricing that would ultimately allow for cost recovery.

Widening Connectivity and Reducing Inequality 117 Figure 5. A value greater than one implies that the subsidy distribution is progressive (pro-poor). Can African governments afford to further expand today’s subsidy model to achieve universal access? There is little justification for utility subsidies at present given that they do not typically reach unconnected low-income households and that more affluent connected households do not need subsidies to afford the service. To put these results in perspective. b.9 Electricity Subsidies Do Not Reach the Poor Nigeria Gabon Congo Côte d’Ivoire Cape Verde Togo São Tomé and Príncipe Senegal Cameroon Mozambique Ghana Central African Republic Guinea Burundi Burkina Faso Chad Malawi Uganda Rwanda 0 0.8 measure of distributional incidence of subsidies 1. However. and Guinea indicate that expenditures on primary education and basic health care reach the poor better than power subsidies (Wodon 2007a). Gabon.2 0. A value less than one implies that the subsidy distribution is regressive (pro-rich). it is relevant to compare them with the targeting achieved by other forms of social policy. Wodon 2007a.6 0.0 Source: Banerjee and others 2008.4 0. Note: A measure of distributional incidence captures the share of subsidies received by the poor divided by the proportion of the population in poverty. Estimates for Cameroon. unfavorably with other areas of social policy. the preceding analysis indicated that affordability would become a major issue to the extent that . because the share of benefits allocated to the poor is larger than their share in the total population.

35 percent of GDP.2 0.8 0. AICD data across a number of African countries Figure 5. This amount is high in relation to existing operations and maintenance expenditure. A key difference is that the cost of this one-time subsidy would disappear at the end of the decade.8 0. Providing universal use of service. so it is difficult to believe that it would be affordable (figure 5.0 electricity operating subsidy needed to maintain affordability O&M spending (2005) Source: Banerjee and others 2008. whereas the use of a service subsidy would continue indefinitely.4 0. Given the very high macroeconomic cost today of subsidizing even the minority of the population with access to power.6 0. Note: GDP = gross domestic product. it is legitimate to question whether African governments can afford to scale up this subsidybased model to the remainder of their populations. This is generally the most effective means of subsidizing the poor. Cross-subsidies can also be achieved through the design of tariff structures that allow for lower rates for a “lifeline” amount of electricity usage for poor households.6 0. Direct grants could also be made to indigent households.10 Subsidy Needed to Maintain Affordability of Electricity One-time connection subsidy 1.0 0.2 0. Ongoing use of service subsidy 1.1 percent of GDP over and above existing spending. but effective targeting is difficult and administration complex.2 1.2 1.10). subsidies of $2 per household would absorb 1.118 Africa’s Power Infrastructure Africa’s low-income countries move aggressively toward universal access. O&M = operations and maintenance.0 percentage of GDP percentage of GDP electricity capital subsidy needed to maintain affordability capital spending (2005) . The welfare case is quite strong for one-time capital subsidies to support universal connection.0 0.4 0. The cost of providing a one-time capital subsidy of $200 to cover network connection costs for all unconnected households over 20 years would be substantially lower at 0.

There is a need to address demand-side barriers such as high connection charges or legal tenure. most African countries have tackled universal access by providing heavily subsidized services. It is well known that households without access to utility services end up paying much higher prices. it is desirable to rethink the design of utility subsidies to target them better and to accelerate service expansion. Fourth. Policy Challenges for Accelerating Service Expansion The business-as-usual approach to expanding service coverage in Africa does not seem to be working. which limits their energy consumption to very low levels. because better-quality light allows students to read and study in the absence of sunlight. The level and scope of the lifeline block in IBTs may also be inappropriate. Reversing this situation will require rethinking the approach to service expansion in four ways. the associated public subsidies have largely bypassed most needy groups. Furthermore. coverage expansion is not just about network rollout. Second. giving too small a benefit to the poor. Alternatively.Widening Connectivity and Reducing Inequality 119 suggest that many current tariff structures are poorly designed. education. Few services and countries are expanding coverage at rates high enough to outstrip demographic growth. it requires a sustained effort by national utilities supported by systematic planning and dedicated REFs. . “pro-poor” tariffs may be poorly targeted and benefit wealthier consumers if the lifeline block is available too widely. it is important to remove unnecessary subsidies to improve cost recovery for household services and ensure that utilities have the financial basis to invest in service expansion. Nonmonetary benefits of connection can also be very significant. and productivity benefits. High fixed charges may inhibit affordability. First. Third. This approach has tended to bankrupt and debilitate sector institutions without bringing about any significant acceleration of coverage. particularly urbanization. progress in rural electrification cannot rely only on decentralized options. The cost of providing basic illumination through candles is much more costly than electricity per effective unit of lighting. For example. Beyond the potential monetary savings. electricity coverage is associated with a wide range of health. The low and stagnant coverage of household services comes with a major social and economic toll. Under the business-as-usual approach. better electricity provision improves literacy and primary school completion rates.

suggests a broader skill base than utilities may routinely engage. expanding coverage is not just about network engineering—it requires community engagement. however. economic. The lower the connection rate to existing infrastructure networks. Dealing with the demand-side barriers preventing connection requires a more detailed understanding of the utility’s potential client base. careful thought should be given to how connection costs might be recovered. The challenge of reaching universal access is typically considered a supply problem of rolling out infrastructure networks to increasingly far-flung populations. a significant segment of the unserved population lives close to a network. upfront connection .120 Africa’s Power Infrastructure Don’t Forget the Demand Side of the Equation Overlooking the demand side of network rollout can lead to much lower returns on infrastructure investments. First. providing the highest potential return to a limited investment budget. Household survey evidence shows. and social returns to the associated investment. they may deserve priority attention in efforts to raise coverage. the most cost-effective way of increasing coverage may be to pursue densification programs that aim to increase connection rates in targeted areas. What are their alternatives? How much can they afford to pay? What other constraints do they face? This. needs to be considered the key measure of success. Third. those involved in project implementation will have little incentive to think about the demand side of service coverage. little attention is given to whether these connections materialize after the project. As noted previously. In that sense. and legal analysis of—and engagement with—the target populations. Africa’s widespread high connection charges are one obvious demand-side barrier to connection. one that goes beyond standard expertise in network engineering to encompass sociological. it is legitimate to ask whether substantial. Unless the focus of monitoring and evaluation shifts from access to connection. because the physical asset is operating below its full carrying capacity. This finding has five implications for network rollout strategy. As a result. Unserved populations living physically close to infrastructure networks could (in principle) be covered at a much lower capital cost than those living farther away. the lower the financial. rather than access. that in urban areas. In these circumstances. Fourth. even when use-of-service charges would be affordable. in turn. Second. economic. Projects that aim to expand service coverage too often measure their outcomes by the number of people who can connect to the network provided. one-time. connection.

In many periurban neighborhoods. not to mention inadequate spacing of dwellings. affordability is a legitimate concern for the bulk of the population and would constrain universal coverage. Fifth. At the national level. Even in the poorest countries. expansion of utility networks needs to be closely coordinated with urban development. electricity spending accounts for only a tiny fraction of total consumption. Among households with a connection to the network. the share of the population living in poverty increases barely one-tenth of a percentage point. maintenance and investment activities are cut back to make ends meet. The implicit subsidies created by underpricing are extremely pro-rich in their distributional incidence.Widening Connectivity and Reducing Inequality 121 charges are the most sensible way to recover the costs of making network connections. however. The political economy likely provides the real explanation for low tariffs: Populations currently connected to utility services tend to be those with the greatest voice. This revenue shortfall is rarely covered through timely and explicit fiscal transfers. Providing services to these communities will require close cooperation with urban authorities. Indeed. the impact is larger but still limited. Many of Africa’s power utilities capture only two-thirds of the revenue they need to function sustainably. with subsidies limited to capital costs. the impact of a 50 percent increase in tariffs or even of a doubling of tariffs is marginal. In all but the poorest African countries. service coverage could be substantially increased before any real affordability problems would be encountered. socializing connection costs by recovering them through the general tariff and hence sharing them across the entire customer base. Take a Hard-headed Look at Affordability Underrecovery of costs has serious implications for the financial health of utilities and slows the pace of service expansion. does not bear much scrutiny. Instead. In the poorest of the low-income countries. Affordability. rarely is there more than a one or two . including repaying connection costs over several years through an installment plan. recovering operating costs should be feasible. expanding utility networks is hampered by the absence of legal tenure and high rates of tenancy. because many of these issues can be resolved only if they are addressed in a synchronized and coordinated manner. What effect would removing utility subsidies have on reducing poverty? For most countries. which starves the utility of funds to expand service coverage and cuts the quality of service to existing customers. Alternatives can be considered. or directly subsidizing them from the government budget. the usual pretext for underpricing services.

122 Africa’s Power Infrastructure percentage point increase in the share of households in poverty. They may be appropriate when households genuinely cannot purchase a subsistence allowance of a service that brings major social and economic benefits to them and those around them. even before addressing tariff adjustments. Tariff increases can be either phased in gradually or effected instantly through a one-time adjustment. called Cashpower. Target Subsidies to Promote Service Expansion Subsidies have a valuable and legitimate role in the right circumstances.11). . One way to strengthen social accountability is to have communication strategies link tariffs with service delivery standards and suggest conservation measures to contain the overall bills. a clear policy has been pursued of rapidly increasing the share of residential customers on prepayment meters (figure 5. customers who object to tariff hikes may refuse to pay their bills. it is important for utilities to work on raising revenue collection rates toward best practice levels and establishing a payment culture. In the absence of a strong payment culture. it is perhaps most important to ensure that the realignment of tariffs and costs is not temporary by providing for automatic indexing and periodic revisions of tariffs. The public acceptability of tariff increases can be enhanced if they form part of a wider package of measures that includes service quality improvements. this eliminates credit risk and avoids nonpayment. South Africa was at the forefront in development of the keypad-based prepayment electricity meter with the first product. reports universal coverage of its low-income consumers with prepayment meters. launched by Spescom in 1990. and Rwanda. this allows them to control their expenditure and avoid consuming beyond their means. as long as governments can afford to pay those subsidies. Because the households that benefit from a connection tend to be richer than other households. Either way. So the small impact of an increase in tariffs on poverty could be offset by reallocating utility subsidies to other areas of public expenditure with a stronger propoor incidence. the increase in poverty starts from a low base. For utilities. At least for power. which place customers on a debit card system similar to that used for cellular telephones. Namibia. In Ghana and Malawi. For customers. utility subsidies’ design and targeting needs to be radically improved to fulfill their intended role. also in South Africa. one technological solution is to use prepayment meters. Therefore. However. In Lesotho. Tshwane. Both approaches have advantages and disadvantages. a majority of residential customers are on prepayment meters.

Limiting subsidies to connections in new network rollout as opposed to densification of the existing network would substantially improve targeting. the absence of a connection is disproportionately concentrated among the poorest. The affordability problems associated with connection charges are often much more serious than those associated with use-of-service charges. As noted previously.11 Tshwane LEC NORED ESKOM ELECTROGAZ VRA Escom Sonabel SBEE TANESCO 0 Prepayment Metering 10 20 30 40 50 60 70 80 90 percentage of residential customers with prepayment meters 100 Source: Foster and Briceño-Garmendia 2009. African utilities typically subsidize consumption. who will likely be the first to benefit from coverage expansion. this is a highly pro-rich result no better than that of existing consumption subsidies (table 5. The share of connection subsidies going to the poor would rise to . but subsidizing connection is potentially more equitable and effective in expanding coverage. the utility subsidies practiced in Africa today largely bypass the poor. connection subsidies may be just as pro-rich as consumption subsidies.3). Simulations suggest that the share of connection subsidies going to the poor would be only about 37 percent of the share of the poor in the population. Given that connections are disproportionately concentrated among the more affluent. This could make the absence of a connection a good targeting variable.Widening Connectivity and Reducing Inequality 123 Figure 5. Where coverage is far from universal even among the higher-income groups.

Some improvements in targeting could be achieved by eliminating fixed charges. This strategy ultimately achieves a progressive result. Note: A measure of distributional incidence captures the share of subsidies received by the poor divided by the proportion of the population in poverty. To improve the distributional incidence beyond this modest level would require connection subsidies to be accompanied by other socioeconomic screens. Even with these modifications. Can anything be done to improve the impact of use-of-service subsidies? The poor performance of existing utility subsidies is explained partly by pro-rich coverage but also by the widespread use of poorly designed IBTs. A value greater than one implies that the subsidy distribution is progressive (pro-poor). Such targeting schemes hinge. however. but the outcome would remain pro-rich. Wodon 2007a. 95 percent of their share in the population. because the share of benefits allocated to the poor is larger than their share in the total population. and changing from an IBT to a volume-differentiated tariff where those consuming beyond a certain level forfeit the subsidized first block tariff completely. New connections mirror pattern of existing connections 2. the absence of a connection remains a fairly weak targeting variable. In the low-access environment in most African countries.3 Potential Targeting Performance of Electricity Connection Subsidies under Various Scenarios Scenarios 1. on the existence of household registers or property cadastres . Global experience suggests that utility subsidy targeting can be improved and become reasonably progressive if some form of geographical or socioeconomic targeting variables can be used beyond the level of consumption (Komives and others 2005).37 0. reducing the size of first blocks to cover only genuinely subsistence consumption. All unconnected households receive subsidy Targeting performance 0. the targeting of such tariffs would improve only marginally and would not become strongly pro-poor in absolute terms. A value less than one implies that the subsidy distribution is regressive (pro-rich). Only households beyond reach of existing network receive connection subsidies 3. b.124 Africa’s Power Infrastructure Table 5.18 Source: Banerjee and others 2008. Common design failures in power IBTs include large subsistence thresholds.95 1. so that only consumers with exceptionally high consumption contribute fully to cost recovery (Briceño-Garmendia and Shkaratan 2010). Providing a connection subsidy equally likely to reach all unconnected households would ensure that the percentage going to the poor exceeds their share of the population by 118 percent. however.

that subsidy burden would increase proportionately and rapidly become unaffordable for the national budget. volatile and uncertain financial flows. and duplication of efforts. Both factors are often absent in Africa. such as load-limited supplies. particularly in the low-income countries. Ghana. ad hoc approach in development partner financing has led to fragmented planning. for example. Madagascar. One other potentially effective method of targeting is to limit the allocation of subsidies to lower-cost and lower-quality alternatives that encourage self-selection. This test of a subsidy’s fiscal affordability is an important reality check that can help countries avoid embarking on policies that are simply not scalable. Utility service underpricing that benefits just a small minority of the population costs many African countries as much as 1 percent of GDP. or Zambia. As countries move toward universal access. and developmental needs. Niger. Given the scale of investments needed. Lesotho. and carefully planned. So countries should consider how the cost of any proposed subsidy policy would escalate as coverage improves.Widening Connectivity and Reducing Inequality 125 that support the classification of beneficiaries. Tanzania. Systematic Planning Is Needed for Periurban and Rural Electrification As already noted.12). Burkina Faso. Engagement across the sector in multiyear programs of access rollout supported by multiple development partners as part of a . because a higher proportion of their population lives close to existing networks (figure 5. Because those circumstances differ widely across regions and countries. thus identifying themselves and leaving the subsidized service to less affluent customers. and Uganda are more favorably positioned than. Senegal. the majority of the population in Sub-Saharan Africa still resides in rural areas. The theory is that more affluent customers will eschew second-best services and automatically select to pay the full cost of the best alternative. the most successful rural electrification will be selective. economic activity. detailed. Mozambique. Data show that those countries with clear planning criteria have generally been more successful at rural electrification. Rwanda. The potential for extending access in a given situation depends on population density. Some countries have a much higher potential for making rural electrification advances more cost effective. distance from the grid. The current projectby-project. Chad. Thus Benin. a systematic approach to planning and financing new investments is critical. as well as a significant amount of administrative capacity.

12 Substation 100 90 80 percentage of rural population 70 60 50 40 30 20 10 0 Potential Rural Access: Distribution of Population by Distance from Source: Eberhard and others 2008. however. Of greatest interest. so “remote” potential service area is overestimated. Iv o Et ire hi op i Gh a an a Ke n Le ya M so ad th o M aga oz sc am ar bi qu M e al a Na wi m ib ia Ni g Ni er ge Rw ria an Se da So ne ut ga l h Af ric a Su d Ta an nz an Ug ia an Za da m bi a rk < 10 km from substation or < 5 km from MV line 20–50 km from substation > 50 km from substation and > 10 km from lit urban area 10–20 km from substation > 50 km from substration or < 10 km from lit urban area Bu . These should be seen. as complementary to the main utility’s efforts to extend the grid. Countries with dedicated REFs have achieved higher rates of electrification than those without. Coordinated action by development partners will also reduce the unit costs of increasing access by achieving economies of scale in implementation. Undoubtedly.3). Case studies indicate that the countries that have taken a centralized approach to electrification—with the national utility made responsible for extending the grid—have been more successful than those that followed decentralized approaches. Ch De a m d Cô .126 Africa’s Power Infrastructure Figure 5. however. those REAs that have attempted to recruit multiple utilities or private companies into the electrification campaign have a contribution to make (see box 5. Note: Transmission lines are not available for Chad or Niger. coherent national strategy will channel resources in a more sustained and cost-effective way to the distribution subsector. especially in promoting minigrids and off-grid options. are the differences among the countries that have funds. R te ep d’ . Be in nin aF Ca as m o er Co oo ng n o.

depending on the proposed connection target within the first two years. In addition to rural electrification. employs two major approaches to rural electrification: spontaneous “bottom-up” electrification of specific communities and planned “top-down” electrification of large geographic areas. Until they are connected. It also has interfuel substitution initiatives and programs for the introduction of improved stoves. About half of Mali’s 12. created by law in 2003. has been more successful. In promoting these new projects. only 13 percent of the rural population has access to electricity. In Mali. AMADER provides grants for 75 percent of the start-up capital costs of rural electrification subprojects. Typically. dry cell. and the average tariff.” because it establishes minimum standards for technical and commercial quality of service and maximum tariffs allowed for both metered and unmetered customers. with an average household expenditure of $4–$10 per month. To date.472 households. AMADER promotes community-based woodland management to ensure sustainable wood fuel supply. Most of the bottom-up rural electrification subprojects are based on conventional. and car batteries. The grant agreement can be viewed as a form of “regulation by contract. the bottomup approach. which typically consists of minigrids operated by small local private operators.3 Rural Electrification in Mali Among new rural electrification agencies created in Africa. diesel-fueled minigrids with installed generation capacities mainly below 20 kilowatts. AMADER performs three main functions. 803 community institutions. 172 schools.000 villages have a school or health center clinic or both. and a de facto regulator through its grant agreements with operators. however. most are without any form of energy for lighting or for operating equipment. connections had been made to more than 41. Mali’s AMADER (Agence Malienne pour le Developpement de l’Energie Domestique et d’Electrification Rurale) has had considerable success. Eighty electrification subprojects managed by 46 operators are financed so far through the bottom-up approach. (continued next page) . It is a provider of grants. By late December 2009. more than 10 times the price of a kilowatt-hour from the grid. Customers on these isolated minigrids typically receive electricity for six to eight hours daily.Widening Connectivity and Reducing Inequality 127 Box 5. a supplier of engineering and commercial technical assistance. the average cost per connection.50 per kWh for energy. most rural households meet their lighting and small power needs with kerosene. and 139 health clinics. The use of these sources of energy make the poor pay about $1. The majority of Malians—more than 80 percent—use wood or charcoal for cooking and heating. AMADER.

Unmetered customers are usually billed on a flat monthly charge per light bulb and power outlet. 2008. Over a period of six years. community institutions. To date. AMADER permits operators to charge residential and commercial cost-reflective tariffs that are often higher than the comparable tariffs charged to grid-connected customers. has been operational since 2006. A multifunctional platform is composed of a small 10 kW diesel engine coupled to a generator. They manage some of the multifunctional platforms after receiving training in basic accounting in local languages provided by NGOs financed through the project. particularly solar photovoltaics. The platform can be connected to income-generating equipment.3 (continued) Renewable energy technologies. Women’s associations are also playing an important role in remote communities as providers of energy services. . more than 7. Many of the minigrid operators also provide service to unmetered customers. leasing arrangements have been proposed. the national electric utility). For example.200 connections. battery chargers. have been successfully introduced into Mali’s rural energy mix. the energy charge for metered residential customers on isolated minigrids is about 50 percent higher than the comparable energy charge for grid-connected residential customers served by EDM (Electricidade de Moçambique. It is providing power to about 500 households. multifunctional platforms have been installed in 64 communities and have resulted in 7. Biofuels are also being promoted for electricity production in the village of Garalo in partnership with the Mali Folkecenter.926 solar home systems and more than 500 institutional solar photovoltaic systems were installed countrywide.128 Africa’s Power Infrastructure Box 5. Work is ongoing to attract private operators to larger concessions and to increase the share of renewable energies in Mali’s rural energy mix. Source: Interviews with World Bank staff from the Africa Energy Department. and microenterprises. such as cereal grinding mills. to ensure that a customer does not connect appliances above and beyond what he or she has paid for. To ensure that the projects are financially sustainable. A solar power station of 72 kW peak solar photovoltaic plant connected to an 8 kilometer distribution network in the village of Kimparana. To reduce financial barriers for operators. as well as a loan guarantee program for Malian banks and microfinance institutions that would be willing to provide loans to potential operators and newly connected customers to increase productive energy uses. a local nongovernmental organization (NGO). AMADER has added public lighting networks of about 2 kilometers to the multifunctional platforms in about 35 communities. combined with load-limiting devices. the first of its type and scale in West Africa. dehuskers. and water pumps.

Finally. Washington. It is also important to find ways to spread the benefits of electrification more widely. a strong correlation is found between urban and rural electrification rates. Countries with seriously underdeveloped generation capacity and tiny urban customer bases are not well placed to tackle the challenges of rural electrification. or are investments in new generation capacity more important? In either case. Amadou Diallo. such as low-cost portable solar lanterns that are much more accessible and affordable to the rural public. World Bank. Diverting scarce capital to network expansion can easily result in a familiar situation where investments barely generate adequate revenue to support operating and maintenance costs. with no contribution to refurbishment or capital-replacement requirements.” Background Paper 2. 2008. because universal household electrification is still decades away in many countries. Across countries. Another way is appropriate technology. as well as a systematic lag between the two. Sectorwide programmatic approaches must ensure that the benefits of electrification touch even the poorest households that are too far from the grid or unable to pay for a grid connection. Hellal Uddin. Should it go to network expansion.Widening Connectivity and Reducing Inequality 129 In an African context. either technically because of power shortages or financially because of the lack of a basis for crosssubsidization. Dedicated electrification funds should thus also be made available for periurban connections. difficult choices need to be made on how to allocate scarce capital. the difficult question needs to be posed as to whether aggressive electrification will exacerbate the financial problems of the sector. Taras Pushak. Clarence Tsimpo. DC. Quentin Wodon. References Banerjee. Ultimately. In rural areas. careful tradeoffs will be required. solar-powered electrification of clinics and schools that provide essential public services to low-income communities is one way to allow them to participate in the benefits of electrification. Sudeshna. The resulting cash drains on the utility could be serious. . Affordability and Alternatives: Modern Infrastructure Services in Sub-Saharan Africa. Africa Infrastructure Country Diagnostic. and Vivien Foster. Street lighting may be one way to do this in urban areas. The “Lighting Africa” initiative is supporting the development of the market for such products. “Access. it is legitimate to ask how far it is possible to make progress with rural electrification when the urban electrification process is still far from complete.

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Roles and responsibilities can further be clarified through public entity legislation. Yet most of them are inefficient and incur significant technical and commercial losses. ownership of utility assets. corporatization. No single reform will be sufficient to effect lasting improvements in performance.CHAPTER 6 Recommitting to the Reform of State-Owned Enterprises Most electricity utilities in Sub-Saharan Africa are state owned. poor billing and collections practices resulting in nonpayment and theft. which will involve clear identification. Hidden costs abound in the sector: network energy losses. underpricing. Roles and responsibilities need to be clarified. an integrated approach to governance reform is needed. 133 . and management of government’s different roles in policy making. Data gathered by the Africa Infrastructure Country Diagnostic show that those enterprises that have implemented more governance reforms have benefited from improved performance. This has even happened in some African countries. performance contracts. Rather. and overstaffing all absorb revenue that could be used for maintenance and system expansion. and transparent transfers for social programs. and regulation. Evidence suggests that reforms in the governance of state-owned enterprises (SOEs) could reduce hidden costs. separation. effective supervisory and monitoring agencies. codes of corporate governance.

4 percent compared with best practice of 100 percent. In countries with utilities of below-average efficiency. Not only is there insufficient generating capacity. This can be promoted through direct competition. Combining the costs of distribution losses and uncollected revenue and expressing them as a percentage of utility turnover provides a measure of the inefficiency of utilities (figure 6.8 percent each year.1). but also national utilities have performed poorly both financially and technically. and private investors. Chapter 7 explores more quantitative measures of inefficiency and hidden costs and their effect on funding requirements. which means that only two-thirds of revenue is captured. and structural reform. taxpayers. Utility managers with operating deficits are often forced to forgo maintenance. improved transparency and information. Inefficiencies also seriously undermine the utilities’ future performance. The inefficiency of the median utility is equivalent to 50 percent of turnover. The inefficiency of the utilities creates a fiscal drain on the economy. and commercialization practices such as outsourcing. For example. Inefficient operation has a similar adverse effect on investment. Underpricing and inefficiency generate substantial hidden costs for the region’s economy. suppressed or unmet power demand accounts for 12 percent of total demand. mixed-capital enterprises. countries with below-average efficiency have increased electrification rates by only 0. Moreover.4 percent for utilities with above-average efficiency. Hidden Costs in Underperforming State-Owned Enterprises The previous chapters have highlighted the deficits of the power sector in Africa. customers.134 Africa’s Power Infrastructure Another broad set of reforms involves strengthening the role of interest groups with a stake in more commercial behavior—for example. compared with only 6 percent in countries with utilities of above-average efficiency (figure 6. average collection rates are only 88.2). because governments must frequently cover any operating deficit to prevent the utility from becoming insolvent. . Average distribution losses in Africa are 23 percent compared with the commonly used norm of 10 percent or less in developed countries. Less efficient utilities also have greater difficulty in meeting demand for power. compared with 1.

including management training.1 Overall Magnitude of Utility Inefficiencies as a Percentage of Revenue Congo. financial and operational information and reporting systems. In particular. Dem. countries have spent substantial sums on institutional reforms in the power sector. Some . Côte d’Ivoire Nigeria Congo. collection inefficiencies overstaffing Driving Down Operational Inefficiencies and Hidden Costs Countries that have made progress in power sector reform. and establishment and strengthening of supervisory and regulatory agencies. Rep. The case of Kenya Power and Lighting Company (KPLC) is particularly striking (box 6. Over the years. Rep. improved boards of directors.1). improved internal accounting and external auditing. including regulatory reform. private sector participation and the adoption of contracts with performance incentives by state-owned utilities appear to substantially reduce hidden costs. have substantially lower hidden costs (figure 6.Recommitting to the Reform of State-Owned Enterprises 135 Figure 6. Niger Ghana Uganda Mali Malawi Botswana Cape Verde Namibia Cameroon Tanzania Mozambique Chad Ethiopia Benin Burkina Faso Lesotho Rwanda Senegal Kenya Zambia 0 10 20 30 40 50 60 percentage of revenue 70 80 90 100 system losses Source: Briceño-Garmendia and Shkaratan 2010.3).

accounting standards. managerial and board autonomy.6 1. but in many other cases reforms have not had the intended effect. Impact on magnitude of suppressed demand 16 supressed demand as % of generation 14 12 10 8 6 4 2 0 high efficiency Source: Derived from Eberhard and others 2008.4 0.0 0. outsourcing to the private sector.2 Effect of Utility Inefficiency on Electrification and Suppressed Demand a. performance monitoring. Governance may be assessed using various criteria. Impact on pace of electrification 1. .2 0. and the discipline of capital markets (Vagliasindi 2008).0 high efficiency low efficiency b.136 Africa’s Power Infrastructure Figure 6.2).4 annualized increase in access to power (%) 1. low efficiency successes have endured (see box 6.2 1.8 0.6 0. Effect of Better Governance on Performance of State-Owned Utilities Evidence is increasing that governance reform can improve the performance of state-owned utilities. including ownership and shareholder quality. exposure to labor markets.

and regulation of prices and quality of utility services. Roles and responsibilities can further be . no Good governance is not universal among Sub-Saharan Africa utilities (figure 6. Making State-Owned Enterprises More Effective Two broad sets of governance reforms are important to ensure that improvements to the performance of state-owned utilities are sustainable. Most utilities report requirements to be profitable and pay market rates for debt. most utilities in the sample meet only about half of the criteria for good governance. and management of government’s different roles in policy making.4). ownership of utility assets. Overall.3 Impact of Reform on Hidden Costs in the Power Sector in Sub-Saharan Africa high reform high regulation high governance management contract or concession performance contracts with incentives present 0 50 100 150 200 250 300 350 400 average hidden cost of inefficiencies as percentage of utility revenue yes Source: Eberhard and others 2008. A comparison of utilities based on 35 governance indicators provides striking and consistent evidence that good governance improves utility performance (figure 6. Only 60 percent of the sample utilities publish audited accounts. The most prevalent good governance practices are those relating to managerial autonomy.5). roles and responsibilities need to be clarified. and stock exchange listing is virtually unheard of (Kengen and KPLC in Kenya are the exceptions).Recommitting to the Reform of State-Owned Enterprises 137 Figure 6. This involves clear identification. First. separation. but the vast majority benefit from sizeable subsidies and tax breaks and are not financially sound enough to borrow.

6 25 0. customers. and transparent transfers for social programs.0 0.20 in 2008. This can be promoted through improved transparency. and private investors. Management reforms resulted in revenue collection improvement—from 81 percent in 2004 to 100 percent in 2006.4 percent of Kenya’s gross domestic product (GDP) per year.4 underpricing distribution losses Source: Foster and Briceño-Garmendia 2009. though more gradually. commercialization .2 0 2001 2002 2003 2004 2006 0. Power-pricing reforms also allowed tariffs to rise in line with escalating costs from $0.6 1.138 Africa’s Power Infrastructure Box 6.2 50 1. performance contracts.8 1. codes of corporate governance. Note: GDP = gross domestic product. hidden costs in Kenya’s power sector fell to 0.4 0. undercollection total as % GDP clarified through public entity legislation. 100 percentage of revenue 1.1 Kenya’s Success in Driving Down Hidden Costs In the early 2000s. such as taxpayers. Distribution losses also began to fall. collection losses.07 in 2000 to $0. among the lowest totals of any African country. As a result of reforms. and distribution losses on the part of Kenya’s power distribution utility (KPLC) absorbed as much as 1.15 in 2006 and $0. which reflected the greater technical difficulty they posed. hidden costs in the form of underpricing.” by which he means strengthening the role of other power-sector stakeholders.0 2008 percentage of GDP 75 1. 33–48) refers to as “changing the political-economy of an SOE.4 percent of GDP by 2006 and almost to zero by 2008 (see figure). corporatization. effective supervisory and monitoring agencies. The second broad set of reforms revolves around what GomezIbanez (2007.8 0.

provided 132 megawatts.1). The utility began as one power station in Gaborone with a network that extended about 45 kilometers outside the city. Source: Molefhi and Grobler 2006. To be fair. lack of government interference in managerial decisions. Regardless. During the tenure of BPC. Governments can interfere with management decisions in an . structural reform.Recommitting to the Reform of State-Owned Enterprises 139 Box 6. its responsibilities and the national network have expanded enormously. practices. cost-reflective tariffs. Energy and Water Affairs. Government funding has allowed BPC to extend the electricity grid into rural areas. direct competition. Defined Roles and Responsibilities Utilities management in Sub-Saharan Africa often suffers from mixed— and sometimes contradictory—policy and governance directives and incentives.2 Botswana’s Success with a State-Owned Power Utility The state-owned electricity utility Botswana Power Corporation (BPC) was formed by government decree in 1970 to expand and develop electrical power potential in the country. and competent and motivated employees. analysts contend that BPC’s strong performance is equally attributable to institutional factors: a strong. The national system. Since then. The government regulates the utility through the Energy Affairs Division of the Ministry of Minerals. and mixed-capital enterprises (table 6. The power system is efficient. When capacity shortages seem likely. in 2005. access to electricity increased to 22 percent in 2006 and is set to reach 100 percent by 2016. BPC must decide between importing power and expanding its own generation facilities. and neighboring countries supplied another 266 megawatts via the Southern African Power Pool. Botswana has been an active member and major beneficiary of the regional pool since its inception in 1995. BPC has benefited from the availability of cheap imported power from South Africa (which is now severely threatened by a power crisis there). Its active trading position has helped to promote multilateral agreements and enhance cooperation among pool members. good internal governance. with distribution losses of less than 10 percent and a return on assets equal to its cost of capital. stable economy.

Note: SOE = state-owned enterprise. disclosure. Government may also be unclear about its role as owner of the utility and the need to maintain and expand its assets. The combination of these nontransparent and sometimes contradictory pressures on the management of the utility can be disastrous.4 Utilities Incidence of Good-Governance Characteristics among State-Owned labor market discipline managerial and board autonomy overall SOE governance capital market discipline accounting. ad hoc and nontransparent manner in areas such as overstaffing and excessive salary levels. Inevitably investment is insufficient. Clear policy statements can help clarify and make transparent government’s social. These challenges can be addressed by clearly identifying. economic. and environmental objectives. Sector and public entity .140 Africa’s Power Infrastructure Figure 6. and service quality deteriorates. separating. and coordinating government’s different roles and functions in the sector. Regulation of prices and quality of service may also be arbitrary and unconnected to ensuring the financial sustainability of the utility. or maintain excessively low prices. They may also pressure utilities to electrify certain areas. ignore illegal connections and nonpayment. and performance monitoring ownership and shareholder quality outsourcing 0 20 40 60 80 percentage of countries 100 Source: Eberhard and others 2008.

T&D = transmission and distribution. However. MW = megawatt.Recommitting to the Reform of State-Owned Enterprises 141 Figure 6. Note: kWh = kilowatt-hour. legislation can also clarify and separate a government’s policy role from its shareholding function and the necessity of balancing demands for more affordable electricity tariffs with the necessity of maintaining financial sustainability (box 6. SOE = state-owned enterprise. no concessions low SOE governance. no concessions Source: Eberhard and others 2008. kWh/capita connections/employee MW/million population 0 commercial efficiency cost recovery ratio urban connections T&D losses countries with emergency power generation reserve margin system capacity utilization factor operational percentage of installed generation capacity 0 10 20 30 40 50 60 percent 70 80 90 50 100 150 200 250 300 high SOE governance.5 Utilities Effect of Governance on Utility Performance in State-Owned Power annual net electricity generated. effective policy coordination will also be needed at the cabinet level to achieve the necessary tradeoffs between social and economic objectives.3). . It makes sense to separate the policy-making ministry from the SOE shareholding ministry so that they focus clearly on their respective mandates.

The utility benefits from separate subsidies for electrification connections and for consumption (poor households receive their first 50 kilowatthours each month free of charge). asset owner. and regulator • Public entity legislation • Corporatization • Codes of corporate governance • Performance contracts • Effective supervisory or monitoring agencies • Transparent transfers for social programs • Independent regulator Source: Eberhard and others 2008. separation. and establishes and monitors technical performance and customers’ service standards. The board (appointed by the Minister of Public Enterprises) is responsible for day-to-day management subject to a performance contract that includes a range of key performance indicators. reporting. sets tariffs.1 Governance Reforms to Improve State-Owned Utility Performance Changing the political economy of the utility • Improved transparency and information • Commercialization and outsourcing • Labor market reform • Structural reform and direct competition • Mixed-capital enterprises • Customer-owned enterprises Clarification of roles and responsibilities • Identification. A general corporate governance code also applies to all state-owned enterprises. South Africa’s national electricity utility. The performance contract is monitored. (continued next page) .142 Africa’s Power Infrastructure Table 6.3 The Combination of Governance Reforms That Improved Eskom’s Performance The experience of Eskom. albeit not very effectively. It must pay dividends and taxes and publish annual financial statements according to international accounting standards. In addition. by the Ministry of Public Enterprises. A clear distinction is now made between the shareholder ministry (Public Enterprises) and the sector policy ministry (Energy). Eskom was corporatized through the Eskom Conversion Act and is subject to ordinary corporate law. Box 6. and authorizations. and coordination of government’s different roles as policy maker. provides a model for the implementation of governance reforms. Additional legislation (the Public Finance Management Act and the Promotion of Administrative Justice Act) defines in more detail how the utility should handle finance. information disclosure. an independent authority regulates market entry through licenses.

Recently. Eskom managers are acutely aware that their financial performance is subject to thorough external scrutiny. and outsourcing was used more widely. An independent regulatory authority is better positioned to balance the need for protecting consumers (price and quality of service) with providing incentives for utilities to reach financial sustainability by reducing costs. Eskom has had to institute load shedding because it has had insufficient generation capacity to meet demand. it raises capital on private debt markets.Recommitting to the Reform of State-Owned Enterprises 143 Box 6. Eskom is a mixed-capital enterprise. Neither government nor the regulator has a good enough idea of Eskom’s actual efficiency or inefficiency. Only direct competitors could provide an appropriate benchmark. The board also includes independent and nonexecutive directors with legal rights and obligations. and moving toward more cost-reflective pricing. What Eskom lacks most of all is direct competition. but the utility has a legal identity that is separate from government. These reforms have caused Eskom to perform relatively well compared with other African utilities. and distributes approximately 60 percent. Any possible downgrading of their debt can make capital scarce or more expensive when they embark on a major capital expansion program. Government is the shareholder. it generates 96 percent of South Africa’s electricity. through issuing bonds. Eskom is dominant in the region. however. .3 (continued) After reforms in the 1980s and the appointment of an experienced private sector manager as Eskom’s chief executive officer. Corporatized utilities have separate accounts and are typically liable for paying taxes and dividends. a commercial culture was embedded within the utility. locally and internationally. Corporatization of state-owned utilities further helps clarify government’s role as owner and shareholder. It is rated by all the major global credit agencies. improving efficiency. separate business units were created with business plans and new budgeting and accounting systems. Although wholly owned by the state. Source: Authors. Policy uncertainties and an earlier prohibition on Eskom’s investing in new capacity while private sector participation was being considered have led to capacity shortages. which makes political interference more difficult. transmits 100 percent. Indications suggest that planning and cost controls could improve. Typically the utility will be made subject to ordinary company law.

dividend policy. powers. Performance indicators could include the following: net income. Furthermore. Performance contracts can also be used between central SOE boards and decentralized units. the supervisory body. At the heart of the challenge of making performance contracts work more effectively are the classic principal-agent and moral hazard problems. and noncommercial (social or political) objectives and their funding. It specifies the obligations and responsibilities of the enterprise. and the “owner” (that is. and auditing are also clearly defined. They normally address tariffs. Codes of corporate governance may also be adopted to clarify and define the relationship between the shareholder and the utility’s board as well as the way in which the board and management operate. sanctions for nonfulfillment of objectives.144 Africa’s Power Infrastructure Legislation that brings about corporatization also clarifies the mandate. investments. more rarely. they sometimes include rewards for good managerial (and staff) performance and. interest cover. This is understandable. but their effectiveness is not guaranteed. the utility’s obligation to earn a profit or an adequate return on assets. accounting. customer satisfaction indexes. productivity improvements. Performance contracts are widespread. and they have not been sufficiently motivated by rewards and penalties. and environmental adherence. They have not always reduced the information advantage that managers enjoy over owners. Responsibilities for financial management. debt and equity ratios. on the other. and its financing and borrowing permissions. on the one hand. the ministry. Performance contracts are also used to reveal information and to monitor managers’ performance. connection targets. Performance contracts are negotiated. human resource issues. considering that contracts often lack mechanisms for enforcing government commitments to pay utility bills or penalize underperforming managers. Typically they include elements of business plans and specify a number of key performance measures and indicators. and duties of the utility and its board. budgeting processes. reporting. which often allows managers to negotiate performance targets that are easy for the utility to achieve. or the regulator). return on assets. procurement policy. managers are not convinced of the credibility of government promises. subsidies. A shareholder compact or performance contract usually sets out the shareholder ministry’s objectives for the utility. Politicians may not benefit from better performance and may subsequently try to make managers serve objectives that conflict with . written agreements that clarify objectives of governments and motivate managers to achieve improved performance.

Contracts can also be incomplete and fail to anticipate events and contingencies. The reforms will eliminate government subsidies of the utility’s cost of capital. These reforms could encompass improved transparency and flow . and credible commitments. Finally. including promised budgets for social programs. The policy or sector ministry may be hindered by a focus on short-term social or political outcomes rather than on efficiency and financial sustainability. Performance contracts are therefore not a panacea and should be used only if governments are prepared to deal with the challenges of information asymmetry. and customer service improves. or not acted upon. Basic operational and financial data on firm performance are either not collected. This would allow utility managers to focus on improving operational efficiency. effective incentives. Finally.Recommitting to the Reform of State-Owned Enterprises 145 efficiency. Alternatively. not sent to supervisors. commercial responsibilities should be clearly separated from social goals by establishing transparent mechanisms such as fiscal transfers and subsidies for connections for poor households. the extent of hidden costs and inefficiencies that affect African utilities is not accurately known. not tabulated and published by the supervising bodies. Employment and procurement should be undertaken on a commercial basis. Other reforms could include hiring private sector managers to instill a commercial culture in the utility. Instead. governments can renege on commitments. and utilities will be encouraged to outsource functions that another company can perform more efficiently. the utility earns a rate of return at least equal to its cost of capital. the supervisory function could be contracted out to an expert panel. Competition among suppliers for outsourcing contracts could also drive costs down. Altering the Political Economy around the Utility Governance reforms should also strengthen other stakeholders with an interest in reduced operating losses and improved operating performance. billing and collection approaches 100 percent. In the end. Independent supervisory units that can effectively monitor performance contracts are therefore essential. such as rewarding political supporters with jobs or subsidies. They would preferably be located in the Ministry of Finance or in a dedicated Public Enterprises Ministry. This would ensure that tariffs are high enough to provide sufficient revenue. In the absence of information—or of action taken on the basis of what information is produced—improved performance cannot be expected. the utility will be required to raise finance from private capital markets.

Customers have mandatory representation on boards of directors. Shareholders (through their voting rights and representatives on the board) and bond holders (through debt covenants) can exercise considerable influence. Customers can choose their suppliers. costs and tariffs. obstacles to collective action can minimize the influence of many small customers. prices. and timely. The potentially competitive elements of the industry (generation and retail) can be separated from the natural monopoly elements of the value chain (the transmission and distribution networks). Mixed-capital enterprise arrangements are also conducive to increased stakeholder involvement. Customer-owned enterprises (such as cooperatives and mutuals) are another option. first by creating separate business units. Effective customer governance is more likely in small groups with stable membership and adjacent interests. Increasing the number of industry players and introducing private sector participation allows for comparisons to be made among the performance of these different entities. service standards. and investors and employees of competing firms are incentivized to improve performance. which are then transformed into separate companies. benchmarking. Information needs to be credible. These can be established either by selling a minority or noncontrolling equity stake to private investors (either a strategic equity partner or shareholders brought in by a partial initial public offering) or through private debt markets. Finally. However. local utilities. who fear a credit downgrading and an increase in capital costs. but consideration could be given to at least allowing large customers to choose among the incumbent utility and alternative independent power producers or even cross-border imports. Further interventions are necessary. the most effective way to change the political economy of state-owned electricity utilities is structural reform and the introduction of competition. Credit agencies provide financial discipline over managers. and customer surveys. Cooperatives are more appropriate for smaller. with competition whenever possible. Unfortunately. The potential for full retail competition in the power sector in Africa may be limited. better dissemination of information alone is not sufficient to improve performance. including comprehensive annual reports and financial statements. and they can also be susceptible to capture by large customers or special interests. . investment and coverage plans. This can be done piecemeal.146 Africa’s Power Infrastructure of information. performance contracts (made available publicly along with results). coherent.

thereby increasing utilities’ access to private debt markets.Recommitting to the Reform of State-Owned Enterprises 147 Practical Tools for Improving the Performance of State-Owned Utilities In addition to governance reforms. practical operational tools have been developed for improving the performance of state-owned utilities. CREST is a “bottom-up” approach designed to address system losses. A key challenge in the sector is funding for new power infrastructure. and U. Donors may prefer large and quick solutions. which can be directed to investments in new capacity or network expansion. Improved credit worthiness also means that state-owned utilities can be more reliable counterparties to independent power producer investors. data transfer. The application of the toolkit should be closely monitored and evaluated and. Conclusion Institutional reform is a lengthy process. revenue. power corporations. but they must recognize that governance reform of state-owned utilities is essential to improving the performance of the African power sector. and distribution) reduces transaction times and generates more regular cash flow (Tallapragada 2008). . A combination of technical improvements (such as replacing low-tension with high-tension lines and installing highly reliable armored and aerial bunched cables on the low-tension consumer point to reduce theft) and managerial changes (introducing “spot billing” and combining the four transactions of recording. Improved state-owned utility performance is thus key to meeting the funding challenges outlined in the next chapter. if successful. The Commercial Reorientation of the Electricity Sector Toolkit (CREST) is an experiment underway in several localities served by West African electricity providers. thus once again increasing investment flows into the sector. Based on good practices from recent reforms in Indian. should be replicated elsewhere (Nellis 2008). European. which are two difficult settings. Improved performance can also lead to better credit ratings. bill generation. Early applications of CREST have reportedly produced positive changes in several neighborhoods in Guinea and Nigeria. low collection rates. Victories on this front will be small and slow in coming.S. Improved financial performance of state-owned utilities helps reduce the funding gap by reducing inefficiencies and losses and improving collection rates. and retained earnings. and poor customer service.

” Unpublished paper.” Internal note. . Washington. and Maria Shkaratan. Washington. World Bank. Anton. N. Washington. and Washington. Daniel Camos. DC. DC: Agence Française de Développement and World Bank. 2008. World Bank. World Bank. South Africa.” Working Paper 8.148 Africa’s Power Infrastructure References Briceño-Garmendia. “Commercial Reorientation of the Electricity Sector Toolkit: A Methodology to Improve Infrastructure Service Delivery.. Vivien Foster. Cecilia. Washington. World Bank. C. J.” North West University. A. Vagliasindi. Foster. Vivien. “Underpowered: The State of the Power Sector in Sub-Saharan Africa. Maria. Africa Infrastructure Country Diagnostic. Potchefstroom. 2007. 2006. Molefhi. World Bank. 2008. Nellis. France. O.” Unpublished note. S. Regulation and Governance in Sub-Saharan Africa. “Demand-Side Management: A Challenge and Opportunity for Botswana Electric Energy Sector. Prasad V. B. 2009. Eberhard. Grobler. Tallapragada. DC. John. Africa’s Infrastructure: A Time for Transformation. 2008. Africa Infrastructure Sector Diagnostic. World Bank. eds. “Alternatives to Infrastructure Privatization Revisited: Public Enterprise Reform from the 1960s to the 1980s. and Maria Shkaratan. J. Fatimata Ouedraogo. “Institutional Infrastructure Indicators: An Application to Reforms. and Cecilia Briceño-Garmendia. Cecilia Briceño-Garmendia. DC. and L. DC. Washington. Africa Infrastructure Country Diagnostic. Paris. Gomez-Ibanez.” Background Paper 6. DC. DC. 2008. 2010. “Private Management Contracts in Power Sector in SubSaharan Africa.” Policy Research Working Paper 4391. AFTSN. Washington. “Power Tariffs: Caught between Cost Recovery and Affordability.

7 billion a year). equivalent to 6. The burden varies greatly by country.83 billion). the remainder is operations and maintenance (O&M) expenses ($14.8 billion a year. The model used to calculate these estimates was run under the assumption of expanded regional power trade and takes into account all investments needed for the increase in trade and all cost savings achieved as a result. or approximately $0. and nonfragile low-income countries.5 times larger than in the information and communication technology (ICT) sector and approximately double the investment needs in each of the water.CHAPTER 7 Closing Africa’s Power Funding Gap The cost of addressing Africa’s power sector needs is estimated at $40. resource-rich. and transport sectors.3 percent of GDP in Equatorial Guinea to 35.35 percent of Africa’s gross domestic product (GDP). In comparison with other sectors.1 billion a year). Approximately two-thirds of the total spending need is capital investment ($26. Almost equal shares of this amount are spent by three groups of countries: middle-income. from 0. a reflection of the weakness 149 . sanitation.6 billion.4 percent in Zimbabwe. Current spending aimed at addressing power infrastructure needs is higher than previously thought and adds up to an estimated $11. Fragile low-income countries spend the remaining small share (5 percent. power sector investment needs are very high: They are 4.

150 Africa’s Power Infrastructure of their economies. there are utility inefficiencies. The situation differs by country. but a funding gap of $20. undercollection of revenue. which provide 4 percent of the total. Capital spending is financed from four sources: One-half comes from the domestic public sector. which provides 9 percent of the total. Reducing inefficiencies is a challenging task. which include system losses. That leaves an estimated $258 million in public investment that is earmarked for the power sector but diverted elsewhere in the budget. but the financial benefit can be substantial. with only 66 percent of the capital budgets allocated to power actually spent. approximately one-quarter is received from non-OECD financiers. Much can be done to reduce the gap between spending needs and current levels of spending. funding from countries outside the Organisation for Economic Co-operation and Development (OECD). The rest is split among official development assistance (ODA) financing. but the remaining two-thirds would face a funding gap of between 6 and 74 percent of total needs even if all inefficiencies were eliminated. which provides 6 percent of the total. Approximately 80 percent of existing spending is domestically sourced from taxes or user charges. Undercollection. and overstaffing for $1.28 percent of GDP. These result in a major waste of resources that adds up to $4. most notably power sector utilities (state-owned enterprises [SOEs]). and overstaffing.40 billion a year.48 billion. and the rest is contributed by OECD and the private sector. system losses account for $1.62 billion a year.73 billion.93 billion would still remain. Historical trends do not suggest strong prospects for increasing allocations from the public budget: Even when fiscal surpluses existed. The countries in the second group will therefore need to pursue ways to raise additional funds. The majority of spending is channeled through public institutions. Three types of power sector inefficiencies are found. First. Almost 75 percent of domestic spending goes to O&M. countries in Sub-Saharan Africa forego revenue of $3.24 billion available. Inefficiencies of various kinds total 1. the largest component of utility inefficiencies. one-third of countries in Sub-Saharan Africa would be able to fund their needs.15 billion. and private sector contributions. amounts to $1. External finance . By setting tariffs below the levels needed to cover actual costs. they did not visibly favor infrastructure. The second type of sector inefficiency is underpricing of power. The third type of inefficiency is poor budget execution. Tackling all these inefficiencies would make an additional $8.

OECD = Organisation for Economic Co-operation and Development.6 billion a year to address its power infrastructure needs. which is equivalent to 1. official sources in nonOECD countries.Closing Africa’s Power Funding Gap 151 for infrastructure has been buoyant in recent years. This will help existing resources to go farther and create a more attractive investment climate for external and private finance. and the remaining one-quarter is divided more or less equally between the WSS and ICT sectors (table 7. Existing Spending in the Power Sector Existing spending on infrastructure in Africa is higher than previously thought when the analysis takes into account budget and off-budget spending (including SOEs and extra budgetary funds) and spending financed by external sources including ODA.1). the power sector has not benefited from this trend: It has received the least funding compared with transport. WSS = water supply and sanitation. Closing Africa’s power infrastructure funding gap inevitably requires reforms to reduce or eliminate inefficiencies. Note: All rows total 100 percent.1 percent Sectoral Composition of Investment. Smits. Although the public sector more or less covers O&M needs. ICT = information and communication technology.5 percent of investment financing needs. and Foster (2008) for public spending. . Africa is spending $11. The power sector receives nearly half of the infrastructure funding provided by non-OECD financiers but does Table 7. it provides only 51. transport nearly one-half. Of the total investment funds provided by the public sector for infrastructure. water supply and sanitation (WSS). in particular.8 percent of GDP. power amounts to one-quarter. The rest of investment spending is provided by external and private sector investors. funding from OECD has increased. by Financing Source Power Domestic public sector External and private sector Including ODA Non-OECD Private 24 14 19 47 5 Transport 47 25 48 46 11 WSS 13 23 33 7 23 ICT 13 37 0 0 61 Irrigation 3 0 0 0 0 Source: Briceño-Garmendia. PPIAF (2008) for private flows. However. and private sources. This is split between investment (40 percent of the total) and O&M. ODA = official development assistance. and ICT. and Foster and others (2008) for non-OECD financiers.

this is the case primarily Box 7. and South Africa (World Bank 2007).2 percent of GDP in the nonfragile states and 2. Other low-income countries constitute a residual category of countries that have GDP per capita below $745 and are neither resource rich nor fragile states. violence. Examples include Cameroon. Middle-income and resource-rich countries spend 1.8 percent of GDP on power. and nonfragile low-income countries (box 7. In defining policies and approaches toward fragile states. Fragile states are low-income countries that face particularly severe development challenges. Examples include Cape Verde. Ethiopia. which is explained in part by the economic and political status of each country. (continued next page) . and Sudan (World Bank 2005). and Uganda. Low-income countries spend substantially more: 2. Examples include Côte d’Ivoire.2). petroleum.1). Fourteen countries of Sub-Saharan Africa are in this category.152 Africa’s Power Infrastructure less well in ODA and PPI funding. Resource-rich countries typically depend on exports of minerals. respectively.1 Introducing a Country Typology Middle-income countries have GDP per capita in excess of $745 but less than $9. and Zambia.3 percent and 1. Resource-rich countries are low-income countries whose behaviors are strongly affected by their endowment of natural resources (Collier and O’Connell 2006. A country is classified as resource rich if primary commodity rents exceed 10 percent of GDP.9 percent of GDP in fragile states (table 7.206. such as weak governance. different organizations have used differing criteria and terms. Senegal. fragile low-income countries. or both. Telecommunications receives the majority of private infrastructure funding. limited administrative capacity. Lesotho. We can group countries into four broad categories to make sense of these variations: middle-income countries. (South Africa is not classified as resource-rich. Countries that score less than 3.2 on the World Bank’s Country Policy and Institutional Performance Assessment belong to this group. resource-rich countries. Funding patterns vary considerably across countries. or a legacy of conflict. IMF 2007). Middle-income countries allocate three-quarters of power spending to O&M. The composition of spending also varies substantially across country groups. Nigeria. using this criterion). Examples include Benin. the Democratic Republic of Congo.

and nonfragile low-income countries allocate 60 percent of the power budget to O&M. because the largest. Madagascar (0. and Foster 2008. Smits. Countries with low levels of capital spending include Lesotho (0.1a). and Malawi (0.1 (continued) MAURITANIA MALI CAPE VERDE SENEGAL GAMBIA BURKINA FASO GUINEA-BISSAU GUINEA BENIN SIERRA LEONE CÔTE GHANA D'IVOIRE TOGO LIBERIA NIGER CHAD ERITREA SUDAN SOMALIA NIGERIA CENTRAL AFRICAN CAMEROON REPUBLIC EQUATORIAL GUINEA NG ETHIOPIA UGANDA KENYA CONGO.27 percent of GDP).1 percent of GDP in the Democratic Republic of Congo to almost 6 percent of GDP in Cape Verde (figure 7. The variation of power sector spending across countries ranges from less than 0. South Africa. By contrast.56 percent of GDP).10 percent of GDP). All these countries require additional investment in new generation capacity or power transmission (Rosnes and Vennemo 2008). South Africa (0. Fragile low-income countries spend 70 percent on O&M.Closing Africa’s Power Funding Gap 153 Box 7. DEM REP RWANDA BURUNDI TANZANIA MALAWI GABON CO ANGOLA ZAMBIA MOZAMBIQUE ZIMBABWE MADAGASCAR MAURITIUS resource-rich countries nonfragile low-income countries fragile low-income countries middle-income countries NAMIBIA BOTSWANA SWAZILAND LESOTHO SOUTH AFRICA Source: Briceño-Garmendia. resource-rich countries spend only 40 percent on O&M and allocate the rest to investment.36 percent of GDP). At the other end of the scale are countries with high O . has been delaying investment in new capacity.

11 0.68 0.28 0.72 Africa Total 1.07 0.30 0.49 0.602 1.970 571 7.274 260 4.15 0. ODA = official development assistance. PPIAF (2008) for private flows.243 830 11. and Foster (2008) for public spending.076 460 Total capital expenditures 811 2.55 Fragile low income 1.33 0.39 0.77 2.56 0.98 0.605 Source: Briceño-Garmendia.17 1. PPI = private participation in infrastructure.78 0.72 0. Totals may not add exactly because of rounding errors.00 Middle income 0.2 $ million O&M Capital expenditure Power Sector Spending in Sub-Saharan Africa.935 3. Figures are extrapolations based on the 24-country sample covered in AICD Phase 1.333 1.656 1.00 0.03 0.15 1. Note: Aggregate public sector expenditure covers general government and state-owned enterprise expenditure on infrastructure.154 Table 7.28 1.01 0.03 0.94 2.594 Total 3.09 0.363 694 1.37 0. Foster and others (2008) for non-OECD financiers.011 NonOECD Public sector ODA financiers PPI 772 33 1 5 1.10 0. .05 0.12 Nonfragile low income 1. GDP = gross domestic product.00 0. OECD = Organisation for Economic Co-operation and Development.13 Resource rich 1.16 1. Smits.467 3. Annualized Flows Percentage of GDP O&M Capital expenditure NonTotal OECD capital Public Public sector sector ODA financiers PPI expenditures Country type 0.243 75 736 278 432 549 129 165 0 37 210 12 2.50 0.81 Public sector 2. O&M = operation and maintenance.

0 5. Non-OECD finance contributes a relatively small amount to the power sector in most countries. Dem.5 1.1 percent of GDP) and Ghana (1.0 percentage of GDP O&M capital 4. Although public funding is the dominant source in 83 percent of countries.5 3.0 (continued next page) . This group includes Uganda (3.0 1.4 percent of GDP). Namibia Burkina Faso Nigeria Niger Rwanda Cameroon Lesotho Botswana South Africa Mozambique Chad Congo.1 Power Spending from All Sources as a Percentage of GDP a.5 2.Closing Africa’s Power Funding Gap 155 levels of capital expenditure.0 2.0 0. Rep. 0.0 3. with the exception of Ghana and Niger.1b).5 4. where it exceeds 20 percent of the total. By functional category Kenya Mali Zambia Benin Ghana Tanzania Madagascar Malawi Senegal Côte d’lvoire Congo. The funding received from different sources also varies substantially across countries (figure 7.5 5.5 6. ODA plays a substantial role in many low-income countries. Figure 7. Rep. A handful of countries enjoy a significant contribution from the private sector.

5 3.5 1. O&M = operations and maintenance.0 2. Note: Based on annualized averages for 2001–06. Smits.5 4.5 5. Averages weighted by country GDP. ODA = official development assistance.5 6. Dem. PPIAF (2008) for private flows. PPI = private participation in infrastructure. Rep.0 1. .0 percentage of GDP public sector ODA non-OECD financiers PPI Source: Briceño-Garmendia.1 (continued) b.0 5.0 4.5 2.0 3. 0. GDP = gross domestic product. Foster and others (2008) for non-OECD financiers. By funding source Uganda Ethiopia Benin Ghana Tanzania Kenya Zambia Madagascar Cape Verde Senegal Namibia Mozambique Burkina Faso Nigeria Niger South Africa Rwanda Cameroon Malawi Côte d’lvoire Lesotho Chad Congo.0 0. and Foster (2008) for public spending. OECD = Organisation for Economic Co-operation and Development.156 Africa’s Power Infrastructure Figure 7.

External financing favors resource-rich countries: They obtain approximately 50 percent of total external funds. roughly 20 percent. Essential interventions include improving utility operations. Across the other country categories. from ODA (table 7. four distinct opportunities can be identified for efficiency gains. external finance contributes roughly one-half of Africa’s total capital spending on the power sector.2). India. domestic public spending is focused on O&M. and the utilities should tackle this issue. One-half of external finance for Africa’s power sector comes from non-OECD financiers. domestic public spending in the power sector is more balanced. External sources include ODA. Overstaffing in the power utilities contributes 14 percent of total inefficiencies.24 billion per year to various inefficiencies in its power sector. In this context. Two-thirds of financing from each of the other two sources—non-OECD financiers and PPI—benefits resourcerich countries (figure 7. The second largest recipient of external financing is the group of nonfragile low-income countries. .1).and low-income countries. and PPI. Undercollection of bills adds up to 22 percent of total sector inefficiency. System losses constitute 18 percent of the inefficiencies and need to be addressed. domestic public sector resources (including tax revenue and user charges raised by state entities) account for 99 percent of power sector spending. In the resource-rich states. The lack of cost recovery is the largest source of sector inefficiency: Losses from pricing power below the current costs constitute 44 percent of all inefficiencies. and the rest. and the Arab funds). approximately one-third from PPI. External finance is primarily for investment—broadly defined to include asset rehabilitation and construction—and does not provide for O&M. which receive one-third of the total.Closing Africa’s Power Funding Gap 157 In the middle-income countries. domestic public sector resources invariably contribute at least two-thirds of total spending. official finance from non-OECD countries (such as China. which accounts for more than three-quarters of the total. How Much More Can Be Done within the Existing Resource Envelope? Africa is losing an estimated $8. and bringing tariffs to the level of the long-run marginal costs of power. capitalizing on the benefits of regional trade. In the aggregate. ODA is directed primarily (80 percent) to nonfragile low-income states. In the middle. with only 57 percent of the total spent on O&M.

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Figure 7.2
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Increasing Cost Recovery
By setting tariffs below the levels needed to recover actual costs, SubSaharan countries forego revenue of $3.62 billion a year.1 However, low cost recovery is a function of both low tariffs and high costs. Despite comparatively high power prices, most Sub-Saharan Africa countries are recovering only their average operating costs and are far from being able to recover total costs with tariffs. Although a few countries—Burkina Faso, Cape Verde, Chad, Côte d’Ivoire, Kenya, Namibia, and Uganda— achieved cost recovery, they are exceptions. Also, in some cases (Burkina Faso, Cape Verde, and Chad), cost recovery has been achieved by elevating tariffs above extremely high costs. Power tariffs in Sub-Saharan Africa are high compared with other regions. The average power tariff of $0.12 per kilowatt-hour (kWh) is twice the level in other developing regions, such as South Asia. The high costs of power can, to a large extent, be explained by lack of economies of scale, underdeveloped regional energy resources, high oil prices, drought, and political instability—factors mostly

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beyond the influence of the energy sector or a utility. However, other causes could be resolved at the sector or utility level. One example is subsidized residential tariffs, especially in the countries with a high share of residential consumption. Another is inefficient residential tariff structures that decrease with increased consumption and create cross-subsidies from the lower-income households to the more affluent ones, which curtails usage by poorer households and promotes overconsumption of power by more affluent households. When tariffs charged to residential customers are below costs (figure 7.3), motivating and achieving increases is usually socially and politically sensitive and takes time to accomplish. In addition, many countries in SubSaharan Africa are pricing power to highly energy-intensive industries at greatly subsidized rates. These arrangements were initially justified as ways of locking in baseload demand to support the development of very largescale power projects that went beyond the immediate demands of the country, but they have become increasingly questionable as competing demands have grown to absorb this capacity. Salient examples include the aluminum-smelting industry in Cameroon, Ghana, and South Africa and the mining industry in Zambia. As figure 7.3 demonstrates, total costs of power supply are above the average tariffs for all customer groups, including residential and industrial tariffs. On average, total costs exceed residential tariffs by 23 percent and industrial tariffs by 36 percent.

Figure 7.3
20 cents per kWh 15 10 5 0

Power Prices and Costs, Sub-Saharan Africa Average

Source: Briceño-Garmendia and Shkaratan 2010. Note: kWh = kilowatt-hour.

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Although tariffs in most countries fall below total costs, they recover operational costs, with only a few exceptions. The exceptions include Cameroon, Malawi, Niger, Tanzania, and Zambia. On the aggregate continental level, tariffs are 40 percent above the operational cost level. Differences are seen among customer groups in this respect: Commercial, residential, and industrial tariffs exceed operational costs by 67 percent, 43 percent, and 21 percent, respectively.

On Budget Spending: Raising Capital Budget Execution
As mentioned previously, most public spending in the power sector SOEs in Sub-Saharan Africa is off-budget, while the on-budget spending constitutes only a small portion of it. The public sector in Sub-Saharan Africa allocates 0.13 percent of GDP, or $827 million, to support the power sector (table 7.3). For a typical African country, this effort translates to about $29 million a year, which is very small in relation to overall power sector needs. To put this figure in perspective, the power sector needs in Sub-Saharan African countries range from $2 million to $13.5 billion per year, and budgetary support of the sector varies from zero to $444 million. Although 99.6 percent of power sector public spending in the middle-income countries is off budget, for resource-rich countries, off-budget spending is a much smaller part of the total, equal to 71.2 percent of all public resources dedicated to power. Despite the limited allocation of public budgetary spending to the power sector, it is still important to mention one additional source of inefficiency: poor budget execution. Central governments face significant problems in executing their infrastructure budgets. On average, African

Table 7.3

Annual Budgetary Flows to Power Sector Percentage of GDP $ billion Power 0.815 0.015 0.145 0.0 0.827 Total 3.55 3.96 1.67 0.27 9.50

Country type Resource rich Middle income Nonfragile low income Fragile low income Africa

Power 0.37 0.01 0.13 0.0 0.13

Total 1.60 1.46 1.52 0.71 1.48

Source: Briceño-Garmendia, Smits, and Foster 2008. Note: Based on annualized averages for 2001–06. Averages weighted by country GDP. Figures are extrapolations based on the 24-country sample covered in AICD Phase 1. Totals may not add exactly because of rounding errors. GDP = gross domestic product.

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Table 7.4

Average Budget Variation Ratios for Capital Spending Overall infrastructure 78 65 76 — 75 Power — 60 75 — 66

Country type Middle income Resource rich Nonfragile low income Fragile low income Sub-Saharan Africa

Source: Adapted from Briceño-Garmendia, Smits, and Foster 2008. Note: Based on annualized averages for 2001–06. — = data not available.

countries are unable to spend as much as one-third of their capital budgets for power (table 7.4). The poor timing of project appraisals and late releases of budgeted funds due to procurement problems often prevent the use of resources within the budget cycle. Delays affecting in-year fund releases are also associated with poor project preparation, which leads to changes in the terms agreed upon with contractors in the original contract (such as deadlines, technical specifications, budgets, and costs). In other cases, cash is reallocated to nondiscretionary spending driven by political or social pressures. Unlike in other infrastructure sectors, the power sector’s losses from nonexecution of budgets are small as a percentage of spending. However, the absolute amount is large, and it is important to tackle this inefficiency. If the bottlenecks in power sector capital execution could be resolved, countries would increase their spending on power by $258 million a year, or 2.2 percent of total current spending, without any increase in current budget allocations. Resolution of these planning, budgeting, and procurement challenges should be included in the region’s reform agenda. Even if budgets are fully spent, concerns are found as to whether funds reach their final destinations. Public expenditure tracking surveys have attempted to trace the share of each budget dollar that results in productive frontline expenditures. Most of the existing case studies concern social sectors as opposed to power, but they illustrate leakages of public capital spending that can be as high as 92 percent (see Pritchett 1996; Rajkumar and Swaroop 2002; Reinikka and Svensson 2002, 2004; Warlters and Auriol 2005).

Improving Utility Performance
Utility inefficiencies are high and constitute on average 0.68 percent of GDP in Sub-Saharan African countries. In some countries, inefficiencies

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amount to almost 5 percent of GDP. Looking at different sources of utility inefficiency, one can see that the largest component is undercollection of electricity bills (0.40 percent of GDP), followed by system losses (0.34 percent of GDP) and overstaffing at the SOEs (0.26 percent of GDP). These numbers are monetary equivalents of physical measures of inefficiencies, such as system losses that average 23 percent compared with a global norm of 10 percent. Collection rates average 88.4 percent compared with the best practice standard of 100 percent, and customerto-employee ratios in Sub-Saharan Africa average 184, substantially below the same indicator in other developing regions. In countries with above-average utility inefficiencies, growth in power access is slow and suppressed demand high compared with the rest of the countries. If revenue cannot cover the necessary expenses because of undercollection or system losses, or the salary bill is excessively high, government resources are used to subsidize the utility. When subsidies cannot cover the net loss, the utilities are forced to skimp on maintenance, and performance deteriorates even further.

Savings from Efficiency-Oriented Reforms
In total, $8.2 billion could be captured through efficiency improvements, cost recovery, and more effective budget execution. The largest potential gains come from improved operational efficiencies that amount to $4.4 billion a year, most of which would come from achieving a 100 percent collection rate ($1.7 billion). A further $1.5 billion a year could be secured by reducing system losses to the internationally recognized norm. Dealing with overstaffing would liberate another $1.2 billion (table 7.5). Reaching cost recovery through cost reduction and tariff adjustment, as described

Table 7.5 Potential Gains from Higher Operational Efficiency $ million annually Total Middle Resource Nonfragile Fragile low Sub-Saharan Africa income rich low income income All operational inefficiencies System losses Undercollection Overstaffing 1,745 22 96 1,627 1,838 948 480 410 980 470 339 172 1,738 498 1,141 99 4,355 1,476 1,728 1,152

Source: Briceño-Garmendia, Smits, and Foster 2008.

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earlier, would yield $3.6 billion. Finally, achieving full capital execution would add yet another 0.2 billion a year. Ten countries have potential efficiency savings of more than 2 percentage points of GDP, from as much as 4.5 percent of GDP in the case of Côte d’Ivoire to 2.38 percent of GDP in Ghana. An additional eight countries can potentially save 1–2 percent of their GDP by eliminating inefficiencies (figure 7.4). In 56 percent of the countries, the largest

Figure 7.4
Senegal Mali Malawi Niger Botswana Cameroon Ghana Tanzania Zambia Nigeria Cape Verde Congo, Rep. Lesotho Benin Kenya Mozambique Madagascar Burkina Faso Ethiopia Rwanda Chad South Africa Namibia

Potential Efficiency Gains from Different Sources

0.0

0.5

1.0

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3.5

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raising capital execution reducing operational inefficiencies improving cost recovery
Source: Briceño-Garmendia, Smits, and Foster 2008. Note: Based on annualized averages for 2001–06. Averages weighted by country GDP. GDP = gross domestic product.

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source of inefficiencies is the lack of cost recovery. Operational deficiencies are the main source of inefficiency in 44 percent of the countries.

Annual Funding Gap
Existing spending and potential efficiency gains can be subtracted from estimated spending needs to gauge the extent of the shortfall in funding. However, even if all of the inefficiencies described previously could be tackled, they would cover only 20 percent of the funding gap for the power sector in Sub-Saharan Africa, 38 percent in resource-rich and low-income fragile states, 18 percent in nonfragile low-income countries, and just 17 percent in middle-income countries. About three-quarters of this funding gap relates to capital investment, and the remainder is O&M needs. Although it may be unrealistic to expect that all these inefficiencies could be captured, even halving them would make a contribution to financing the African power sector (table 7.6). Seventeen countries face significant funding gaps for the power sector (figure 7.5). By far the most salient cases are Ethiopia and the Democratic Republic of Congo, which have annual gaps of 23 percent of GDP ($2.8 billion annually) and 18 percent ($1.3 billion a year), respectively. Mozambique, Senegal, and Madagascar all have funding gaps of
Table 7.6 Annual Power Funding Gap Nonfragile low Resource income rich (11,770) 3,959 4,440 294 1,838 2,309 (3,370) 0 (9,704) 3,241 1,758 20 980 757 (4,705) 0 Fragile low income (5,201) 830 1,924 0 1,738 186 (2,447) 0 Total CrossSubcountry Saharan gain from Africa reallocation (40,797) 11,633 8,237 258 4,355 3,624 (20,927) 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 773

Middle income Infrastructure spending needs Spending directed to needs Gain from eliminating inefficiencies Capital execution Operational inefficiencies: Cost recovery Funding gap Potential for reallocation (14,191) 3,470 2,431 2 1,745 684 (8,289) 0

Source: Briceño-Garmendia, Smits, and Foster 2008. Note: n.a. = Not applicable.

Tanzania. Mozambique Senegal Madagascar Congo. South Africa Rwanda Nigeria Namibia Zambia Ghana Tanzania Kenya Uganda Cameroon Benin Chad Burkina Faso Niger Mali Malawi Lesotho Côte d’lvoire Cape Verde Botswana 0 5 10 15 20 25 percentage of GDP capex gap O&M gap Source: Briceño-Garmendia. Note: Based on annualized averages for 2001–06. Uganda. capex = capital expenditures. Rwanda. Kenya. Rep. 5–10 percent of GDP. South Africa. Zambia. Dem. O&M = operations and management. The Democratic Republic of Congo. the power sector’s annual funding gap totals $20.5 Power Infrastructure Funding Gap Ethiopia Congo. After inefficiencies are eliminated. Nigeria. and Foster 2008. Smits. GDP = gross domestic product.Closing Africa’s Power Funding Gap 165 Figure 7. Namibia. Averages weighted by country GDP. Rep. Ghana. Covering it would require raising additional .9 billion. and Cameroon have funding gaps of 1–5 percent of GDP.

which is where public resources are least available. Huge debt repayments more than fully absorbed the fiscal windfalls in these countries. Domestic public finance is the largest source of funding today. Although private participation in the power sector in Africa has increased over the past two decades. and to a smaller extent in Kenya. The question is whether private participation might increase in the future.7 percent of GDP to the public budget. Little Scope for Raising More Domestic Finance To what extent are countries willing to allocate additional fiscal resources to infrastructure? In the run-up to the current financial crisis. How Much Additional Finance Can Be Raised? Only limited financing sources are available. As a result. In low-income countries. Moreover. and the 2008 global financial crisis has affected all of them adversely.7). substantial debt relief increased external grants by almost 2 percent of GDP. and investors are more cautious after the 2008 financial crisis. an improved institutional environment.7 percent of GDP. averaging 4 percent a year from 2001 to 2005. To what extent were the additional resources available during the recent growth surge allocated to infrastructure? The answer is: surprisingly little (table 7. and reduced barriers to entry. budgetary spending actually contracted by 3. The most extreme case is that of the resource-rich countries. translated into increased domestic fiscal revenue of about 3 percent of GDP on average. assuming capacity expansion. but they could eventually become more important in some of the region’s larger economies. The future of ODA and non-OECD financing is unclear in the postcrisis situation. or using lower-cost technologies. The remainder of this chapter evaluates the potential for raising additional finance and explores policy adjustments to reduce the price tag and the burden of the funding gap. taking more time to attain investment and coverage targets.166 Africa’s Power Infrastructure funds. In resource-rich countries. it remains at modest levels. both of these sources of funding are of limited relevance to the power sector in fragile low-income states. burgeoning resource royalties added 7. but it presents little scope for an increase. Rapid economic growth. particularly Nigeria. Local capital markets have so far contributed little to infrastructure finance outside South Africa. except possibly in countries enjoying natural resource windfalls. the fiscal situation in Sub-Saharan Africa was favorable. Infrastructure .

This finding suggests that raising domestic revenue above current levels would require undertaking challenging institutional reforms to increase the effectiveness of revenue collection and broaden the tax base. however. Only in the low-income countries did the overall increases in budgetary expenditure have some effect on infrastructure spending.69 Nonfragile low income 3. Smits.54 0. domestic revenue generation will remain weak.14) 0.03 0. In middle-income countries.9 percent of GDP. Domestic borrowing is often very expensive. Sub-Saharan Africa’s public financing capabilities are characterized by weak tax revenue collection. The nonfragile low-income countries have allocated 30 percent of the budgetary increase to infrastructure investments. by Economic Use. which bore much of the decrease in spending.7 Net Change in Central Government Budgets.22 Source: Adapted from Briceño-Garmendia.89 Middle Resource income rich 4.1 percent of GDP. and the additional resources went primarily to current social sector spending. fell by almost 1. despite seeing their overall budgetary expenditures increase by about 3. Compared with other developing regions. Averages weighted by country GDP. GDP = gross domestic product. have allocated only 6 percent of the increase to infrastructure.00 0.09 (0. with interest rates .2 percent of GDP. Totals are extrapolations based on the 24-country sample as covered in AICD Phase 1.5 percent of GDP.00 0. domestically raised revenue grew by less than 1.04 (1.73) Fragile low income 1. and Foster 2008. budgetary spending increased by almost 4.46) 0. The fragile states. investment. Without such reforms. Domestic revenue generation of approximately 23 percent of GDP trails averages for other developing countries and is lowest for low-income countries (less than 15 percent of GDP a year). The borrowing capacity from domestic and external sources is also limited. the effect was fairly modest and confined to capital spending. but the effect on infrastructure spending was almost negligible.85 0.02 0.08 (3. Despite the high growth rates in the last decade.Closing Africa’s Power Funding Gap 167 Table 7. Even there. 1995–2004 percentage of GDP Use Net expenditure budget Current infrastructure spending as a share of expenditures Capital infrastructure spending as a share of expenditures Sub-Saharan Africa 1. Note: Based on annualized averages for 2001–06.

and user charges. Growth projections for the coming years have been revised downward from 5. cuts in infrastructure investment amounted to about 40 percent of the observed fiscal adjustment from the early 1980s to the late 1990s (Calderón and Servén 2004). Commodity prices have fallen to levels of the early 2000s. Based on recent global experience. Africa is not exempt from its impact. the scarcity of private domestic savings means that public domestic borrowing tends to precipitate sharp increases in interest rates that build up a vicious circle. Particularly for the poorest countries. the ratios of debt service to GDP are more than 6 percent. many African countries are devaluing their currency. there is every reason to expect that changes in the overall budget envelope in Africa will affect infrastructure investment in a similar pro-cyclical manner. fiscal adjustment episodes tend to fall disproportionately on public investment—and infrastructure in particular. Various oil producers have been saving royalty revenue in excess of $60 a barrel. For example.1 percent to 3.168 Africa’s Power Infrastructure that far exceed those on concessional external loans. so the current downturn will affect savings accounts more than budgets. The effect on royalty revenue. Given recent spending patterns. this adverse situation created by the global financial crisis will put substantial pressure on public sector budgets. For many Sub-Saharan countries. Overall.5 percent. Similar patterns were observed in East Asia during the financial crisis of the mid-1990s. These infrastructure investment cuts were later identified as the underlying problem holding back economic growth in the whole region during the 2000s. The 2008 global financial crisis can be expected to reduce fiscal receipts because of lower revenue from taxes. royalties. In addition. ODA financial flows to power infrastructure in Sub-Saharan Africa remained steady at a meager $492 . This reduction was remarkable because public infrastructure investment already represented less than 25 percent of overall public expenditure in Latin American countries. which will reduce tax revenue and likely depress the demand and willingness to pay for infrastructure services. however. Indonesia’s total public investment in infrastructure dropped from 6–7 percent of GDP in 1995–97 to 2 percent in 2000. Based on averages for eight Latin American countries. Experience from earlier crises in East Asia and Latin America indicates that infrastructure spending is vulnerable to budget cutbacks during crisis periods. Official Development Assistance—Sustaining the Scale-Up For most of the 1990s and early 2000s. will depend on the saving regime in each country. reducing the purchasing power of domestic resources.

1). However. this happens less in the power sector than in other infrastructure sectors. based on annual budget determinations. where the Infrastructure Consortium for Africa was created to focus on scaling up donor finance to meet Africa’s infrastructure needs. the European Commission. the execution of funds faces some of the same problems affecting domestically financed public investment. The three multilateral agencies—the African Development Bank. UBS Investment Research 2008. ODI 2009. if all commitments up to 2007 are fully honored. Bilateral support. and some decline can be anticipated.2 billion a year could come from the multilateral agencies alone in the near future. A significant lag occurs between ODA commitments and their disbursement. This gap reflects delays typically associated with project implementation. Divergences between donor and country financial systems. Because ODA is channeled through the government budget. ODA disbursements could be expected to rise significantly (IMF 2009. the just-reported commitments in power were only 18 percent higher than the estimated ODA disbursements of $694 million (see table 7. but prospects no longer look so good. Donors have so far lived up to their promises. including procurement delays and low country capacity to execute funds. from $642 million in 2004 to $810 million in 2006. which suggests that disbursements should continue to increase in the coming years. In principle. In practice. The launch of the Commission for Africa Report in 2004 was followed by the Group of Eight Gleneagles Summit in July 2005. ODA was set to increase further before the crisis. World Economic Outlook 2008). the crisis may divert multilateral resources away from infrastructure projects and toward emergency fiscal support. and ODA commitments to African power infrastructure increased by more than 26 percent. . In 2006. and power will likely continue to attract a substantial share of that overall envelope. World Economic Outlook 2008. Historical trends suggest that ODA has tended to be pro-cyclical rather than countercyclical (IMF 2009.Closing Africa’s Power Funding Gap 169 million a year. and International Development Association (IDA)—and France and Japan make significant contributions among the bilaterals. however. and the World Bank—secured record replenishments for their concessional funding windows for the three to four years beginning in 2008. as well as unpredictability in the release of funds. may be more sensitive to the fiscal squeeze in OECD countries. may further impede the disbursement of donor resources. funding allocations to African infrastructure totaling $5. and references cited therein). Most of this ODA comes from multilateral donors—the African Development Bank. Bearing all this in mind. European Community.

with the most significant projects in Sudan and Nigeria. amounting to $5. They offer realistic financing options for power and transport and for postconflict countries with natural resources.170 Africa’s Power Infrastructure Non-OECD Financiers—Will Growth Continue? Non-OECD countries financed about $1. However. Non-OECD financiers have been active primarily in oil-exporting countries (Angola. By the end of 2007. and Sudan). and policy sides. Most of this has been focused on the construction of large hydropower schemes. As they originate in fiscal and royalty resources in their countries of origin. It is important to note that these and all . countries. followed by Indian and then Arab support. Non-OECD financiers also provide investment finance without associated support on the operational.3 billion for the construction of 10 major hydropower projects totaling 6. and the Arab funds follow sectors. Nigeria. Private Investors—Over the Hill Private investment commitments in the Sub-Saharan power sector surged from $40 million in 1990 to $77 million in 1995. institutional.3 billion in cumulative commitments by 2007. About one-third of Chinese infrastructure financing in Africa has been directed to the power sector.7 billion provided by ODA over the same period. Main transmission projects are in Tanzania and Luanda (Angola). Some of the projects will more than double the generating capacity of the countries where they are located. nongovernmental organizations are voicing concerns about the associated social and environmental standards. which raises questions about the new assets’ sustainability. the focus of the finance is very different. they will likely suffer from budgetary cutbacks. China has invested in building thermal plants. India.1 billion of the African power sector annually during 2001–06 (see table 7.2 billion in 2008. then to $451 million in 2000 and $1. Non-OECD finance for the African power sector has predominantly taken the form of Chinese funding.000 megawatts (MW). China was providing $3. This is substantially more than the $0. and circumstances aligned with their national business interests. The downturn in global commodity prices may also affect the motivation for some of the Chinese infrastructure finance linked to natural resource development. How the current economic downturn will affect non-OECD finance is difficult to predict because of the relatively recent nature of these capital inflows.1). moreover. Outside hydropower. The nonOECD financiers from China. Non-OECD finance raises concerns about sustainability.

equity issues (34 percent of total). a further 17 percent to concessions that amount to cumulative commitments of $1. corporate bonds are almost nonexistent. When project implementation cycles are taken into account. or 0.07 percent of GDP (see table 7. Approximately half of local financing of the power sector comes from loans received from the banks. Furthermore.and medium-term debt. and bank loans (28 percent of total). Private capital flows. These disbursements are very similar in magnitude to those received from non-OECD financiers. In the power sector.6a). almost one-third comes from issuing securities.1 billion) and the funding gap ($22. this is barely 13 percent of the total outstanding stock of infrastructure issues.7 billion of cumulative commitments. and the remaining 1 percent to divestitures that total $124 million (figure 7. with occasional spikes driven by the closure of a handful of large deals. private participation in developing countries fell by about one-half over a period of five years following the peak of this participation in 1997. although their composition differs. the typical average annual capital flow to African power sector since 2000 has averaged no more than $450 million. Other than in South Africa. which—although valuable from a fiscal perspective— do not contribute to the creation of new power assets.1). About 80 percent of private finance for African power has gone to greenfield projects with some $7.6 billion.6b).Closing Africa’s Power Funding Gap 171 values reported here exclude royalty payments to governments for power infrastructure. this translates to average annual disbursements in recent years of $460 million. the picture is very different: Approximately half of financing is a result of corporate bond issuance. .3 billion). In South Africa. Local Capital Markets—A Possibility in the Medium Term The outstanding stock of power infrastructure issues in the local capital markets in Africa is $9. and only 18 percent is bank lending. This is very little compared with annual power sector financing needs ($40. Private capital flows to the African power sector have been volatile over time (figure 7. in particular. are likely to be affected by the 2008 global financial crisis.6 billion. Existing transactions are also coming under stress as they encounter difficulties refinancing short. the sources of financing are divided almost equally among corporate bond issues (38 percent of total). Excluding this handful of megaprojects. and the other half is covered by utility-issued securities. In the aftermath of the Asian financial crisis.

172

Africa’s Power Infrastructure

Figure 7.6

Overview of Private Investment to African Power Infrastructure
a. Over time

60,000 50,000 40,000 $ million 30,000 20,000 10,000 0

Source: PPIAF 2008.

90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08
year b. By type of project $1,598 million 17% $124 million 1% $7,737 million 82% concessions divestitures greenfield projects

19

Closing Africa’s Power Funding Gap

173

Although half of the total value of corporate bonds in infrastructure is accounted for in power utilities, only one-quarter of total bank loans to infrastructure goes to the power sector, and only 6 percent of the total value of equity issues is attributed to the power sector (table 7.8). By comparing countries of different types, one can see that most local capital market financing outside South Africa goes to nonfragile lowincome countries (55 percent of total value), and another large part ends up in resource-rich countries (39 percent of total value). Almost the entire value of equities (99 percent of total) is issued in nonfragile lowincome countries, and a similar distribution can be observed for corporate bonds, with 88 percent of their value associated with issues in nonfragile low-income countries, although the total value of corporate bonds issued outside South Africa is negligible at $59 million. Most bank loans (68 percent of total) benefit resource-rich countries (table 7.9).

Bank Lending
As of the end of 2006, the amount of commercial bank lending to infrastructure in Africa totaled $11.3 billion. More than $2.7 billion of this total was related to power and water utilities, but distribution between these two sectors was unclear (table 7.8). As well as being limited in size, bank lending to infrastructure tends to be short in tenure for all but the most select bank clients, which reflects the predominantly short-term nature of banks’ deposits and other liabilities. Financial sector officials in Ghana, Lesotho, Namibia, South Africa, Uganda, and Zambia reported maximum maturity terms of 20 years, the longest such maturities among the focus countries. Eight other countries reported maximum loan maturities of “10 years plus,” and maximum maturities in four countries were reported as five or more years. Even where 20-year terms are reportedly available, they may not be affordable for infrastructure purposes. In Ghana and Zambia, for example, average lending rates exceed 20 percent because it is difficult to find infrastructure projects that generate sufficient returns to cover a cost of debt that is greater than 20 percent. For most Sub-Saharan countries, the capacity of local banking systems is too small and constrained by structural impediments to adequately finance infrastructural development. There may be somewhat more potential in this regard for syndicated lending to infrastructure projects with the participation of local banks, which has been on an overall trend of increase in recent years. The volume of syndicated loans to infrastructure borrowers rose steeply from $0.6 billion in 2000 to $6.3 billion in

174

Table 7.8 $ million Corporate bonds Total 13,399.0 2,792.7 62,019.2 6,843.1 75,418.1 9,635.9 15 28 10 18 1.00 0.00 1.00 0.00 37 51 0.30 0.00 548.1 58.9 7,796.2 1,302.9 48,148.7 1,965.4 55,944.9 3,268.4 6,841.3 3,613.9 7,389.4 3,672.8 Equity issues Bank loans Government bondsa

Financial Instruments for Locally Sourced Infrastructure Financing % of total local capital market financing Corporate bonds 4 2 11 53 10 38 Equity issues 58 47 78 29 74 34

Bank loans 46.8 0.0

Government bondsa

5,007.9 1,430.9

6,274.9 1,263.8

754.3 0.0

Africa excluding South Africa All infrastructure Electricity South Africa All infrastructure Electricity Africa total All infrastructure Electricity

11,282.7 2,694.7

801.1 0.0

Source: Adapted from Irving and Manroth 2009. a. The actual amount of government bonds financing infrastructure may be an underestimate, as a specific financing purpose for these bond issues is generally unavailable. Some of the financing raised via these issues may have been allocated toward infrastructure.

Closing Africa’s Power Funding Gap

175

Table 7.9

Outstanding Financing for Power Infrastructure, 2006 Bank Corporate Equity Share of Share of total loans bonds issues total infrastructure Total ($ million) ($ million) ($ million) ($ million) stock (%) stock (%)

South Africa Middle income (excluding South Africa) Resource rich Nonfragile low income Fragile low income Total Share of total stock (%) Share of total infrastructure stock (%)

1,264

3,614

1,965

6,843

70

11

103 1,119 350 69 2,905 30

— 7 52 — 3,673 38

— 15 1,235 — 3,215 33

103 1,141 1,637 69 9,793 100

1 12 17 1 100

19 43 22 15 14

4

5

4

14

Source: Adapted from Irving and Manroth 2009. Note: — = data not available.

2006, with 80 percent of this amount concentrated in South Africa (Irving and Manroth 2009). As of 2006, the power sector accounted for only 1.4 percent of the value of the syndicated infrastructure loans in Africa. The two major power sector transactions based on syndicated loans for 2006 are reported in table 7.10. Much of this finance is denominated in local currency. Maturities are four to nine years in length with undisclosed spreads. The largest loan is the UNICEM power plant construction loan in Nigeria, which comprised a $210.6 million mixed naira-dollar–denominated loan delivered in four tranches raised from eight local banks, one U.S. bank (Citibank), and a local affiliate of a regional Ecobank.

Equity
Although the infrastructure companies issue only 7.7 percent of total value of corporate equities in the region, equity financing is a large part of overall local capital market infrastructure financing. A total of $55.9 billion of capital has been raised for infrastructure in this way, including $48.1 billion in South Africa alone and $7.8 billion outside South Africa (table 7.8). The region’s stock exchanges played an important role in raising capital for the power sector, with $3.3 billion raised in this way in

176

Table 7.10 Currency denomination Maturity 4 years, 7 years, 9 years 5 years Undisclosed Undisclosed Pricing Naira and dollar 4 1 Dollar Number of tranches

Syndicated Loan Transactions for Power Sector in 2006

Country

Borrower

Project

Loan amount ($ million)

Bank participation: local vs. nonlocal 8 local; 1 U.S. (Citibank); 1 local affiliate of regional Ecobank 1 local; Banque de Afrique (Benin); 1 local subsidiary of Stanbic Bank

Nigeria

UNICEM

Power plant construction

210.6

Kenya

Iberafrica Power

Electric utility

16.8

Source: Adapted from Irving and Manroth 2009.

Closing Africa’s Power Funding Gap

177

Africa overall, including $2.0 billion in South Africa and $1.3 billion outside South Africa (table 7.11). As of 2006, the largest outstanding value was a KenGen issue on the Nairobi stock exchange that constituted 71 percent of total outstanding equity value in the power sector. The second largest equaled one-quarter of the total value in the sector. The remaining issues were quite small. Overall, power issues account for 2 percent of Sub-Saharan Africa’s stock exchange listings by value (table 7.11).

Corporate Bonds
In the last decade, governments in the region extended the maturity profile of their security issues in an effort to establish a benchmark against which corporate bonds can be priced. Except in South Africa, however, corporate bond markets remain small and illiquid, where they exist at all. At 13 percent of GDP, South Africa’s corporate bond market is by far the largest in the region, with $33.8 billion in issues outstanding at the end of 2006, followed by Namibia’s at $457 million (7.1 percent of GDP). Outside South Africa, the few countries that had corporate bonds listed on their national or regional securities exchange at the end of 2006 had only a handful of such listings, and the amounts issued were small. Overall, $3.7 billion of corporate bonds issued by power companies were outstanding as of the end of 2006 (table 7.8). As much as 98 percent of these were issued in South Africa by Eskom, which represents

Table 7.11 Details of Corporate Equity Issues by Power Sector Companies by End of 2006 Percentage Outstanding of all stocks on country value exchange ($ million) 53.4 307.9 926.6 0.2 0.05 14.8 1,302.9 4.0 2.7 8.0 0.002 0.0004 0.06 2.0

Country

Issuer

Stock exchange BRVM Nairobi SE Nairobi SE Nairobi SE AIM Nairobi SE AIM Nigeria SE

Côte Compagnie Ivoirienne d’Electricitév d’Ivoire Kenya Kenya Power & Lighting Ltd. KenGen Kenya Power & Lighting Ltd. Pref. 4% Kenya Power & Lighting Ltd. Pref. 7% Nigeria Nigeria Energy Sector Fund Total electricity generation/power

Source: Adapted from Irving and Manroth 2009. Note: AIM = alternative investment market; BRVM = Bourse Régionale des Valeurs Mobilières (regional stock exchange).

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Africa’s Power Infrastructure

11 percent of the total value of outstanding corporate bonds and 53 percent of outstanding infrastructure bonds in that country. Only $0.5 billion in power sector bonds were issued outside South Africa in countries such as Benin, Burkina Faso, Kenya, Mozambique, Namibia, Senegal, Uganda, and Zambia. These small bond issues represent a large portion of total bond value in the respective countries. A single listing of Communauté Electrique de Benin in a small amount of $33.2 million accounted for 60 percent of total corporate bonds outstanding on BRVM. A listing of Zambia’s Lunsemfwa Hydro Power in the amount of $7.0 million represented 43 percent of the Lusaka Stock Exchange’s corporate bond value (table 7.12). Institutional investors, including pension funds and insurance companies, could potentially become an important source of infrastructure financing in the future, with approximately $92 billion in assets accumulated in national pension funds and more than $181 billion in insurance assets. However, only a fraction of 1 percent of these assets is invested in infrastructure. It is not expected that this situation will change in the near future or without significant improvement in the macroeconomic environment.

Costs of Capital from Different Sources
The various sources of infrastructure finance reviewed in the previous sections differ greatly in their associated costs of capital (figure 7.7). For public funds, raising taxes is not a costless exercise. Each dollar raised and
Table 7.12 Details of Corporate Bonds Issued by Telecom Operators by End of 2006 Percentage of all Maturity Outstanding corporate value Stock Issue terms ($ million) bond issues exchange date (years) BRVM BRVM LuSE 2003 2004 2003 7 7 n.a. 33.2 18.7 7.0 58.9 60 34 43 6

Country Benin

Issuer

Communauté Electrique de Benin Communauté Electrique de Benin Zambia Lunsemfwa Hydro Power Total electricity generation/power

Source: Adapted from Irving and Manroth 2009. Note: BRVM = Bourse Régionale des Valeurs Mobilières (regional stock exchange); LuSE = Lusaka Stock Exchange; n.a. = not available.

75 percent service charge) with a 10-year grace period. authors’ calculations. respectively.87 0.17 0. .00 cost of raising $1 of financing Source: Average marginal cost of public funds as estimated by Warlters and Auriol (2005). The cost of non-OECD finance is somewhere between that of public funds and ODA.33 0.80 1. That premium captures the incidence of that tax on the society’s welfare (caused by changes in consumption patterns and administrative costs. 3. cost of equity for private sector as in Estache and Pinglo (2004) and Sirtaine and others (2005). and 1.5 percent interest.Closing Africa’s Power Funding Gap 179 Figure 7. ODA = official development assistance.60 0. To allow ready comparisons across financing sources.7 public India China Arab funds ODA IDA grants Costs of Capital by Funding Source 1.65 0.6 percent.00 1. Note: IDA = International Development Association. among other things). spent by a Sub-Saharan African government has a social value premium (or marginal cost of public funds) of almost 20 percent. this study standardized the financial terms as the present value of a dollar raised through each of the different sources. China.40 0. which may offset or accentuate some of the differences.20 0.51 0. ODA typically provides a subsidy factor of 60 percent. India. The most concessional IDA loans charge zero interest (0. Wide variation exists in lending terms. it recognized that all loans must ultimately be repaid with tax dollars. and grant a four-year grace period. each of which attracts the 20 percent cost premium.91 0. 50 percent. and the Arab funds charge 4 percent. sources of finance differ in the transaction costs associated with their use. In doing so. The subsidy factor for Indian and Chinese funds is about 25 percent and for the Arab funds. rising to 75 percent for IDA resources. In addition to the cost of capital.00 0.20 0.

For some countries. The same cannot be said for the other country groups. Taking More Time The investment needs presented in this book are based on the objective of redressing Africa’s infrastructure backlog within 10 years. without which the time . These estimates are contingent on achieving efficiency gains. what are the best ways to increase availability of funds for infrastructure development? The place to start is clearly to get the most from existing budget envelopes by tackling inefficiencies. It has been shown that it would be possible for middle-income states to meet this target within existing resource envelopes if the efficiency of resource use could be substantially improved. both resource-rich and nonfragile low-income countries could achieve the proposed targets within the existing spending envelopes. especially considering the long-term consequences of the recent financial crisis. The fragile lowincome countries would need to spread the investment needs over 60 years to reach the targets using the existing spending levels. Only resource-rich countries have the possibility of using natural resource savings accounts to provide a source of financing for infrastructure. The prospects for improving this situation are not good. even after capturing all efficiency gains. particularly the fragile states. Extending the time horizon for the achievement of these goals should make the targets more affordable. What Else Can Be Done? The continent faces a substantial funding gap for power even if all the existing sources of funds—including efficiency gains—are tapped. this would be enough to close the funding gap in the power sector. however. What other options do these countries have? Realistically. But how long of a delay would be needed to make the infrastructure targets attainable without increasing existing spending envelopes? By spreading the investment needs over 30 rather than 10 years. a significant funding gap would remain. The possibility exists across the board that all sources of infrastructure finance in Africa may fall rather than increase. but only if macroeconomic conditions allow.180 Africa’s Power Infrastructure The Most Promising Ways to Increase Funds Given this setting. which would further widen the funding gap. For several others. they need either to defer the attainment of the infrastructure targets proposed here or to try to achieve them by using lower-cost technologies.

regional integration is a crucial step in the power sector reform that would substantially reduce costs. respectively. Resource envelope plus potential efficiency gains variation in resources needed (% deviation from current envelope) 300 250 200 150 100 50 0 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 number of years needed to attain investment targets b. variation in resources needed (% deviation from current envelope) . Note: The threshold is the index value of 100.8 Spreading Investment over Time a. Alternatively. the countries would need to considerably increase their existing spending to reach the targets (figure 7.Closing Africa’s Power Funding Gap 181 horizon for meeting the targets would be substantially longer than 30 and 60 years. Lowering Costs through Regional Integration As we have already shown. mainly Figure 7.8a). Existing resource envelope 600 550 500 450 400 350 300 250 200 150 100 50 0 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 number of years needed to attain investment targets Sub-Saharan Africa middle income fragile low income resource rich nonfragile low income Source: Foster and Briceño-Garmendia 2009.

even though it entails higher investment in capital-intensive hydropower and associated cross-border transmission in the short run.6 billion a year.1 billion a year. . and distribution will require a substantial investment of $25 billion a year for the next 10 years. displacing 20. and Central Africa and are at varying stages of maturity.182 Africa’s Power Infrastructure because of economies of scale and increased share of hydropower in total power generation. far above existing power sector spending of $11. No exceptions can be found to this general conclusion among country types: No country group covers more than 50 percent of its power sector funding gap by eliminating inefficiencies. transmission. West. The returns to cross-border transmission can be as high as 120 percent (Southern African Power Pool) or more—typically 20–30 percent for the other power pools.2 billion a year of inefficiencies that exist at present. Optimizing power trade would require 82 gigawatts (GW) of additional generation capacity and 22 GW of new cross-border transmission capacity. regional trade could reduce the annual costs of power system operation and development by $2. still averages 13 percent below the current total costs and only 40 percent above the current effective tariffs. mainly in poorly operated utilities. In recognition of this benefit. The savings come largely from substituting hydropower for thermal power. Pooling energy resources through regional power trade promises to significantly reduce power costs. Regional power trade would lead to an increase in the share of hydropower in Africa’s generation portfolio from 36 percent to 48 percent.000 MW of thermal plant and saving 70 million tons per year of carbon dioxide emissions (8 percent of Sub-Saharan Africa’s anticipated emissions through 2015). If pursued to its full economic potential. regional power pools have been formed in Southern. East. New generation. The difference between spending needs and current spending cannot be bridged entirely by capturing the estimated $8. regional trade would also save 70 million tons per year of carbon dioxide emissions. which would lead to a substantial reduction in operating costs. By increasing the share of hydropower. but the long-term marginal cost of producing and distributing power. The Way Forward The cost of meeting the power sector spending needs estimated in this volume amounts to $40.7 billion (assuming efficiency gains have been achieved). which takes into account construction costs.

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.

APPENDIX 1 Africa Unplugged 187 .

0 0.1 38.0 0.211 76 227 285 278 233 393 .1 97.7 50.443 120 1. % of country total Gas 0.622 1.0 75.0 3.6 17.1 National Power System Characteristics Installed generation capacity (MW) Hydro 0.9 56.9 Installed generation capacity per million people (MW/million people ) Operational capacity as percentage of installed capacity (%) System capacity factor (%)a Generation technology.0 0.0 0.8 58.0 0.0 0. Congo.2 100.0 0.0 100.7 91.0 0.9 62.0 0.8 38.0 83.1 Benin Botswana Burkina Faso Cameroon Cape Verde Chad Congo.0 100.6 79.0 0.0 96.0 0.7 — 45.3 93.0 0.8 0. Dem.0 0.0 87.1 53.0 Coal 0.0 0. Rep.4 56.3 58.0 0.6 6.9 — 100.188 Table A1.5 100.5 65.0 31.6 95.0 0.084 755 1.0 24.0 6.0 0.0 17.0 45.3 89.4 82.1 61.7 5.0 0.5 100.3 27.4 9.3 42.0 20.0 44.0 0.8 91.0 0.7 0.7 11.3 59.0 0.7 34.6 Oil 14 70 13 54 150 3 41 33 59 10 72 34 42 12 22 23 12 192 36.4 100.0 100.0 40. Rep.0 0. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mali Mozambique Namibia 122 132 180 902 78 29 2.0 4.8 32.9 82.6 92.1 43.5 100.5 45.0 0.0 8.0 0.5 0.0 0.8 62.3 6.0 95.0 0.0 0.2 2.0 63.0 79.0 100.0 0.0 95.0 0.2 43.2 3.5 57.2 41.

5 18.8 4.5 23.9 40.760 CAPP 709 EAPP 1.0 66.0 68.2 66.0 0.0 0.3 0.4 0.5 25. EAPP = East African Power Pool.0 61.8 5.0 6.0 0.7 0.0 60.8 71. SAPP = Southern African Power Pool. . data for 2007.0 1.3 14.0 0.4 5.7 91 27 23 219 41 158 34 140 19 10 93.8 95.0 73.0 0.9 63. MW = megawatt.9 4.0 0.101 Installed capacity high 7.1 50.0 49.1 79.2 65.9 0.855 WAPP 3.0 30.3 85.7 86.6 0.0 30.0 0.4 76.6 78.8 0.8 11.4 0.9 100.6 98.4 7.1 77.8 60.4 3.6 27.1 69. kWh = kilowatt hour.1 63. Mali.0 0.0 6.6 52.0 13. Note: Data as of 2005 or the earliest year available before 2005.6 7.5 84.4 Niger 105 Nigeria 5.778 Zimbabwe 1.5 0.4 14.1 2.0 22.0 96.4 0.0 22.9 38.8 65.0 0. For Botswana.3 70.7 71.5 — 25.1 2.0 89.3 92.481 Sudan 801 Tanzania 881 Uganda 321 Zambia 1.0 65.129 Predominantly hydro capacity 1.6 79. WAPP = West African Power Pool.0 6.5 1.7 15.2 29.2 52.3 0.912 Predominantly thermal capacity 9.0 18.169 SAPP 9. — = data not available.7 79.3 9.8 71. Republic of Congo.0 2.0 0.7 41 3 25 854 22 22 11 150 146 69.0 71. Calculated as ratio of electricity generated (watt-hours [Wh]) to installed operational capacity in Wh (W x 24 x 365).1 100.0 24. and Zimbabwe.1 14.0 68.4 100.6 42.9 0.1 44.8 — 96. a.2 64.3 43.0 100.0 86.9 86.625 Installed capacity medium 597 Installed capacity low 73 87.4 17. CAPP = Central African Power Pool.7 0.5 85.960 Benchmarks (Weighted Averages) Sub-Saharan Africa 4.898 Rwanda 31 Senegal 300 South Africa 40.0 5.0 5.3 — 85.3 189 Source: Eberhard and others 2008.6 0.1 73.2 77.

6 51.9 38.266 33.9 76.4 26.300 — — — 5.692 — — 550.214.1 36.583 — — 31.933 5.2 — 22.4 35.0 — 51. Dem.27 –2.2 12.750 5.949 22.4 34.141 49.1 32.0 High voltage — — — 40.0 9 386 38 240 87 12 121 115 299 36 300 152 229 51 104 76 7 770 14 166 595 2.794 449 –1.397 0 176 28 13 0 0 2.8 49.7 25.1 38.1 27.2 Consumption of electricity by customer group.589 6.108.079 — 22.278 962.2 58.004 45 117 7.5 39.0 44.018 387 1.0 0.8 — 0.904 — — 47.692 Medium High voltage voltage Electricity Production and Consumption 190 Generation and net imports Net electricity generated (GWh/year) Low voltage 40.2 10.7 — 48.068 20 739 35 — 111 170 94 205 — — 147 77 71 169 293 92 252 — 127 161 134 897 40.Table A1.998 3.413 1.611 54.850 366.537 2. Rep.6 47.9 13.068 25. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mali Mozambique Namibia Niger Nigeria 81 726 516 4.3 — 0.667 22.5 14.368 942 147 1.5 0. as percentage of total (%) Consumption per customer by customer group (kWh/month) Low voltage Medium voltage 22.0 39.7 4.466.7 63.6 35. Congo.524 2.580 202 24.193 407 5.1 — 40.8 17.9 4.0 85.1 — 63.079 .1 20.5 60.3 0.347 410 973 1.5 45.489 220 0 Net electricity Net import generated per capita (import-export) (kWh/capita/year) (GWh/year) Benin Botswana Burkina Faso Cameroon Cape Verde Chad Congo.4 22.610 496 — 28.9 22.3 92.1 — 36.397.394 0 0 0 0 –1.997 3.0 19.8 3.7 — 36. Rep.3 34.0 36.978 61.

305 150. Note: Data as of 2005 or the earliest year available before 2005. GW = gigawatt.9 — 43.523.13 176 4.925 Installed capacity high 41.975 Installed capacity medium 2.880 Uganda 1.0 — — — 31.794 370.203 281. and Zimbabwe.471 Benchmarks (Weighted Averages) Sub-Saharan Africa 23.348 855.3 — 41.483.105 South Africa 228.812 17.071 Sudan — Tanzania 1.9 7.049 2.561 1.583 EAPP 3.591 2.3 5.808 SAPP 52.285.805. — = data not available.170 — 24.337 CAPP 2.773 49.760 20.000 2.659 — 58.6 — — — 10.492 584.767 90.850 Zimbabwe 7.972 113. kWh = kilowatt hour.051 1.454.813 — 48 63 746 557 –214 0 –282 –521 –51 –153 –257 –836 22 21 17 6 27 8 17 9 19 28 42 8 1.161 2.4 — — — 139 336 — 162 120 — — — 39.5 7. data as of 2007.681 1.694 2.735 96.338 — 169.830.303.774 12.556 1.355 81.978.338 110 0 –2.234 2.345 4.340 Predominantly hydro 3.714 4.8 — 14.343 — 136 –170 222 2.560 18.510 2.1 86.079 Predominantly thermal 53. Mali.058 162 156 33 28 32 31 21 7 44 12 21 12 33 39 62 80 27 77 41 74 2.360 1.968.018 15.214 171 963 161 822 Source: Eberhard and others 2008.113 Installed capacity low 149 77 22 470 147 77 1.6 19.682 — — Rwanda 116 Senegal 2.319 481.898 — — — — 4. EAPP = East African Power Pool. CAPP = Central African Power Pool.149. For Botswana. WAPP = West African Power Pool.893 Zambia 8. Republic of Congo. SAPP = Southern African Power Pool.5 73.686 4.890 WAPP 16. 191 .

14 73.18 10.31 1.34 0.85 0.61 44.50 49.45 35.90 14.17 10.06 4.48 — 1.09 30.28 7.47 69.74 6.01 0.75 4. % firms Power from own generator (%) Outages and Own Generation: Statistics from the Enterprise Survey 192 Electricity cited as business constraint.33 12.97 5.87 6.91 29.16 13.09 Source: Foster and Steinbuks 2008. .09 45. Note: — = data not available.13 9.43 60.26 43.57 6.12 22.40 54.64 2.96 21.92 22.75 2.53 5.69 26.66 42.09 26. % sales Equipment destroyed by outages.16 53.58 15.21 27.23 9.45 32. % firms Algeria Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Egypt.68 8.93 25.94 70.22 57.92 1.15 41.93 Power outages.94 15.87 11.04 17.20 2.14 29.87 33. Arab Rep.35 7.12 0.24 43.16 2.38 24.52 25.33 26.12 5.79 43.40 21.32 56.72 5.79 1.65 68.44 5.95 5.46 37.10 19.45 9.00 3.71 0.87 11.64 5.Table A1.66 12.30 60.56 64.61 38.40 74.92 6.21 5.28 7.3 Power outages (days) 12.54 62.25 39.06 45.82 39.51 13.54 3.91 — 1.94 5.45 48.54 5.85 39.31 63. Eritrea Ethiopia Kenya Madagascar Malawi Mali Mauritania Mauritius Morocco Namibia Niger Senegal South Africa Swaziland Tanzania Uganda Zambia Average 11.42 — — — 0.81 0.82 1.67 2.56 5.49 26.82 143.62 — — 0.76 15.80 15. % sales Generator owners.33 14.05 38.98 — 6.74 0.97 37.09 11.78 6.87 9.38 63.65 8.62 13.28 0.28 6.54 — — — — — — — — 0.18 29.23 4.81 13.36 — 0.44 9.36 3.50 25.80 17.06 4.16 34.29 7.97 79.22 32.71 59.34 38.

00 0.04 0.00 0.13 0.8 33.Africa Unplugged 193 Table A1.5 Distribution of Installed Electrical Generating Capacity between Network and Private Sector Self-Generation Utility and government.0 Cost of emergency generation.00 1.872 Emergency generation capacity.19 3.43 0.95 0.3 9.00 0. Rep.00 0.36 (continued next page) .00 0.48 0.45 1.25 3.53 0.00 0.1 4.37 1.00 0. Short-Term.79 1.00 0.00 0.00 1. MW = megawatt.09 0.00 0.65 0.00 Sierra Leone Uganda Madagascar Ghana Rwanda Kenya Senegal Angola Tanzania Gabon Total 20 100 50 80 15 100 40 150 40 14 609 Source: Foster and Steinbuks 2008. Rep.211 428 830 881 414 5.00 3.00 0.00 0.00 Manufacturing 0.34 0.00 0. by sector.00 1.00 0.00 0. Table A1. Côte d’Ivoire Equatorial Guinea Eritrea Ethiopia 94 97 91 100 98 99 100 100 100 100 93 53 96 49 100 99 Self-generation.00 Fuels 2.5 3.19 0.3 18.00 2.00 0.96 0.00 0.69 0. Note: Emergency power plant is generally leased for short periods and thus the amount of emergency power in individual countries varies from year to year.45 19.13 4.55 0.00 0.4 183. Leased Generation Emergency generation capacity (MW) Total generation capacity (MW) 49 303 227 1.01 0.18 42.84 0.00 0. % of total 40.00 0.00 0.84 1.00 0.84 0. % of total Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Comoros Congo.4 Emergency.29 2.5 8.23 0.4 38.00 0.00 0.00 0. Congo.39 3.17 Commerce/ services 0. GDP = gross domestic product.90 1.0 5. Dem.41 0.00 0.14 0.00 0. % of total Mining 2.41 51.00 8.0 22.00 0.490 39 1. % GDP 4.00 0.00 0.00 0.00 0.

00 0.32 20.22 0.00 0.00 3.32 0.28 0.00 1.194 Africa’s Power Infrastructure Table A1.00 0.38 0.11 2.00 0.69 0.00 0.75 1.09 4. by sector.19 0.00 0.00 0.63 1.31 48.00 0.00 3.00 0. .00 0.67 Gabon Gambia Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritania Mauritius Mozambique Namibia Niger Nigeria Rwanda São Tomé and Príncipe Senegal Seychelles Sierra Leone Somalia South Africa Sudan Swaziland Tanzania Togo Uganda Zambia Zimbabwe Average 81 98 87 82 94 95 100 100 100 94 91 38 77 99 100 76 78 93 100 99 100 100 100 98 93 49 89 79 93 98 96 90 Source: Foster and Steinbuks 2008.00 0.76 0.31 18.02 0.00 0.5 (continued) Utility and government.55 0.00 0.00 5.00 1.00 0.02 0.02 0.29 Fuels 18.68 4.56 Commerce/ services 0.00 0.00 0.10 0.00 0.45 10.31 0.92 0.00 7.68 0.00 0.00 0.00 0.89 3.97 5.00 0.23 0.00 3.15 0.53 3.00 4.00 0.00 0.98 0.00 0.00 0.00 0.00 0.00 0.58 0.23 3.00 0.00 0.00 0.27 Manufacturing 0.00 20.00 1.00 0.03 0.00 0.00 0. % of total Self-generation.00 0.00 0.00 3.00 12. % of total Mining 0.00 0.43 4.99 1.14 57.33 0.00 0.70 0.00 0.00 8.00 0.00 0.00 0.00 2.53 0.49 0.00 0.79 0.50 3.00 0.00 0.00 0.83 0.00 0.00 0.03 0.39 1.00 0.00 0.00 0.81 0.00 0.00 0.00 0.50 0.92 5.00 6.00 21.84 0.32 0.73 0.00 0.56 0.00 0.

46 0.29 0.09 0.40 0.05 0.32 0.14 0.74 0.0 12.36 0.08 0.27 0.15 Average total cost of own electricity (C = A + B) 0.8 38.18 0.04 0.50 0. ∂ Share of total electricity consumption coming from own generation.27 0.15 0.43 Weighted Price of average kWh cost of purchased electricity from public (E = ∂C+[1–∂]D)d grid (D) 0.45 0.6 With own generator 52.28 Source: Foster and Steinbuks 2008.11 0.12 0.05c 0.12c 0.03c 0.10 0.18 0.46 0.24 0.15 0.04 0.Africa Unplugged 195 Table A1. c.10 — 0.30 0.50 0.44 0.04 0. Tourism industry (hotels and restaurants sector) only.31 0.41 0.04 0. Eritrea Kenya Madagascar Malawi Mali Mauritius Morocco Nigera Senegal Senegalb South Africa Tanzania Uganda Zambia Average 0.09 0.08c 0.16 0. a.16 0.16 Algeria Benin Burkina Fasoa Cameroona Cape Verde a Egypt.12c 0.23 0.09 0.54 0.6 $/kWh Effect of Own Generation on Marginal Cost of Electricity Average variable cost of own electricity (A) Average capital cost of own electricity (B) 0.61 0. b.2 23.17c 0.13 0.35 0.04 0.21c 0. Note: kWh = kilowatt hour.68 0.03 0.16 0.30 0.03 0.18 0.26 0.7 Losses Due to Outages (“Lost Load”) for Firms with and without Their Own Generator $/hour Without own generator Algeria Benin Burkina Fasoa Cameroona 155.14 — 0.26 0.3 (continued next page) .12 0. d.11 0.14c 0.46 0.06 0.28 0.39 0.25 0.13 0.26 0.46 0. — = data not available.05 0.17 0.23c 0.09 0.31 0. Survey of informal sector.34 0.06 0.1 13.04c 0.4 114.11 0.41 0. Data not reported in the enterprise surveys (obtained from the public utilities).26 0.36 0.09 0.36 0.04 0. Table A1.26 0.25 0.04 0.29 0.42 0.26 0.32 0.21 0. Arab Rep.11 0.25 0.04 0.52 0.62 0.1 403.35 0.

7 (continued) Without own generator With own generator 36.9 22.24 0.72 0.9 22.44 0.45 0.36 0.9 1140.5 31.04 0.17 0.4 10.25 0.6 286.10 0.03 0. Survey of informal sector.66 0.03 0.17 Algeria Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Egypt.24 0. 177.27 0.37 0.56 0. Arab Rep.55 0.26 0.42 0.11 0.3 390.6 19.9 113.03 0.0 Table A1.83 0.22 0.22 0.07 0.08 0.25 0.08 0.40 0.2 84.16 0.196 Africa’s Power Infrastructure Table A1.3 166.20 0.06 0.1 153.0 401.05 0.10 0.1 434. Eritrea Ethiopia Kenya Madagascar Malawi Mali 0.32 0.10 0.26 0.18 0.4 39.32 0.2 37. a.05 0.5 81.7 201.25 0.11 0.1 444.17 0.49 0.21 0.14 0. b.12 0.09 0.04 0.17 0.36 0.4 30.5 13.10 — 0.86 0.25 0.05 0.58 0. Survey of tourism sector.21 — 0.03 0. Arab Rep.15 0.08 0.29 0.32 0.25 0.0 12.70 0.9 66.1 — 27.61 0.75 0.19 0.88 0.65 0. Eritrea Kenya Madagascar Malawi Mali Mauritius Morocco Nigera Senegal Senegalb South Africa Tanzania Uganda Zambia Average Source: Foster and Steinbuks 2008.63 0.5 917.15 (continued next page) .4 9.22 0.08 0.6 307.8 Operating Costs of Own Generation Cost ($/kWh) Fuel price (cents/liter) <5 kVA 5–100 kVA 100 kVA–1 MW 1 MW–10 MW Grid 0.1 Cape Verdea Egypt.24 0.28 0.49 0.3 468.81 0.94 1.3 191.03 0. Note: — = data not available.12 0.2 1.79 0.6 377.

16 0.53 0.65 0.21 0.60 0.73 0.27 0. MW = megawatt.49 0. KWh = kilowatt hour.04 0.40 0.22 0.12 0.73 0.56 0.52 0.19 0.42 0.11 0.21 0.50 0.15 0.20 0.32 0.18 0.09 0.18 0.18 0.16 0.45 0.59 0.47 0.04 0.17 0.08 0.48 0.05 0.16 0.16 0. Note: kVA = kilovolt-ampere.25 0.8 (continued) Cost ($/kWh) Fuel price (cents/liter) <5 kVA 5–100 kVA 100 kVA–1 MW 1 MW–10 MW Grid — 0.29 0.14 0.10 Mauritania Mauritius Morocco Namibia Niger Senegal South Africa Swaziland Tanzania Uganda Zambia Average 0.32 0.16 0.27 0.32 0.56 0.58 0.41 0.18 0.27 0.33 0.62 0.19 0.20 0. — = data not available.09 0.70 0.70 0.91 0.27 0. .23 0.28 0.18 0.24 0.19 0.56 0.14 0.25 0.61 0.17 Source: Foster and Steinbuks 2008.04 0.Africa Unplugged 197 Table A1.

.

APPENDIX 2 The Promise of Regional Power Trade 199 .

6 –0.8 258.2 4.3 16.4 1.3 11.6 –0.1 6. Lesotho Malawi Mozambique Namibia South Africa Zambia Zimbabwe Total SAPP 2.9 –0.0 6.7 1.4 0.4 2.9 2.7 0 7.7 0 1.1 2.9 –3.6 0.2 2.2 0.8 13.5 0.8 –36.8 13.4 1.1 4.4 8.5 42.2 0.7 1. % of demand 0 –117 –16 68 –60 –12 –17 4.1 1.1 1.8 EAPP/Nile Basin Burundi Ethiopia Kenya Sudan Tanzania Uganda Total EAPP/ Nile Basin 0.4 5.0 0.8 78 –227 22 –134 –22 –61 –344 0 3.9 37.7 396.0 146.6 0.4 3.0 6.2 65 93 –369 68 56 –33 72 10 18 17 –3 0. Rep.1 –0.3 19.1 Trade expansion.2 –2. Dem.1 0.0 –62 18 –194 0 1 3 0 0 –9 –5 Projected Trading Patterns in 10 Years under Alternative Trading Scenarios.9 4.4 0.200 Table A2.1 25.3 51.4 0.4 47.3 –0.2 1.2 13.2 4.7 0.7 41.5 0 3.3 0.5 0.3 319.5 5.3 18.0 7.6 9.5 0.2 2.1 0 –0.9 –14.4 –0.5 0.5 2.2 0.3 2.0 1.7 .4 2.2 52.5 –0.2 Exports (TWh) Net exports (TWh) Trade.8 2.9 44.5 146.7 12.6 2.3 5.6 –6.2 0. 2015 Imports (TWh) 11.2 41.2 15.1 79.3 22.3 12.4 4. by Region Demand 2005 (TWh) Demand 2015 (projected) (TWh) SAPP Angola Botswana Congo.3 29.8 8.9 3.9 4.2 29.0 –3.8 47.2 9.0 10.0 9.8 5.0 6.4 –1.7 0.6 215.6 0.1 2.8 38.8 –3.0 0.2 2. % of demand Imports (TWh) Exports (TWh) Net exports (TWh) Trade stagnation.2 0 0.8 7.1 0 5.7 26.7 –1.6 3.2 21.4 39. 2015 Trade.0 –4.4 12.2 7.2 0.7 10.4 4.1 1.9 3.5 0 0 0.

The Ghana Guinea Guinea-Bissau Liberia Mali Niger Nigeria Senegal Sierra Leone Togo Total WAPP 1.3 –0.9 0 10.04 2.4 –0.1 1.8 2.6 0.4 –1.0 0 0 0 0 0 0 0.4 16.2 0 0 0 0 0 0.5 –0.0 0 11.4 1.7 12.5 2.1 0 11.0 — 3.3 1.5 93.2 50.4 0.1 –1.4 0.2 0 0 0 0 0 0.9 –0.5 45 58 — –12 –19 52 –564 77 89 79 86 –3 30 60 48 26 0.4 0.4 12.0 1.3 0 0 0 0.9 1.0 2.7 1.8 CAPP Cameroon Central African Republic Chad Congo.1 5.9 0. Note: CAPP = Central African Power Pool.1 5.6 17.1 49.14 1.9 –1.2 0 1.4 0 2. SAPP = Southern African Power Pool. Rep.4 0.5 1.9 0. WAPP = West African Power Pool.4 18 58 — –47 0 14 0 0 0 –14 20 0 13 0 –27 35 0.9 –1.3 4.1 1.4 6.5 0 –2.0 — 0.2 10.2 0 0 0 0 0 0 0.6 31.7 –84 0.4 17. .8 0 0 0 0.4 1.5 0.8 20.03 1.2 3.1 0.7 0 0 — 3.7 0.2 1.3 0.9 0 –1.1 5.6 0 0. EAPP/Nile Basin = East African/Nile Basin Power Pool.1 0 0.9 0.4 2.7 –1.9 6.6 0 0 0 0.0 0.5 0.6 1.1 0.7 1.4 0. — = data not available.7 0 0 7.0 1.7 1.5 7.5 2. TWh = terawatt-hour.9 0 4.9 0.2 0.0 0 2.1 –9.8 0.3 0.1 1.2 0.1 0.3 –0.9 10.3 –4.0 0 0 0 12.3 59.0 0 0.0 201 Source: Rosnes and Vennemo 2008.5 0.5 0.7 0.2 0.0 –0.1 0 102 34 100 42 194 6. Equatorial Guinea Gabon Total CAPP 3.8 1.63 0.7 0 0.1 0.4 –0.9 0.5 –0.4 –0.2 0 2.1 –1.WAPP Benin Burkina Faso Cape Verde Côte d’Ivoire Gambia.1 2.4 0.0 7.1 0.2 –1.1 1.4 –0.0 0 0 0 0 0 6.

6 4.6 2.202 Table A2.1 10.6 3.9 0.8 6.3 Angola Botswana Congo.1 3.6 4. Lesotho Malawi Mozambique Namibia South Africa Zambia Zimbabwe Average 1.4 2.3 3.1 2.0 1.1 2.7 Cost of generation and international transmission lines Cost of generation and international transmission lines Cost of domestic T&D 4.7 7.7 4.0 4. Dem.8 3.5 7.3 3.5 7.2 3.5 12.5 7.5 6.6 7.3 2.6 2.6 2.8 7.2 1.9 4.8 8.9 0.2 Projected Long-Run Marginal Cost in 10 Years under Alternative Trading Scenarios a.0 5.1 4.7 4.4 2.7 Total LRMCs 10.5 4.6 2.8 7.3 .8 3.3 3.0 5.9 4. SAPP cents/kWh Trade-stagnation scenario Trade-expansion scenario Cost of domestic T&D Total LRMCs 6.6 3.3 2.4 5.7 3.8 5.0 6.0 4.6 3.6 2.9 5.4 5.4 3.6 4.9 5.9 3.5 1.2 1. Rep.1 4.

5 6.2 3.4 12.3 12.3 12.2 5.5 6.4 4.6 7.6 0.9 12.0 6.4 203 .9 7.3 12.1 5.6 0.9 12.8 11.6 7. EAPP/Nile Basin cents/kWh Trade-stagnation scenario Trade-expansion scenario Cost of domestic T&D Total LRMC 11.b.5 4.4 4.6 0.2 5.2 8.7 4.7 12.4 7.4 6.2 8.5 5.0 12.9 7.0 6.4 12.4 7.7 Cost of generation and international transmission lines Cost of domestic T&D Cost of generation and international transmission lines Total LRMC 14.4 6.1 13.7 9.1 10.1 5.6 16.6 0.6 7.7 4.1 12.2 5. Arab Rep.0 8.5 19.6 6. Ethiopia Kenya Rwanda Sudan Tanzania Uganda Average 6.2 3.4 4.8 6.2 5.2 (continued next page) Burundi Djibouti Egypt.8 7.9 7.3 6.0 7.

4 6.8 1.2 1.8 43.1 11.5 30.2 26.8 9.1 27.8 1.1 24.7 7.4 12.7 2.0 8.3 8.7 16.7 2.3 2.6 10. The Ghana Guinea Guinea-Bissau Liberia Mali Mauritania Niger Nigeria Senegal Sierra Leone Togo Average 7.2 6.4 12.4 7.9 7.0 4.9 14.6 14.7 13.0 8.4 10.0 15.2 1.2 (continued) c.1 Benin Burkina Faso Côte d’Ivoire Gambia.7 11.9 6.3 7.7 8.8 2.4 8.8 6.6 6.7 11.8 46.1 7.8 2.6 6.6 7.9 7.5 8.3 6.3 1.8 5.6 5.8 5.6 10.4 2.6 19.0 7.3 1.1 7.6 9.5 18.0 11.3 8.3 6.1 18.204 Table A2.1 18.3 5.2 .0 9.1 7.2 36.3 14.2 36. WAPP cents/kWh Trade-stagnation scenario Trade-expansion scenario Cost of domestic T&D Total LRMCs 19.5 18.2 6.6 13.2 6.8 8.6 6.6 7.0 15.1 7.9 7.3 18.9 7.3 2.6 7.4 2.7 12.8 13.6 24.0 25.7 10.1 Cost of generation and international transmission lines Cost of domestic T&D Cost of generation and international transmission lines Total LRMCs 19.7 16.

9 Source: Rosnes and Vennemo 2008.4 2.2 2. In some cases power exporting countries report higher LRMC under trade expansion.5 7.8 5.9 8.0 4.d.8 4.6 2.0 5.1 10.0 0.8 9.2 Cost of generation and international transmission lines Cost of domestic T&D Cost of generation and international transmission lines Total LRMC 6.1 6.7 1. T&D = transmission and distribution.2 4.6 2.3 2.0 6.4 4.1 9.4 11. Even if the cost of meeting domestic power consumption may be higher with trade than without.4 6.2 2. CAPP cents/kWh Trade-stagnation scenario Trade-expansion scenario Cost of domestic T&D Total LRMC 6.7 1. the higher revenues earned from exports would more than compensate for that increment.3 2. kWh = kilowatt-hour. LRMC = long-run marginal cost.5 6.4 9.9 7.9 5.1 Cameroon Central African Republic Chad Congo.6 7. Equatorial Guinea Gabon Average 4.9 4.0 2.0 7. Note: Average is weighted by annualized cost. CAPP = Central African Power Pool.4 4.8 4.7 7.0 0.9 7. 205 .9 11. Rep.

Table A2. 2015 Other capacity 8 84 4 61 57 5 96 0 100 0 0 2 0 6 1 100 7 1 100 19 5 0 84 80 12 0 39 60 91 0 100 0 99 85 79 73 81 65 0 67 94 44 36 95 98 0 16 28 100 0 0 0 0 0 0 0 0 19 27 0 0 0 28 0 0 48 0 0 0 3 61 0 61 40 9 0 0 100 1 15 2 0 19 35 100 6 6 56 17 5 2 0 Hydro capacity Coal and gas Other capacity Projected Composition of Generation Portfolio in 10 Years under Alternative Trading Scenarios 206 Trade expansion. Rep. Rep Congo. Dem. The Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar 88 16 0 39 43 95 0 100 0 100 100 77 0 94 99 0 75 99 0 42 95 100 16 .3 % of total Trade stagnation. Côte d’Ivoire Equatorial Guinea Ethiopia Gabon Gambia. 2015 Coal and gas 4 0 96 0 0 0 4 0 0 0 0 20 100 0 0 0 19 0 0 39 0 0 0 Hydro capacity Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo.

Malawi Mali Mauritania Mauritius Mozambique Namibia Niger Nigeria South Africa Senegal Sierra Leone Sudan Tanzania Togo Uganda Zambia Zimbabwe 91 73 0 30 97 66 0 76 8 0 46 87 61 99 91 95 73 6 6 0 60 3 33 99 21 82 42 0 6 35 0 0 4 26 3 21 100 9 0 1 1 3 9 58 54 7 4 1 9 1 1 98 82 0 0 69 31 73 77 8 9 77 73 67 56 87 97 47 2 3 58 0 30 68 14 20 83 38 0 13 29 44 0 2 52 1 14 42 0 0 0 13 3 9 53 23 14 4 0 13 1 1 Source: Rosnes and Vennemo 2008. 207 .

713 119 0 695 18 22 2.236 148 601 0 335 297 66 160 28 22 395 143 174 761 2.997 111 19 979 2. The Ghana Guinea Guinea-Bissau Kenya 620 75 120 66 13 249 0 203 112 12 95 18 596 1 0 0 0 0 498 10 831 0 22 1.562 28 1.689 1.Table A2.120 0 78 831 0 0 202 5.471 18 143 0 8. Côte d’Ivoire Equatorial Guinea Ethiopia Gabon Gambia.141 0 30 2. Rep.283 818 266 0 0 0 0 498 10 831 0 22 1.184 76 0 0 173 1.699 92 4 1.984 498 2. Congo.368 0 8.015 0 0 0 0 0 0 Generation capacity: installed Generation capacity: refurbishment Generation capacity: new investments New cross-border transmission Projected Physical Infrastructure Requirements in 10 Years under Alternative Trading Scenarios 208 Trade expansion Generation capacity: new investments 8 4 2.933 92 4 1.236 129 601 0 335 163 74 160 28 22 389 0 0 0 0 0 0 0 0 0 0 0 0 0 .237 620 75 120 66 13 249 305 112 12 95 18 596 1.288 0 987 Generation capacity: installed Generation capacity: refurbishment Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo.226 20 2.400 568 24 1.048 4.120 160 2.381 1. Dem.4 MW Trade stagnation New cross-border transmission 2.713 119 0 695 18 0 2. Rep.401 1.

148 6.526 3.171 75 0 87 175 288 37 195 2.128 3. SSA = Sub-Saharan Africa.251 74.690 139 46 0 305 31 191 1670 1. WAPP = West African Power Pool.059 1.348 1. SAPP = Southern African Power Pool.554 468 0 358 268 0 26.690 139 46 0 305 91 191 1.463 205 62 2. .454 18.072 54.835 37.174 240 0 1.835 37.103 0 0 0 16.399 258 1 3.726 2.135 4.020 17.3491 266 5 537 7.059 202 10.011 13.258 3 2.704 2046 200 1.248 2 0 10.554 468 0 358 268 0 26.183 906 0 0 349 1 3 1 0 3.135 4. — = data not available.873 320 145 568 1.780 6.662 75 0 — 175 288 37 — 2.828 19.724 35. Note: CAPP = Central African Power Pool.Lesotho Liberia Madagascar Malawi Mali Mauritania Mauritius Mozambique Namibia Niger Nigeria South Africa Senegal Sierra Leone Sudan Tanzania Togo Uganda Zambia Zimbabwe SSA: Total CAPP: Total EAPP/Nile Basin: Total SAPP: Total WAPP: Total — 100 66 63 — 180 120 73 5.011 13.919 17.253 1.828 20. EAPP/Nile Basin = East African/Nile Basin Power Pool.174 240 0 1.767 321 707 1.244 28.919 17.703 79 0 1.654 259 0 64 82 100 46 63 0 180 120 38 5.385 30.372 259 0 73 0 369 — 698 284 136 — 2.081 4.238 28.400 556 206 366 547 487 661 1.454 21.020 1.046 6.552 11.158 57.670 1. MW = megawatt.395 0 258 0 227 2.911 209 Source: Rosnes and Vennemo 2008.208 21.807 16.942 4.635 23.463 205 62 2.833 0 0 — 0 0 0 — 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4.059 1.

Rep.275 431 614 148 7 81 3 3.472 482 826 526 559 644 148 7 81 0 102 17 3 42 56 40 48 72 2 1 5 85 49 188 239 1 178 64 31 624 56 157 723 754 964 12 2. Rep.255 486 179 115 142 87 744 24 558 74 246 50 140 328 — 50 19 14 21 2 52 — 177 130 201 71 6 72 — 785 223 461 142 148 452 — Total cost Variable cost Total cost –299 –44 –346 0 –61 292 24 0 –117 749 –272 –138 –9 1.001 34 17 588 1.100 –53 7 –527 Cost of rehabilitation of existing capacity Cost of investment in new capacity Cost of rehabilitation of existing capacity Difference in total cost: trade expansion – trade stagnation 359 67 61 50 80 595 9 49 19 14 21 2 52 1 48 39 2 0 Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo.5 Estimated Annualized 10-Year Spending Needs to Meet Infrastructure Requirements under Alternative Trading Scenarios $million/year Trade stagnation Trade expansion Cost of investment in new capacity Variable cost 78 93 39 71 4 97 15 5 1 49 43 131 0 276 13 38 126 3 3. Côte d’Ivoire Equatorial Guinea Ethiopia Gabon Gambia. Dem. Congo.003 36 17 560 0 102 13 3 42 .210 Table A2.281 115 51 1.381 62 58 728 11 2. The Ghana 1.

086 8.442 4. .251 –1.736 13.194 25 250 — 190 303 145 — 685 583 185 7.982 555 31 135 176 105 56 99 408 15.060 –341 947 11 676 17 39 205 34 112 29 16 681 108 34 4.359 4.052 3 1 69 2 4 — 9 21 7 — 30 61 20 659 1.303 1.828 7. EAPP/Nile Basin = East African/Nile Basin Power Pool.223 –159 6. WAPP = West African Power Pool. SSA = Sub–Saharan Africa.596 501 28 187 280 11 65 99 302 13.244 4.460 12.546 866 –9 –175 0 –202 478 –134 –124 –71 54 86 –299 –109 142 –624 –69 –52 1.501 415 183 29 1.134 1.747 18.085 149 –106 153 –160 –33 1. SAPP = Southern African Power Pool.080 1.517 579 97 498 234 650 22.691 7.069 369 36 1.353 7.846 122 3 43 52 5 38 138 257 3.237 4.004 211 Source: Rosnes and Vennemo 2008.488 7.748 911 113 601 471 1.062 118 663 762 219 448 631 1.510 993 66 1.944 79 18 11 428 7 18 — 14 82 97 — 190 315 59 2.049 20 1.953 74 98 9 274 7 5 267 14 47 39 29 60 115 24 2.025 7.004 979 9.578 2. Note: CAPP = Central African Power Pool.846 122 3 43 52 5 38 138 257 3.400 12.246 4.387 161 17 697 17 228 — 167 199 41 — 465 207 106 4.019 25 48 478 56 179 74 54 771 284 76 7.208 306 2.555 1.632 1.925 159 1.306 385 85 485 534 109 353 394 577 19.665 5.422 1.463 6.243 39. — = data not available.210 7.Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritania Mauritius Mozambique Namibia Niger Nigeria South Africa Senegal Sierra Leone Sudan Tanzania Togo Uganda Zambia Zimbabwe SSA: Total CAPP: Total EAPP/Nile Basin: Total SAPP: Total WAPP: Total 1.907 306 2.496 19.152 3 1 69 2 3 6 9 20 7 9 30 61 18 662 1.554 1.594 14.210 40.

.

APPENDIX 3 Investment Requirements 213 .

6 1.3 2.3 4.2 3. Arab Rep.6 1.5 0.2 2.9 2.7 2.9 2.6 0.9 1.3 1.4 4.4 1.8 3.6 3.3 2.2 Electricity demand 9.9 3.0 2.8 2.9 0.7 1.9 2.7 0.7 2.8 2.2 2.5 0.2 5.9 4.6 1.7 1.8 2.5 4.3 3.8 3.2 1. Ethiopia Kenya Rwanda Sudan Tanzania Uganda Weighted average WAPP Benin Burkina Faso Côte d’Ivoire Gambia.4 2.9 2. % growth GDP/capita 6.2 Low growth scenario.3 1.6 1.7 1.0 3.3 3.7 2.5 4.0 1.3 1.9 1.2 2.5 4.9 2.1 3.1 1.0 1.5 2.0 2. Rep.2 1.0 2.2 2.9 4.3 0.2 1.7 1.1 1.3 3. Dem.0 0.1 2.8 2. Projected Average Annual Growth Rate Base growth scenario.8 2.4 1.0 0.8 0.8 0.8 –0.6 2.214 Africa’s Power Infrastructure Table A3.5 0.1 1.8 1.1 3.6 1.2 2.0 2.8 2. Lesotho Malawi Mozambique Namibia South Africa Zambia Zimbabwe Weighted average EAPP/Nile Basin Burundi Djibouti Egypt.3 4.3 2.5 8.2 0.8 2.7 (continued next page) .7 4.9 4.6 2.6 1.6 1.2 1.1 Power Demand.1 Annual population growth (%) SAPP Angola Botswana Congo.2 4.8 3.0 0.5 5.6 1.9 2.6 3.5 0.4 4.4 2.5 2.0 2.0 3.5 2.4 2.3 4.6 3.4 2.5 1.1 2. % growth GDP/capita 3.7 1.0 3.7 5.1 Electricity demand 6.3 2.5 2.1 2.6 1.1 1.5 3.4 0.6 2.2 1.2 3.7 2.2 2.7 4.0 1.3 4.7 3.3 3.9 1.0 1.2 2.9 4.4 2. The Ghana Guinea Guinea-Bissau Liberia Mali Mauritania Niger Nigeria Senegal Sierra Leone Togo 2.3 2.2 1.1 2.8 3.3 3.1 2.4 3.6 0.4 5.0 1.5 0.8 2.7 4.1 0.5 –0.8 2.9 4.5 5.2 1.7 0.8 0.9 1.5 2.2 0.3 3.4 0.3 5.4 2.3 2.5 3.9 0.2 2.8 3.2 0.

08 2.5 2.7 4. Dem.1 24.8 2.5 Annual population growth (%) Weighted average CAPP Cameroon Central African Republic Chad Congo.7 3.9 2.08 20.2 1.8 5. Rep.6 3.48 6.3 2.2 177.6 0.8 2.1 2.1 (continued) Base growth scenario.4 2.7 3.8 3.0 2.8 2.4 19.5 219.32 4.1 350.1 1. Equatorial Guinea Gabon Weighted average Island States Cape Verde Madagascar Mauritius Weighted average 2.5 2.63 7.8 0.5 0. SAPP = Southern African Power Pool.0 3.5 0.31 1.4 1.2 Suppressed Demand for Power Outages Average duration of Down time Suppressed demand (hours per year) outages (hours) (% of a year) in 2005 (GWh) SAPP Angola Botswana Congo.6 4. WAPP = West African Power Pool.8 2.1 2.9 2.5 0.4 Electricity demand 4.6 3.2 3.15 5.2 1.4 7.6 1.3 0.3 2.7 1. GDP = gross domestic product.4 2.780.86 3.5 0.5 4. Lesotho Malawi Mozambique Namibia South Africa Zambia Zimbabwe 1.2 4.9 2.7 3.3 0.9 1. Note: CAPP = Central African Power Pool.5 3. % growth GDP/capita 2.Investment Requirements 215 Table A3.0 1.2 1.0 435 11 351 8 49 450 13 602 157 512 (continued next page) .9 350. Rep.4 46. Table A3. % growth GDP/capita 1.65 4.27 6.5 1.7 Electricity demand 3.3 Low growth scenario.3 Source: Rosnes and Vennemo 2008.0 0.0 3.1 1.8 38.9 2.3 1.2 2.7 1.6 6.0 0.5 2.4 0.0 2.9 328.2 3. EAPP/Nile Basin = East African/Nile Basin Power Pool.9 659.5 2.6 0.

9 463.461.3 25 12 417 109 366 5 168 208 84 456.78 17.2 6 2 13 22 17 31 23 41 5 1 1 64 17 82 13 34 11 365 29 979 224 14 123 21 3 6 10.216 Africa’s Power Infrastructure Table A3.2 (continued) Outages Average duration of Down time Suppressed demand (hours per year) outages (hours) (% of a year) in 2005 (GWh) Average for available sample EAPP/Nile Basin Burundi Djibouti Egypt.94 5.50 5.3 456.5 456.88 2.44 2.88 2.46 6.0 4.6 346.4 505 196 1.4 435.67 5.61 5.101 1.94 2.4 43.1 10.803 250 189 73 1.101 5.55 4.9 456.72 1.4 1.86 12.47 5.20 4.7 5.94 6. The Ghana Guinea Guinea-Bissau Liberia Mali Mauritania Niger Nigeria Senegal Sierra Leone Togo Average for available sample CAPP Cameroon Central African Republic 350.59 6.101 453 129 124 1.5 5.94 5.0 5.978 1.03 5.34 5.89 0.94 5.88 6.0 16.961 1.0 5.176 613 950 5.88 8.101 1.052 1.101 1.759 1.2 5.2 0.465 2.94 5.0 10.94 4.2 8.4 702.48 5.8 6. Arab Rep.8 241 11 (continued next page) .20 22 7. Ethiopia Kenya Rwanda Sudan Tanzania Uganda Average for available sample WAPP Benin Burkina Faso Côte d’Ivoire Gambia.

23 10. and Djibouti (EAPP/Nile Basin).0 2. EAPP/Nile Basin = East African/Nile Basin Power Pool. Note: Market demand for power is one of three categories of demand for power.1 1. Côte d’Ivoire. Benin. Mali. Equatorial Guinea Gabon Average for available sample Island States Cape Verde Madagascar Mauritius 950 924 950 950 5. CAPP = Central African Power Pool. data are available for Cameroon and Republic of Congo only.30 2. for the other countries. Nigeria. Rep. the others being social demand or access. Zimbabwe (SAPP).6 10. .Investment Requirements 217 Table A3.8 10.8 10 616 3 134 889 797.20 5. Because of a lack of data.0 221. Ethiopia. Sierra Leone. For CAPP.5 15.0 5. WAPP = West African Power Pool. and suppressed demand. SAPP = South African Power Pool. regional average is applied. and Togo (WAPP).1 4 21 35 Source: Rosnes and Vennemo 2008.20 4.8 10.2 (continued) Outages Average duration of Down time Suppressed demand (hours per year) outages (hours) (% of a year) in 2005 (GWh) Chad Congo. Sudan.20 5. Senegal.33 5. GWh = gigawatt-hour. regional sample averages are applied to the following countries: Mozambique.2 9.321.20 10.67 7. Liberia.

Table A3. Lesotho Malawi Mozambique Namibia South Africa Zambia Zimbabwe Total SAPP 14 30 8 6 7 14 37 71 20 41 26 26 45 16 23 29 26 75 80 45 87 45 EAPP/Nile Basin Burundi Djibouti Egypt. by Percentage of Population % of population Regional targets Rural 4 9 2 1 1 2 12 50 3 8 11 0 5 87 0 4 1 12 1 2 19 6 35 68 25 50 100 32 42 29 50 30 27 50 100 54 100 100 72 66 77 63 100 84 13 11 100 16 10 4 23 2 15 31 9 31 53 100 60 67 18 60 29 25 60 50 67 56 100 100 100 39 100 38 100 88 100 24 40 20 17 18 23 45 79 29 49 37 42 59 37 68 76 41 86 87 57 99 60 9 14 8 4 1 5 19 66 11 14 17 46 100 39 35 15 20 53 100 29 67 51 84 100 76 121 56 37 95 100 50 100 79 Total Urban Rural Total Urban Rural 15 100 12 13 3 5 25 100 15 44 27 25 29 100 50 32 4 21 22 13 45 11 National targets 218 2005 access Total Urban SAPP Angola Botswana Congo. Ethiopia Kenya Rwanda Sudan Tanzania Uganda Total EAPP/Nile Basin 6 31 93 15 27 16 34 13 8 35 45 34 100 76 48 39 56 27 44 64 WAPP Benin 25 50 .3 Target Access to Electricity. Arab Rep. Rep. Dem.

EAPP/Nile Basin = East African/Nile Basin Power Pool. . WAPP = West African Power Pool. Rep. SAPP = Southern African Power Pool. Note: CAPP = Central African Power Pool. The Ghana Guinea Guinea-Bissau Liberia Mali Mauritania Niger Nigeria Senegal Sierra Leone Togo Total WAPP 21 0 0 0 0 54 8 24 5 100 9 62 36 100 40 80 91 100 92 31 12 100 16 68 15 15 33 22 92 44 90 36 46 52 54 93 73 31 1 1 0 0 83 12 71 34 26 53 35 91 53 84 36 100 40 84 84 84 84 84 84 84 100 89 100 90 49 1 0 0 0 82 19 54 13 100 17 9 54 59 55 21 14 1 15 23 7 59 34 41 21 45 40 86 82 82 54 41 0 37 50 37 84 69 82 41 75 0 23 21 21 2 2 2 2 3 0 28 6 2 2 16 20 63 66 62 31 25 13 25 34 18 67 44 46 30 53 84 96 88 89 77 74 1 60 73 93 89 88 91 58 85 1 30 31 30 3 4 4 5 4 1 40 9 4 5 23 23 73 79 76 40 33 66 39 46 20 82 51 51 50 66 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 6 46 37 37 3 6 6 7 6 1 49 10 6 8 34 CAPP Cameroon Central African Republic Chad Congo. Equatorial Guinea Gabon Total CAPP 61 3 3 22 11 82 35 85 8 9 35 26 85 59 Island States Cape Verde Madagascar Mauritius Total islands 55 18 100 23 72 48 100 52 219 Source: Rosnes and Vennemo 2008.Burkina Faso Côte d’Ivoire Gambia.

893 67.031 31.742 10.804.472 1.426.566 239.409 4.498.626 868.437 18.809 2.538 1.325 4.049 2.033.270 4.278.026 854.250 1.746.538 1.946 1.828 5.267.478.501 131.751 37.234 0 3.4 Target Access to Electricity. by Number of New Connections number of new connections Regional targets Rural 12.809 7.360 EAPP/Nile Basin Burundi Djibouti Egypt.039 National targets 2005 access Total Urban SAPP Angola Botswana Congo.934.596.713 1.142 1.490 208.058 1.612 417.186 364.082 405.410 326.478.443 396.515 132.148 411.661 967.696 2.387 68.082 387.705 429.351 66.587 621.729 2.204. Arab Rep.411 11.533 514.198.837 445.679 110.907 2.265 1.221.062 36.476 626.677.596 3.681.675 4.600 1.986.180 478.533 200.219.476 380.802 48.796 877.192 231.887 2.189.006 31.869 495.456 83.068 182.566 239.986 52.275 546.224 74.378.412 130.801 3.424 6.563 381.839.936 1.716 610.544.608 0 64 0 4.926 200.602 203.355 32.706 1.220 Table A3.158.306 48.762.611 382.540 5.775 1.944.746.876 .052 1.312 319.050 1.320 10.848 34.891 777.787 3.805 1.355 32.612.508 1. Lesotho Malawi Mozambique Namibia South Africa Zambia Zimbabwe Total SAPP 189.600 1.322 1.517 4.680.680 4.699.160 476.635.108 0 1.834 80.972 245.227 260.296.168 830.276 255.476 242.475 473.457 1.436 37.212 10.092 520.580 48.335 0 21.428 122.845.342 1.247 0 18.681.967 313.330 201.756 818.804 412.523 41.292 Total Urban Rural Total Urban Rural 273.356 2.937.056 1.220 1.822 182.022.618 2.474.101 803.887 1.576. Dem.834 76.176 446.253 3.815 201.428 126.972.478.267.891 2.270.409 9.046 570.393 73.442 5.179.983 46.937.212 411.117 896.724 3.316.455 69.024 103.110. Ethiopia Kenya Rwanda Sudan Tanzania Uganda 68.861 128.267 177.891 798.988 4.368 12.600 1.895.995 201.016. Rep.810 177.534 4.019.661 45.552 8.048 737 51.808 104.077 386.248 270.922 51.208 1.674 877.265 1.612 483.544 35.118.190 3.754 0 38.724 1.012 823.676.

287 597.654 479.915 63.508.351.180 115. Rep.722 327.213.709.135 CAPP Cameroon Central African Republic Chad Congo.114 16.004.237 507.913 97.720.126 4.002 166.518.134 4.516 614.988 326 36 10.312 519.094 496.151 72.839 80.881 28.693 571.276 852.300 2.539 84.268.156 621 157.215 73.888 221 .028 194.323 132.720 7.444 33.519 212.792 831.592 543.952 10.201 211.693 6.767 256.747 79. Equatorial Guinea Gabon Total CAPP 680.809 204.042 6.912 174 350 66 4 1 6.264 458.084 635.684 133.301 230.508 308.790 18.675 1.176 636.400 4.424 155.275 5.219 9.605 205.733 400.875 90.753 18.859 25.176 1.764 11.011 277.329 1.054 53.504 2.922 86.852 354.852 493 96.084.376 449.842.796 583.673 5.173 609.066 407.964 512.842 11.860 354.726.710 886.482.235 132.991 416 29 34.088.820 742.692 616.426 13.020.583 1.636 12.856 17.918 43.844 21.089 493.346 7.786 4.067 1.300 169.238 7.545 139.492 1.449 338.285.930.434 474.402.481 102.193 508.453 510.621 490.566 5. The Ghana Guinea Guinea-Bissau Liberia Mali Mauritania Niger Nigeria Senegal Sierra Leone Togo Total WAPP 6.376 290.646 317.234.404 10.182.770 1.228.618 7.013 57.428 89.292 1.790 51.402 122.214 116.556 14.974 163.797.401 63.542 785.021 55.116 2.911 3.427 658.505.613 54.901 379.466 345.993 332.039 77.222 7.592 2.255 685.891 45.690 11.406.832 240.030 39.202 6.076 9.396.325 2.036.668 5.576 24.624 44.806 105.507 977.893 52.986 162.836 17.506 403.187 6.867 167.395 674.457 274.793 631.513.718 810.774 669.491 21.803.148 9.116.687 130.929 5.298 1.978 3.647 7.163 17.796 2.041 236.645 10.928 2.099 3.183 306.656 871.Total EAPP/ Nile Basin WAPP Benin Burkina Faso Côte d’Ivoire Gambia.994 2.496 69.478 621.552 13.860 33.575 128 149.967.913 454.473 297.924 99.762.037 17.524.791 824.792.017 55.240 19.781 15.055 28.801 5.026 (continued next page) 9.138 11.127 429.445 660.363 57.221 3.270 1.285 842.188 4.440 142.043 679.166 441.306 78.423 581 49.055 1.287 48.699.690 7.555 1.461 269.112.569 493.357 228.

101 12.633 31.670 1.813 879.022.928 10.398.184 11.899 1.222 Table A3.4 Regional targets Rural 10 30.017 16.280 218.596 855.379 62.303 251.754 37.885 12.099.832. Note: CAPP = Central African Power Pool.139.567 1.261 19.606.337 6.118 6. .022. SAPP = Southern African Power Pool.142 821.466 Source: Rosnes and Vennemo 2008.094.304.513 277.813 856.754 260.717 Rural 9.813 238.655 1.809. EAPP/Nile Basin = East African/Nile Basin Power Pool.629.554 19.150.107.592 15.792 6.924 12.299 38.576 6.059 2005 access Total Urban Island States Cape Verde Madagascar Mauritius Total islands Total Sub-Saharan Africa 6.290 249.776 Total Urban Rural Total (continued) National targets Urban 22.461 19.295 2.567 1.762 12.833 24.754 294.567 275.922 39.563 28. WAPP = West African Power Pool.

4 6.4 0.4 4.1 0.3 3.1 0.3 16.9 1.4 0.9 1.8 1.7 0.3 6. Dem.2 0.5 0.1 1.8 0.6 31.1 0.6 0. Arab Rep.7 1.3 18.9 3.4 5.3 119.4 12.0 0.0 10.1 0.3 10.9 4.2 3.9 0.2 2.9 2.1 5.8 14.Investment Requirements 223 Table A3.6 2.0 4.4 1.1 3.4 0.5 TWh Total Electricity Demand Social demand with national targets 2015 1.1 Total net demand 2015 7.8 0.6 215. Rep.9 0.8 1.2 0.7 Market demand 2015a 6.5 9.2 1.2 10.8 0.3 3.5 0.2 0.4 123.0 1.3 1.8 0.9 0.3 0.8 258.2 13.8 20.6 4.8 2.2 0.1 9.0 0.0 383.7 1.5 0.7 24.6 0.9 0.8 0.7 12.2 0.6 45.7 24.3 0.4 0.2 0.5 0.9 0.0 0.4 16.8 69.8 0.3 0. Lesotho Malawi Mozambique Namibia South Africa Zambia Zimbabwe Total EAPP/Nile Basin Burundi Djibouti Egypt.2 316.8 0.2 6.4 0.7 13.0 9.3 0.1 0.7 0.4 2.8 0.4 0.4 0.0 7.2 7.2 10.8 1.6 100.0 0.2 5.2 1.5 2.1 Total net demand in 2005 SAPP Angola Botswana Congo.2 9.7 17.9 4.8 0.1 3.7 1.2 84.3 12.1 3.5 0.3 11.8 1.05 0.0 6.5 5.3 0. Ethiopia Kenya Rwanda Sudan Tanzania Uganda Total WAPP Benin Burkina Faso Côte d’Ivoire Gambia.2 6.9 15.5 94.6 0.4 0.9 1.6 5. The Ghana Guinea Guinea-Bissau Liberia Mali Mauritania Niger Nigeria Senegal Sierra Leone Togo Total CAPP Cameroon Central African Republic Chad Congo.7 4.0 18.5 144.6 0.6 1.2 0. Equatorial Guinea Gabon Total 2.2 0.4 0.2 2.7 396.6 1.5 1.6 0.2 4.3 319.6 0.0 0.2 Increase in net demand 2005–15 (%) 375 174 288 224 176 145 164 147 147 145 152 349 199 145 509 260 499 287 187 262 167 282 299 185 399 216 313 199 432 449 399 299 349 232 499 249 300 187 599 999 175 332 149 188 (continued next page) . Rep.2 0.0 0.2 169.2 59.1 3.1 5.1 4.1 2.4 4.5 0.7 0.2 2.03 1.1 1.2 0.4 7.1 0.7 0.0 1.2 0.5 0.

a.029 31.136 28.239 73 17.186 80 (continued next page) .8 0.096 5. Table A3.4 0.1 2.136 28.4 3.162 16.540 48 4. trade targets for targets for access rates access rates expansion 17.530 15.168 33 22.375 24. WAPP = West African Power Pool.5 (continued) Total net demand in 2005 Market demand 2015a 0.1 0.04 Source: Rosnes and Vennemo 2008.297 33 22.1 1.6 Social demand with national targets 2015 0.096 6.319 34 22. and Growth Scenarios Trade stagnation scenario Low-growth scenario Trade expansion scenario Generation capacity (MW) SAPP Installed capacitya Refurbished capacity New capacity Hydropower share (%) EAPP/Nile Basin Installed capacitya Refurbished capacity New capacity Hydropower share (%) WAPP Installed capacitya Refurbished capacity New capacity Hydropower share (%) Constant access rate 17.224 Africa’s Power Infrastructure Table A3.132 1.096 6.369 23.972 18.148 32.0 Increase in net demand 2005–15 (%) 249 324 199 272 Island States Cape Verde Madagascar Mauritius Total 0.04 0. Assuming all suppressed demand is met.132 1.136 28.535 17.729 40 22.096 5.132 1.842 16.6 Generating Capacity in 2015 under Various Trade.639 47 4.972 28 4.035 32.096 6. Note: CAPP = Central African Power Pool.132 1.4 1.46 Total net demand 2015 0.013 25 22. SAPP = Southern African Power Pool.02 1.637 48 4.132 1.045 49 4.634 79 National targets for National National access rates.381 17.2 1.046 33.04 1.136 28. EAPP/Nile Basin = East African/Nile Basin Power Pool.046 20.375 23.136 28.979 82 Regional target access rate 17.6 0.375 25.003 77 17. Access.

561 77.366 Hydropower share (%) 48 Source: Rosnes and Vennemo 2008.906 37.395 97 282 83 368 19 43.833 83 282 83 368 260 906 3. a.Investment Requirements 225 Table A3. EAPP/Nile Basin = East African/Nile Basin Power Pool.906 Refurbished capacity 35.382 81.856 97 282 83 189 25 Regional target access rate 260 906 4.723 52 Total Sub-Saharan Africa Installed capacitya 43.917 New capacity 74.915 97 282 83 353 20 43.722 47 43. .945 65. but in the refurbishment figure. Note: CAPP = Central African Power Pool.906 37. “Installed capacity” refers to installed capacity as of 2005 that will not undergo refurbishment before 2015.081 3. WAPP = West African Power Pool. SAPP = Southern African Power Pool.143 97 282 83 369 19 43. Existing capacity that will be refurbished before 2015 is not included in the installed capacity figure.425 36 260 1.906 35.6 (continued) Trade stagnation scenario Low-growth scenario Trade expansion scenario Generation capacity (MW) CAPP Installed capacitya Refurbished capacity New capacity Hydropower share (%) Island States Installed capacitya Refurbished capacity New capacity Hydropower share (%) Constant access rate 260 906 3. trade targets for targets for access rates access rates expansion 260 906 4.953 47 National targets for National National access rates.535 70.906 36.

5 4 0. Rep.Distribu. Congo.7a $ million T&D Total Annualized Costs of Capacity Expansion. The Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia 0. Trade Expansion 226 Generation Investment 78 0 12 3 0 22 0 0 0 53 20 32 0 71 2 0 5 44 2 15 0 1 139 18 19 10 3 22 1 1 0 29 9 38 0 69 3 1 79 6 0 65 6 5 2 2 0 0 0 1 0 0 0 3 0 8 0 2 0 0 3 1 0 1 0 0 11 8 0 8 4 42 0 0 2 24 4 28 0 64 3 4 42 10 1 51 0 0 38 15 14 17 1 21 1 1 0 38 0 49 0 84 5 1 34 2 0 48 2 0 78 36 29 32 4 43 1 2 1 49 13 99 0 116 8 1 94 7 1 130 7 4 231 28 30 21 7 497 4 6 2 761 332 146 1 1342 27 6 391 920 3 362 6 5 49 19 14 21 2 52 1 2 0 148 7 81 0 102 13 3 42 3 1 68 2 3 78 93 39 57 4 97 11 3 1 49 37 111 0 249 13 31 126 98 8 274 7 5 Cross.1 0 0 0 0 410 3 5 0 652 301 40 0 1.Table A3. Rep.connec.Rehabiligrid tion ilitation Variable ment tion itation Variable grid tation Variable expansion 357 140 84 99 14 646 16 12 4 958 376 338 1 1.6 4 1 32 0 1 0 110 7 32 0 18 9 2 9 1 1 20 0 3 0 57 10.693 54 40 559 1. Dem. Constant Access Rates. Côte d’Ivoire Equatorial Guinea Ethiopia Gabon Gambia.3 24 0.4 54 10 1 0 0 24 12 0 133 5 30 32 91 8 144 0 1 .Rehabof capacity RehabilInvest.022 12 705 15 14 Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo.Urban Rural Total costs border tion connec.136 19 0 262 860 0 231 0 0 10.

457 6.251 748 58 13 70 15 16 653 98 10 3.8 2 2 0 9.612 982 148 14 47 39 29 60 115 24 2.951 2. WAPP = West African Power Pool.468 14 5 9 3 1 12 2 5 306 16 13 18 48 24 6 13 8 0 809 114 184 118 456 9 1 1 0 2 0 0 0 55 3 0 — 4 0 0 6 1 0 105 7 12 16 73 2 5 18 5 9 20 55 16 473 118 1 800 43 36 3 28 81 160 2.048 501 10 7.077 32.1 10 1.046 — 16 2 10 57 97 1.696 61 182 1. T&D = transmission and distribution.352 236 227 1.310 4 3.495 97 60 7 39 99 185 4.900 9.244 109 235 1.452 131 6 5.667 5.020 4.846 43 52 5 38 138 257 3. — = Not available.671 Senegal 41 Sierra Leone 0 South Africa 2.521 186 192 8 65 99 302 12.978 CAPP: Total 1. Note: CAPP = Central African Power Pool.173 59 29 3 23 43 75 3.167 1.178 212 35 137 61 54 742 274 52 5.607 Sudan 1.003 6 9 20 7 9 30 61 18 642 122 1 1.800 1327 306 10 347 193 518 15.852 SAPP: Total 4.868 0 1 35 0 0 17 29 1 1 1 3 2 50 10 0 16 141 41 708 172 185 384 128 2 7 24 11 13 17 67 4 1.544 WAPP: Total 2.4 13.046 322 21 3.839 172 460 5.877 6 14 43 11 21 43 102 14 596 370 5 2.556 550 22 451 429 1.901 EAPP/Nile Basin: Total 2.962 246 411 3. SSA = Sub-Saharan Africa.799 419 870 8. 227 .361 235 142 0 4 29 8 17.013 261 5 1.026 88 132 0 27 0 117 7.458 1.166 Tanzania 243 Togo 0 Uganda 289 Zambia 0 Zimbabwe 403 SSA: Total 10.167 1. EAPP/Nile Basin = East African/Nile Basin Power Pool.4 2 169 4 0 1. SAPP = Southern African Power Pool.747 17.430 3.736 946 33 13.937 168 417 2.606 1.166 Source: Rosnes and Vennemo 2008.624 3.Madagascar 33 Malawi 0 Mali 0 Mauritania 0 Mauritius 0 Mozambique 606 Namibia 0 Niger 0 Nigeria 1.693 3.5 6.

169 434 445 2 2.200 20 1 272 860 0 236 10.5 4 0. Trade Expansion Generation Investment 81 0 10 1 1 21 0 0 0 53 17 28 0 66 2 0 4 43 3 0 139 18 19 10 3 22 1 1 0 29 9 38 0 69 3 1 79 6 0 65 31 18 2 31 14 50 1 7 20 104 10 41 1 120 5 5 53 24 3 120 24 9 1 2 29 31 1 1 2 89 0 39 0 431 2 3 44 4 1 29 38 15 14 17 1 21 1 1 0 38 0 49 0 84 5 1 34 2 0 48 78 36 29 32 4 43 1 2 1 49 13 99 0 116 8 1 94 7 1 130 277 46 31 44 53 539 5 23 22 972 387 249 2 1.246 59 50 620 1.228 Table A3.887 32 10 452 936 7 450 49 19 14 21 2 52 1 2 0 148 7 81 0 102 13 3 42 3 1 69 Total costs Cross. The Ghana Guinea Guinea-Bissau Kenya 0. Rep.Distribu.4 54 11 1 0 0 28 15 0 141 5 36 32 91 8 144 . Congo.9 415 3 13 0 697 351 102 0 1.7b $ million T&D Total Annualized Costs of Capacity Expansion.1 0 5.038 17 792 Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo.Urban Rural tion connec.Rehabiligrid tion tion ilitation Variable ment itation Variable grid tation Variable expansion 78 93 39 71 4 97 12 4 1 49 41 114 0 257 13 37 126 98 9 274 403 158 85 136 59 688 18 29 23 1.connec. 35% Access Rates.3 39 0.6 4 1 32 0 1 0 110 7 32 0 18 9 2 9 1 1 21 0 57 10.7 1 0. Rep.Rehabof capacity border RehabilInvest. Dem. Côte d’Ivoire Equatorial Guinea Ethiopia Gabon Gambia.

705 61 0 1 266 0 4 29 8 17.846 43 52 5 38 138 257 3. SSA = Sub-Saharan Africa.251 748 411 3.241 229 Source: Rosnes and Vennemo 2008.445 178 0 1 0 1 32 1 0 17 29 1 1 2 3 1 39 0 0 10 142 36 646 161 6 5 2 7 24 11 13 17 67 4 1. WAPP = West African Power Pool. .711 3.072 90 181 4 26.013 261 5 1.406 425 18 35 477 57 161 68 54 778 279 75 6.352 236 2 0 53 26 25 8 1 34 3 27 355 32 17 37 104 118 13 54 16 19 1.680 7.543 1.962 246 10 26 200 34 94 22 16 688 103 33 3.408 5.677 2.907 1. Note: CAPP = Central African Power Pool.062 4. T&D = transmission and distribution.604 242 1 17 74 1 10 2 2 14 3 2 380 12 1 18 94 9 3 116 24 15 1.046 0 16 2 10.495 97 60 7 39 99 185 4.843 3.310 4.497 349 27 3.179 255 60 317 0.476 411 80 520 226 549 18.6 404 11.167 1.985 0 3 4 3.677 1.173 59 29 3 23 43 75 3.400 0 4 70 0 2 0 0 606 0.360 244 521 5.949 168 7 5 272 14 47 39 29 60 115 24 2.319 1707 704 95 624 463 1. SAPP = Southern African Power Pool.748 42 0 2.109 36.540 183 2 0 2 5 18 5 9 20 55 16 473 118 1 800 43 36 3 28 81 160 2.028 18.1 56.523 972 57 13.811 2 3 6 9 20 7 9 30 61 18 651 122 3 1.046 3. EAPP/Nile Basin = East African/Nile Basin Power Pool.567 187 241 11 65 99 302 13.5 97 1.8 2 2 0 9.4 13.468 540 445 645 703 273 528 235 1.4 2 177 4 1 1.861 10.779 131 23 5.855 418 2.376 501 28 7.552 6.4 0 1.5 6.692 2.1 10 1.6 0 117 8.095 183 1.244 109 7 4 6 14 43 11 21 43 102 14 596 370 5 2.612 993 931 8.Lesotho Liberia Madagascar Malawi Mali Mauritania Mauritius Mozambique Namibia Niger Nigeria Senegal Sierra Leone South Africa Sudan Tanzania Togo Uganda Zambia Zimbabwe SSA: Total CAPP: Total EAPP/Nile Basin: Total SAPP: Total WAPP: Total 147 370 119 227 1.606 1.404 3.

019 25 Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo. Dem.408 6 7 114 4 1 144 6 38 15 14 17 1 21 1 1 0 38 0 49 0 84 5 1 34 2 0 48 2 78 36 29 32 4 43 1 2 1 49 13 99 0 116 8 1 94 7 1 130 7 359 67 61 50 80 595 9 48 39 1. Rep.Rehabilition ilitation Variable ment grid tion itation Variable grid tation Variable expansion 486 179 115 142 87 744 24 56 40 1.Rehabof capacity border RehabilInvest.003 36 17 560 947 11 676 17 49 19 14 21 2 52 1 2 0 148 7 81 0 102 13 3 42 3 1 69 2 78 93 39 71 4 97 15 5 1 49 43 131 0 276 13 38 126 98 9 274 7 Total costs Cross.Table A3.Urban Rural tion connec. Trade Expansion 230 Generation Investment 87 0 10 0 1 21 0 0 0 54 15 27 0 61 2 0 5 40 5 3 0 139 18 19 10 3 22 1 1 0 29 9 38 0 69 3 1 79 6 0 65 6 79 35 7 39 8 41 1 19 38 256 22 46 2 120 3 7 73 37 5 200 5 51 12 24 1 57 85 3 0 0 162 0 101 0 1.381 62 58 728 1. Rep.7c $ million T&D Total Annualized Costs of Capacity Expansion. The Ghana Guinea Guinea-Bissau Kenya Lesotho 3 1 2 0 11 426 4 28 0 775 385 402 0 1.049 20 1.345 21 2 288 860 0 264 0.472 482 826 3 3.Distribu.connec.275 431 614 3 3.1 11 4 1 4 1 32 0 1 0 110 7 32 0 18 9 2 9 1 1 21 0 0 57 10 39 1 54 13 3 0 0 31 31 0 160 5 37 32 91 8 144 0 . National Targets for Access Rates. Côte d’Ivoire Equatorial Guinea Ethiopia Gabon Gambia. Congo.

272 7. Note: CAPP = Central African Power Pool.713 Source: Rosnes and Vennemo 2008.232 131 23 5.739 2.416 2.177 303 60 312 1 412 12.529 183 1.208 418 2.362 256 583 5.025 7.3 1 0 0 606 1 0 1.964 428 48 478 56 179 74 54 771 284 76 7.004 184 2 0 1 26 1 0 17 30 0 2 3 7 1 37 12 0 12 142 37 661 163 5 2 7 24 11 13 17 67 4 1.495 97 60 7 39 99 185 4.Liberia Madagascar Malawi Mali Mauritania Mauritius Mozambique Namibia Niger Nigeria Senegal Sierra Leone South Africa Sudan Tanzania Togo Uganda Zambia Zimbabwe SSA: Total CAPP: Total EAPP/Nile Basin: Total SAPP: Total WAPP: Total 158 391 117 227 1. SSA = Sub-Saharan Africa.051 3 4 4 2 2 0 10 6 2 189 4 1 1.799 277 0 2 5 18 5 9 20 55 16 473 118 1 800 43 36 3 28 81 160 2.867 44 0 2.451 3.069 1.719 61 1 261 0 4 29 8 17 13 10 2.377 3.046 0 16 2 10 57 97 1.748 911 113 601 471 1.167 1. EAPP/Nile Basin = East African/Nile Basin Power Pool.395 4.220 378 1 82 9 8 2 2 13 7 1 880 20 2 80 78 184 4 96 38 106 3. 231 . T&D = transmission and distribution.051 762 1.013 261 5 1.108 3 6 9 20 7 9 30 61 18 662 122 3 1.745 1.918 3.789 12. WAPP = West African Power Pool.352 236 32 51 17 52 14 1 28 4 29 484 42 21 70 166 51 30 54 11 20 2.846 43 52 5 38 138 257 3.159 235 1.736 993 66 13.210 40.173 59 29 3 23 43 75 3.606 1.510 1.953 19.468 711 599 933 2.251 748 411 3.310 6.244 109 4 6 14 43 11 21 43 102 14 596 370 5 2.542 8.596 187 280 11 65 99 302 13.246 369 36 4.004 991 8. SAPP = Southern African Power Pool.612 1.708 3.101 90 220 4 27 0 117 9.962 246 39 205 34 112 29 16 681 108 34 4.828 501 28 7.906 4.960 168 5 267 14 47 39 29 60 115 24 2.517 579 97 498 234 650 22.237 0 70 0.

Trade Expansion 232 Generation Investment 73 0 17 0 0 24 0 0 0 53 18 24 0 62 2 0 4 41 4 2 87 13 8 9 2 15 1 1 0 23 6 30 0 46 2 1 52 5 0 50 79 35 7 39 8 41 1 19 38 256 22 46 2 120 3 7 73 37 5 200 51 12 24 1 57 85 3 0 0 162 0 101 0 1.4 426 3 27 0 735 278 166 0 1.5 54 11 3 0 0. Rep.049 19 1. Dem.004 Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo.Table A3.3 39 0.6 1 2.1 23 18 0 159.Distribu. Congo. National Targets for Access Rates.5 5 37 32 91 8 144 . The Ghana Guinea Guinea-Bissau Kenya 2.7d $ million T&D Total Annualized Costs of Capacity Expansion.Urban Rural Total costs border tion connec.1 0 11.Rehabilition ilitation Variable ment grid tion itation Variable grid tation Variable expansion 420 174 111 142 86 740 21 55 40 1. Low Growth Scenario.connec.359 59 57 699 1.408 6 7 114 4 1 144 38 15 14 17 1 21 1 1 0 38 0 49 0 84 5 1 34 2 0 48 78 36 29 32 4 43 1 2 1 49 13 99 0 116 8 1 94 7 1 130 293 62 57 50 80 591 8 47 39 1.981 33 17 531 947 9 661 49 19 14 21 2 52 1 2 0 148 7 81 0 102 13 3 42 3 1 69 78 93 39 71 4 97 12 5 1 49 36 117 0 276 13 38 126 98 9 274 Cross.8 4 0.345 19 2 288 860 0 264 10. Rep.Rehabof capacity RehabilInvest.228 325 368 2 2.426 367 566 3 3. Côte d’Ivoire Equatorial Guinea Ethiopia Gabon Gambia.6 4 1 32 0 1 0 110 7 32 0 18 9 2 9 1 1 21 0 57 10.

890 3.282 2.4 2 168 4 1 1.962 246 14 36 202 32 107 24 11 673 72 34 3.Lesotho Liberia Madagascar Malawi Mali Mauritania Mauritius Mozambique Namibia Niger Nigeria Senegal Sierra Leone South Africa Sudan Tanzania Togo Uganda Zambia Zimbabwe SSA: Total CAPP: Total EAPP/Nile Basin: Total SAPP: Total WAPP: Total 153 392 112 164 709 656 711 599 933 2.5 6.801 176 0 2 0 1 28 1 0 16 26 0 1 2 6 4 37 9 0 9 141 52 659 154 3 2 2 5 18 7 8 11 34 4 343 174 1 455 37 18 3 19 27 36 1.177 285 60 312 1 412 10. SSA = Sub-Saharan Africa.385 1.026 501 28 6.762 421 22 45 466 54 175 70 47 763 248 76 6.310 6.984 3.491 10.630 15.244 109 7 4 6 14 43 11 21 43 102 14 596 370 5 2.051 762 1.365 1.230 2.220 378 6 1 82 9 8 2 2 13 7 1 880 20 2 80 78 184 4 96 38 106 3.206 7.315 187 195 11 65 99 302 11.725 794 113 594 455 1.939 168 7 5 258 14 47 39 28 60 115 24 2.867 44 0 777 1.612 983 899 7.546 1. SAPP = Southern African Power Pool.895 233 Source: Rosnes and Vennemo 2008.186 33.154 418 2.905 2 3 6 9 20 7 9 30 61 18 641 122 3 1.799 277 2 0 2 5 18 5 9 20 55 16 473 118 1 800 43 36 3 28 81 160 2.820 90 134 4 27 0 117 6.495 548 97 491 218 626 18.576 281 31 1.697 61 0 1 253 0 4 29 6 17. WAPP = West African Power Pool.1 10 1.558 150 5 32 51 17 52 14 1 28 4 29 484 42 21 70 166 51 30 54 11 20 2.7 0 1.348 6.159 235 1.292 183 1. T&D = transmission and distribution.846 43 52 5 38 138 257 3.344 0.495 3.4 13.1 0 68 0.314 5.429 131 23 3.167 1.8 2 2 0 9. .046 0 16 2 10 57 97 1.251 748 411 3. Note: CAPP = Central African Power Pool.495 97 60 7 39 99 185 4.941 0 3 4 3. EAPP/Nile Basin = East African/Nile Basin Power Pool.3 1 0 0 606 0.041 1.243 904 61 9.361 235 488 4.531 3.

Equatorial Guinea Ethiopia Gabon Gambia.Urban Rural tion connec.Distribu.connec.Rehabilition ilitation Variable ment grid tion itation Variable grid tation Variable expansion 785 223 461 142 148 452 — 56 157 754 964 723 12 2.001 34 17 588 161 17 697 50 19 14 21 2 52 — 2 1 7 81 148 0 102 17 3 42 3 1 69 177 130 201 71 6 72 — 5 85 188 239 49 1 178 64 31 624 18 11 428 Total costs Cross.7e $ million T&D Total Annualized Costs of Capacity Expansion.281 115 51 1. Trade Stagnation 234 Generation Investment 0 0 0 0 0 0 — 0 0 0 0 0 0 0 0 0 0 0 0 0 139 18 19 10 3 22 — 1 0 9 38 29 0 69 3 1 79 6 0 65 79 35 7 39 8 41 — 19 38 22 46 256 2 120 3 7 73 37 5 200 51 12 24 1 57 85 — 0 0 0 101 162 0 1. Rep. Côte d’Ivoire Congo.Rehabof capacity border RehabilInvest. The Ghana Guinea Guinea-Bissau Kenya 289 8 196 0 72 180 — 28 33 528 458 80 8 403 21 2 322 114 11 288 12 4 1 4 1 32 — 1 1 7 32 110 0 18 12 2 9 1 1 21 99 94 172 39 2 29 — 3 84 175 140 0.Table A3.408 6 7 114 4 1 144 38 15 14 17 1 21 — 1 0 0 49 38 0 84 5 1 34 2 0 48 78 36 29 32 4 43 — 2 1 13 99 49 0 116 8 1 94 7 1 130 558 74 246 50 140 328 — 48 72 559 644 526 11 2. Dem. Rep.194 Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo.255 183 29 1.1 0 62 56 30 530 11 11 298 .

1 191 — 135 115 13 — 407 130 72 1.551 20.306 485 534 109 353 394 577 19. WAPP = West African Power Pool.013 261 5 1.712 378 2 0 — 5 18 5 — 20 55 16 473 118 1 800 43 36 3 28 81 160 2.134 663 762 219 448 631 1.256 336 810 6.253 12. T&D = transmission and distribution.984 182 270 72 179 302 376 10.928 8.598 784 14 82 97 — Lesotho Liberia Madagascar Malawi Mali Mauritania Mauritius Mozambique Namibia Niger Nigeria Senegal Sierra Leone South Africa Sudan Tanzania Togo Uganda Zambia Zimbabwe SSA: Total CAPP: Total EAPP/Nile Basin: Total SAPP: Total WAPP: Total 0 0 0 236 1.617 2.982 135 176 105 56 99 408 15.071 1.972 105 1.337 0.454 1.673 2. — = data not available.225 3.030 6.167 402 6 1 — 9 8 2 — 13 7 1 880 20 2 80 78 184 4 96 38 106 3.062 118 14.495 97 60 7 39 99 185 4.934 332 17 228 — 167 199 41 — 465 207 106 4. .951 248 — 190 315 59 2.352 2.584 1.867 62 56 2.211 736 461 3.664 91 451 0 0 — 0 0 0 — 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6 5 — 7 24 11 — 17 67 4 1. SAPP = Southern African Power Pool. EAPP/Nile Basin = East African/Nile Basin Power Pool.125 1. SSA = Sub-Saharan Africa.259 4.046 5.095 4 185 1 26 1.336 265 5 32 — 17 52 14 — 28 4 29 484 42 21 70 166 51 30 54 11 20 2.722 10.232 158 7 4 — 14 43 11 — 43 102 14 596 370 5 2.216 235 Source: Rosnes and Vennemo 2008.466 1.173 59 29 3 23 43 75 3.243 39.487 0 38 16 115 3 97 10 18 57 0 97 223 1.142 1.475 6.2 4 — 9 21 7 — 30 61 20 659 122 3 1.594 1. Note: CAPP = Central African Power Pool.846 43 52 5 38 138 257 3.271 0 0 4 14 — — 4 0 3 40 2 87 — — 10 147 6 213 4 44 186 2.691 555 31 7.244 385 85 4.789 351 2.757 4.631 3.198 5.320 7 18 25 250 — 190 303 145 — 685 583 185 7.458 501 314 1.271 9.217 246 1.990 518 1.

0 3.9 11.9 0.0 2.01 13.3 11.1 0.0 3.8 5.03 18.3 6.6 9.9 11. Rep.7 7.1 20.2 31.6 3.8 5.2 4.2 3.6 18.7 12.7 11.8 1.6 5.2 2.9 11.7 12.6 6.1 9.1 6.8 Annualized Costs of Capacity Expansion under Different Access Rate Scenarios.8 31.6 6. Trade Expansion percent of 2005 GDP Trade expansion Access rate scenarios Sustain current levels Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo.04 27.0 3.1 1.7 16.0 3.1 2.2 9.5 0.4 2.3 5.5 0.4 1.1 0.8 1.4 5.8 9.5 2.8 1.1 2.6 8.9 — 10.0 3.4 5.8 32.6 10.4 1.2 18.9 1.1 4.6 5.5 8.2 6.4 7.9 3.4 4.6 10.1 10.7 10.7 5.1 2.6 5.8 4.3 0. Dem.2 0.1 2.6 2.6 4.1 11.9 2.6 2.7 5. Côte d’Ivoire Congo.6 10.04 27.4 Uniform 35% target 1.5 National targets 1.4 4.6 4.8 4.5 2.8 (continued next page) Trade stagnation National targets .4 4. The Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritania Mauritius Mozambique Namibia Niger Nigeria Senegal Sierra Leone South Africa 1.3 5.5 32.8 47.6 4.9 2.2 2.7 5.4 6.8 12.4 5.7 5.8 3.8 2.3 0.2 1.4 1.6 4.3 0.4 4.4 9.9 11.8 11.5 1.6 Low growth.2 1.8 0.3 4.1 2.5 2.2 4.3 3.7 5.7 6.0 3.7 12.7 0.1 0.5 2.6 9.2 1.6 6.8 0.2 — 6.7 7. Equatorial Guinea Ethiopia Gabon Gambia.7 — 4. national targets 1.1 13.5 0.6 0.1 0.5 9.7 5.4 5.4 5.2 1.2 6.7 0.236 Africa’s Power Infrastructure Table A3.4 1.7 0.3 5.5 20.1 1.7 4.5 7.9 4.5 2. Rep.3 6.8 2.9 5.9 10.3 0.3 4.0 0.3 3.

0 4.4 10.6 36.2 6.4 6.1 6.3 32.9 1. EAPP/Nile Basin = East African/Nile Basin Power Pool.4 5.4 7.8 (continued) Trade expansion Access rate scenarios Sustain current levels Uniform 35% target 6. .2 5. SAPP = Southern African Power Pool.1 8. national targets 6.4 5.Investment Requirements 237 Table A3. Note: CAPP = Central African Power Pool.4 333 41 72 104 153 Trade stagnation National targets Sudan Tanzania Togo Uganda Zambia Zimbabwe SSA: Total CAPP: Total EAPP/Nile Basin: Total SAPP: Total WAPP: Total 5.9 6.2 6.7 3.4 262 25 52 88 117 National targets 6.4 303 34 70 94 132 Low growth. WAPP = West African Power Pool.3 5.5 215 16 37 77 96 Source: Rosnes and Vennemo 2008.2 34.7 288 32 65 87 127 2.6 5.0 5.2 5.4 35. — = data not available.8 6.2 5. SSA = Sub-Saharan Africa.8 31.

.

1 Institutional Indicators: Summary Scores by Group of Indicators Out of 100. 2007 Reform sector specific 20 83 67 42 42 42 83 42 58 75 0 42 42 42 42 50 58 Regulation sector specific 28 19 75 31 28 83 78 31 50 78 0 67 67 44 67 61 44 SOE governance 47 75 80 61 60 Aggregate score 22 55 70 57 34 Reform Benin Burkina Faso Cameroon Cape Verde Chad Congo. Cote d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mozambique Namibia Niger Nigeria 13 50 80 69 38 33 88 64 88 86 79 67 64 46 79 49 78 Regulation 0 50 48 82 0 0 36 56 83 53 64 59 61 0 76 48 53 49 41 70 71 100 59 70 70 64 71 50 39 86 64 79 63 100 46 73. Dem.5 68 74 56 56 58 (continued next page) 239 . Rep.APPENDIX 4 Strengthening Sector Reform and Planning Table A4.

1 (continued) Reform sector specific 17 58 42 0 58 75 58 Regulation sector specific 56 78 44 — 33 33 67 SOE governance 45 61 65. an interministerial committee. an interministerial committee. an interministerial committee.2a Subindex Legislation Institutional Indicators: Description of Reform Indicators Indicator Indicator values 0 = No reform of the sector 1 = At least one key reform of the sector 0 = No new sector legislation passed within the past 10 years 1 = New sector legislation passed in the past 10 years Existence of reform Legal reform Unbundling 0 = Vertical integration 1 = Restructuring through vertical separation Separation of 0 = No separation of different business services business lines 1 = Separation of different business services SOE corporatization 0 = No state-owned utility corporatized 1 = At least one utility corporatized Existence of 0 = No autonomous regulatory body regulatory body 1 = Autonomous regulatory body Tariff approval oversight Investment plan oversight 0 = Oversight on tariff approval by line ministry 1 = Oversight on tariff approval by a special entity within the ministry.240 Africa’s Power Infrastructure Table A4. or the regulator (continued next page) Policy oversight Restructuring Technical standard oversight Regulation monitoring oversight Dispute arbitration oversight .5 50 64 63 54 Aggregate score 47 65 64 28 58 64 63 Rwanda Senegal South Africa Sudan Tanzania Uganda Zambia Reform 62 71 88 33 69 84 71 Regulation 53 58 82 — 67 64 64 Source: Vagliasindi and Nellis 2010. or the regulator 0 = Oversight on investment plans by line ministry 1 = Oversight on investment plans by a special entity within the ministry. — = data not available. or the regulator 0 = Oversight on regulation monitoring by line ministry 1 = Oversight on regulatory monitoring by a special entity within the ministry. an interministerial committee. or the regulator 0 = Oversight on technical standards by line ministry 1 = Oversight on technical standards by a special entity within the ministry. Note: SOE = state-owned enterprise. an interministerial committee. or the regulator 0 = Oversight on dispute resolution by line ministry 1 = Oversight on dispute resolution by a special entity within the ministry. Table A4.

or concession Private sector 0 = No private sector involvement.Strengthening Sector Reform and Planning 241 Table A4. lease. service and works investment contracts. management contract. affermage. and not renewed private sector participation sector participation Absence of 0 = Renegotiation renegotiation in 1 = No renegotiation private sector participation Private ownership 0 = No private ownership 1 = At least a form of greenfield operation/divestiture Full privatization of 0 = No privatization or partial privatization incumbent operator 1 = Full privatization (sales of 51% or more shares) Absence of 0 = Renationalization renationalization 1 = No renationalization Source: Vagliasindi and Nellis 2010.2a Subindex (continued) Indicator Indicator values Private de jure 0 = Private participation forbidden by law 1 = Private participation allowed by law Private de facto 0 = No private participation 1 = At least a form of private participation Private sector 0 = No private sector involvement or service and management works contracts only 1 = Management contract. or lease 1 = Concession Absence of 0 = Canceled. distressed private sector participation distressed private 1 = Operational. concluded. affermage. Note: SOE = state-owned enterprise. Private sector involvement .

Dem.2b Institutional Indicators: Reform.. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mozambique 0 1 1 1 1 0 1 1 1 1 0 0 0 0 0 1 1 1 0 1 1 1 1 1 1 0 0 1 .. 2007 Legislation Restructuring Policy oversight Private sector involvement .Existence of reform Legal reform Unbundling Separation of business lines SOE corporatization Existence of regulatory body Regulation monitoring oversight Dispute arbitration oversight Tariff approval oversight Investment plan oversight Technical standard oversight Private de jure Private de facto Private sector management Private sector investment Absence of distressed private sector participation Absence of renegotiation in private sector participation Private ownership Full privatization of incumbent operator Absence of renationalization 242 Country Benin Burkina Faso Cameroon Cape Verde Chad Congo. Rep. 0 0 0 1 1 — 0 1 1 1 1 — 1 1 1 0 1 1 1 1 1 1 1 1 0 0 0 1 1 0 0 0 0 1 1 1 1 1 1 0 1 1 1 1 1 1 1 1 1 1 1 0 1 0 1 1 1 0 1 0 0 1 0 1 1 1 — 1 0 1 1 0 0 — — 1 1 1 1 0 — 0 — — 0 1 1 1 1 1 1 1 1 0 1 1 1 1 1 — 0 0 0 1 1 1 1 1 — — 1 0 0 1 0 1 1 1 1 0 1 0 1 0 1 1 0 1 0 1 0 1 0 0 1 1 1 0 0 0 1 0 0 0 0 0 0 0 — 1 — — 1 1 1 — — 0 1 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 — 1 — — — — — — — 0 0 1 1 — 0 0 1 1 0 0 0 1 1 0 0 0 0 1 — 0 1 1 1 0 0 1 1 1 0 0 0 1 1 0 0 0 1 1 0 — — 1 0 — — — 0 0 — 0 1 0 0 0 0 0 0 0 0 — — 1 0 — Table A4.

243 .Namibia Niger Nigeria Rwanda Senegal South Africa Sudan Tanzania Uganda Zambia 1 1 1 1 1 1 — 1 1 1 1 1 1 1 1 1 — 1 1 1 1 0 1 0 0 1 — 0 1 0 1 1 1 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 1 1 1 0 1 1 1 1 — 1 1 1 1 1 0 1 1 1 — 0 1 1 1 0 1 1 1 1 — 1 1 1 1 0 0 0 0 1 — 0 0 0 1 0 1 0 0 1 — 0 0 0 1 0 1 1 1 1 — 1 1 1 0 0 1 1 1 1 — 1 1 1 0 0 0 1 0 0 0 1 1 0 0 0 0 0 0 0 0 0 1 0 — — — 0 — — — 1 1 — — — — 0 — — — 0 1 — 0 0 1 0 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 — — — — — — — — 1 — Source: Vagliasindi and Nellis 2010. — = data not available. Note: SOE = state-owned enterprise.

. or local government 0 = Vertically integrated structure 1 = Single-buyer model 0 = No separation of water and electricity service provision 1 = Separation of water and electricity service provision 0 = IPPs not allowed by law 1 = IPPs allowed by law 0 = No IPPs 1 = At least one IPP 0 = No presence of community-based service providers 1 = Presence of community-based service providers De jure unbundling of generation and transmission De jure unbundling of distribution and transmission De jure unbundling of generation and distribution De facto unbundling of generation and transmission De facto unbundling of distribution and transmission De facto unbundling of generation and distribution Responsibility for urban electricity service provision Decentralization Restructuring Responsibility for rural electricity service provision Single-buyer model Separation of water and electricity service provision Market structure De jure IPP De facto IPP Community-based providers of rural electricity Source: Vagliasindi and Nellis 2010.3a Indicators Subindex Institutional Indicators: Description of Reform Sector–Specific Indicator Indicator values 0 = Joint ownership allowed by law 1 = No joint ownership allowed by law 0 = Joint ownership allowed by law 1 = No joint ownership allowed by law 0 = Joint ownership allowed by law 1 = No joint ownership allowed by law 0 = No unbundling 1 = Unbundling 0 = No unbundling 1 = Unbundling 0 = No unbundling 1 = Unbundling 0 = No decentralization of responsibility of service provision at the national or state level 1 = Decentralization of responsibility of service provision beyond national or state level 0 = Accountability of service provision only at the central government level 1 = Accountability of service provision at the regional.244 Africa’s Power Infrastructure Table A4. Note: IPP = independent power project. state.

— = data not available.3b Institutional Indicators: Reform Sector Specific. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Sudan Tanzania Uganda Zambia 0 1 1 0 0 0 1 0 0 1 — 0 0 0 0 1 0 0 0 0 — 0 1 0 0 1 1 0 0 0 1 0 0 0 — 0 0 0 0 1 0 0 0 0 — 0 1 0 0 1 1 0 0 0 1 0 0 1 — 0 0 0 0 1 0 0 0 0 — 0 1 0 1 1 1 1 1 1 1 1 1 0 — 1 1 1 1 1 1 0 1 1 — 1 0 1 1 1 1 1 1 1 1 1 1 1 — 1 1 1 0 1 1 0 1 1 — 1 0 1 — 1 1 1 1 1 1 1 1 0 — 1 1 1 0 1 1 0 1 1 — 1 0 1 0 0 0 0 0 De jure IPP 0 1 1 1 1 0 1 0 0 1 1 0 1 0 0 1 1 1 1 1 — — — 0 1 0 0 1 0 0 1 0 1 1 0 0 0 0 0 1 1 0 1 0 0 1 1 0 1 0 — — — 0 1 1 1 1 1 0 1 1 Source: Vagliasindi and Nellis 2010. De facto IPP 0 1 0 0 0 .Strengthening Sector Reform and Planning 245 Table A4. Rep. 2007 Restructuring De facto unbundling of generation and transmission De facto unbundling of distribution and transmission De jure unbundling of distribution and transmission De jure unbundling of generation and distribution De facto unbundling of generation and distribution De jure unbundling of generation and transmission Market structure Single buyer model Country Benin Burkina Faso Cameroon Cape Verde Chad Congo. Dem. Note: IPP = independent power project.

246 Africa’s Power Infrastructure Table A4.4a Subindex Institutional Indicators: Description of Regulation Indicators Indicator values 0 = Appointment by government/line ministry 1 = Otherwise 0 = Firing by government/line ministry 1 = Otherwise 0 = Budget fully funded by government 1 = At least a proportion of budget funded through fees and/or donors 0 = At least a proportion of budget funded through government and/or donors 1 = Budget fully funded through fees 0 = Veto decision by government/line ministry 1 = Veto decision by others 0 = Veto decision by government/line ministry/others 1 = No veto decision 0 = Sector-specific regulator 1 = Multisectoral regulator 0 = Individual 1 = Board of Commissioners 0 = Regulatory decisions not publicly available 1 = Regulatory decisions publicly available only through reports 0 = Regulatory decisions not publicly available or available only through reports 1 = Regulatory decisions publicly available through Internet 0 = Regulatory decisions not publicly available or available through only through reports/Internet 1 = Regulatory decisions publicly available through public hearings 0 = No right to appeal regulatory decisions 1 = Right to appeal regulatory decision 0 = Appeal to government/line ministries 1 = Appeal to bodies other than government/line ministries 0 = No recourse to independent arbitration 1 = Possibility to appeal to independent arbitration (continued next page) Indicator Formal autonomy: hire Formal autonomy: fire Partial financial autonomy Full financial autonomy Partial managerial autonomy Full managerial autonomy Multisectoral Commissioner Publicity of decisions reports only Autonomy Transparency Publicity of decisions Internet only Publicity of decisions public hearing only Appeal Accountability Partial independence of appeal Full independence of appeal .

annual review or review (period less than three years) 1 = Multiyear tariff review (at least three years) 0 = No sectoral fund established 1 = Sectoral fund established 0 = No funding based on levies 1 = At least a percentage of funding coming through sectoral levies Indicator Tariff methodology Tariff indexation Tools Regulatory review Length of regulatory review Existence of a specific sectoral fund Finance of sectoral fund Source: Vagliasindi and Nellis 2010. Note: ROR = rate of return.Strengthening Sector Reform and Planning 247 Table A4. USO = universal service obligation.4a Subindex (continued) Indicator values 0 = No tariff methodology 1 = Some tariff methodology (price cap or ROR) 0 = No tariff indexation 1 = Some tariff indexation 0 = No tariff review 1 = Periodic tariff review 0 = No tariff review. USO .

248 .248 Africa’s Power Infrastructure Table A4. Dem. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Sudan Tanzania Uganda Zambia — — 0 0 — — 0 0 0 0 0 0 0 — 0 0 0 1 0 0 — 0 0 0 — — 0 1 — — 0 0 0 0 0 0 0 — 0 0 0 0 0 0 — 0 0 0 — — 1 1 — — 1 1 — 1 1 1 1 — 1 1 1 1 — 1 — 1 1 1 Full Partial Full manfinancial managerial agerial autonomy autonomy autonomy — — 0 1 — — 1 0 — 1 — 1 0 — 1 0 0 1 — 1 — 1 0 0 — — 0 0 — — — 0 — 0 0 0 1 — 0 0 1 0 1 1 — 0 1 0 — — 0 0 — — 1 0 — 0 0 0 0 — 0 0 0 0 0 0 — 0 0 0 Multisectoral Commissioner — — 0 1 — — 0 0 1 0 0 0 0 — 0 1 0 1 0 1 — 1 0 1 — — 1 1 — — 0 1 1 1 1 1 1 — 1 0 1 1 1 1 — 1 1 1 Source: Vagliasindi and Nellis 2010. Note: — = data not available. Rep.4b Institutional Indicators: Regulation. 2007 Autonomy Formal Formal Partial autonautonfinancial omy hire omy fire autonomy Benin Burkina Faso Cameroon Cape Verde Chad Congo.

Strengthening Sector Reform and Planning 249 Transparency Publicity of decisions reports only — — 0 1 — — 0 1 1 1 — 1 1 — 1 1 1 1 1 1 — 1 1 1 Publicity of decisions Internet only — — 0 1 — — 0 1 1 1 — 1 0 — 1 1 1 1 0 1 — 1 1 1 Publicity of decisions public hearing only Appeal — — 0 1 — — — 0 1 0 — 0 1 — 1 1 1 1 0 1 — 1 1 1 — 0 1 1 — — 1 1 — 1 — 1 1 — 1 1 0 0 1 1 — 1 1 1 Accountability Partial independence of appeal — — 1 1 — — 1 1 — 0 — 0 1 — 1 1 — — 1 1 — 1 1 1 Tools Full independence of appeal — — 0 0 — — 0 0 — 0 — 0 0 — 0 0 — — 0 0 — 0 0 0 Length of regulatory review — — 1 1 — — — — — 1 — 1 1 — — — 1 — 1 1 — 0 0 0 Tariff methodology 0 1 1 1 0 0 0 1 1 1 1 1 1 0 1 0 1 1 1 1 — 1 1 1 Tariff indexation 0 — 1 1 — 0 0 0 — 0 — 1 0 — 1 0 0 0 1 1 — 0 1 0 Regulatory review 0 — 1 1 — 0 1 1 — 1 — 1 1 — — — 1 — 1 1 — 1 0 1 249 .

T&D = transmission and distribution. TPA = third-party access. Note: capex = capital expenses.Table A4. opex = operational expenses.5a Indicator values Institutional Indicators: Description of Regulation Sector-Specific Indicators 250 Subindex Indicator Regulation of large customers Transmission tariff regulation methodology Tools Third-party access to T&D networks Minimum quality standards Penalties for noncompliance 0 = Regulation of large customers 1 = No regulation of large customers 0 = No transmission tariff regulation methodology 1 = Tariff regulation methodology (price cap or rate of return) 0 = TPA not allowed by law 1 = TPA allowed by law 0 = No well-defined minimum quality standards 1 = Well-defined minimum quality standards 0 = No penalties for noncompliance to minimum quality standards 1 = Penalties for noncompliance to minimum quality standards Partial cost recovery requirement for rural electricity Cost recovery Full cost recovery requirement for rural electricity 0 = Full capital subsidy 1 = Partial capital subsidy 0 = Partial or full capital subsidy 1 = No subsidy Community contribution to the rural fund Universal service Criteria are used to prioritize rural electrification projects Opex cost recovery for rural water Capex cost recovery for water 0 = No community contribution to the rural fund 1 = Community contribution to the rural fund 0 = Criteria other than least cost 1 = Least-cost criteria 0 = No opex recovery 1 = Opex recovery 0 = Only opex recovery or no recovery 1 = Some capex recovery 0 = No incentive for renewable energy 1 = Incentives for renewable energy Environmental Incentives for renewable energy Source: Vagliasindi and Nellis 2010. .

Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Sudan Tanzania Uganda Zambia 0 0 1 1 0 1 1 1 1 1 — 1 1 — 1 0 1 0 1 1 — 0 1 1 — 0 1 0 0 1 1 0 — 0 — 0 1 — 1 0 1 0 1 1 — 0 1 1 1 1 1 1 1 1 1 1 1 1 — 1 1 1 1 1 1 1 1 1 — 1 0 1 Cutoff possibility 0 0 0 0 0 0 0 0 0 1 — 0 0 0 0 0 0 0 0 0 — 0 0 — 1 0 1 0 1 1 1 0 0 0 — 0 0 1 0 1 0 0 0 0 — 0 0 0 — 1 1 1 — — — 1 1 1 — 1 1 0 1 — 1 1 1 1 — 1 1 1 0 0 0 0 — 1 0 0 1 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 1 0 0 — 0 0 — 1 0 0 1 0 1 — 0 — 1 0 1 1 0 — — 0 0 Source: Vagliasindi and Nellis 2010. Dem.Strengthening Sector Reform and Planning 251 Table A4. Rep. 2007 Tools Penalties for noncompliance Minimum quality standards Access/interconnection Third-party access to transmission and distribution networks Regulation of large customers Criteria used to prioritize rural electrification projects Transmission tariff regulation methodology Cost recovery Full cost recovery requirement for rural electricity Partial cost recovery requirement for rural electricity Environmental Incentives for renewable energy — — — — — — — — — — — — — — — — — — — — — — — — Country Benin Burkina Faso Cameroon Cape Verde Chad Congo. Note: — = data not available.5b Institutional Indicators: Regulation Sector Specific. .

252 Africa’s Power Infrastructure Table A4.6a Subindex Ownership and shareholder quality Institutional Indicators: Description of SOE Governance Indicators Indicator Indicator values 0 = Ownership diversified 1 = 100% owned by one state body 0 = Noncorporatized 1 = Corporatized 0 = Nonlimited liability 1 = Limited liability company 0 = No requirement to earn a rate of return 1 = Requirement to earn a rate of return 0 = No requirement to pay dividends 1 = Requirement to pay dividends 0 = Manager does not have the most decisive influence on hiring decisions 1 = Manager has the most decisive influence on hiring decisions 0 = Manager does not have the most decisive influence on firing decisions 1 = Manager has the most decisive influence on firing decisions 0 = Manager does not have the most decisive influence on setting wages/bonuses 1 = Manager has the most decisive influence on setting wages/bonuses 0 = Manager does not have the most decisive influence on how much to produce 1 = Manager has the most decisive influence on how much to produce 0 = Manager does not have the most decisive influence on to whom to sell 1 = Manager has the most decisive influence on to whom to sell 0 = Number of members of board smaller than a given threshold 1 = Number of members of board greater than a given threshold 0 = Board members appointed only by government 1 = Board members appointed by shareholders 0 = No independent directors in the board 1 = At least one independent director in the board Concentration of ownership Corporatization Limited liability Rate of return policy Dividend policy Hiring Laying off Wages Managerial and board autonomy Production Sales Size of the board Selection of board members Presence of independent directors (continued next page) .

Strengthening Sector Reform and Planning 253 Table A4.6a Subindex (continued) Indicator Indicator values 0 = Annual reports not publicly available 1 = Annual reports publicly available 0 = IFRS not applied 1 = Compliance to IFRS 0 = No operational or financial audit 1 = At least some form of external audit 0 = No independent audit of accounts 1 = Independent audit of accounts 0 = Audit not publicly available 1 = Audit publicly available 0 = No remuneration of noncommercial activities 1 = Remuneration of noncommercial activities 0 = No performance contracts 1 = Existence of performance contract 0 = Performance-based incentive systems 1 = Existence of performance-based incentive systems 0 = No penalties for poor performance 1 = Penalties for poor performance 0 = No periodic monitoring of performance 1 = Periodic monitoring of performance 0 = No monitoring of performance by third party 1 = Monitoring of performance by third party Publication of annual reports IFRS Accounting and disclosure and performance monitoring External audits Independent audit of accounts Audit publication Remuneration of noncommercial activity Performance contracts Performance contracts with incentives Penalties for poor performance Monitoring Third-party monitoring Billing and collection 0 = Ownership diversified 1 = 100% owned by one state body Meter reading 0 = Noncorporatized 1 = Corporatized Human resources 0 = Nonlimited liability 1 = Limited liability company Information 0 = No requirement to earn a rate of return technology 1 = Requirement to earn a rate of return (continued next page) Outsourcing .

Note: IFRS = International Financial Reporting Standards.254 Africa’s Power Infrastructure Table A4.6a Subindex (continued) Indicator Indicator values 0 = Restrictions to dismiss employees according to public service guidelines 1 = Restrictions to dismiss employees only according to corporate law 0 = Wages compared with public sector 1 = Wages compared with private sector (or between public and private sectors) 0 = Benefits compared with public sector 1 = Benefits compared with private sector (or between public and private sectors) 0 = Exemption from taxation 1 = No exemption from taxation 0 = Access to debt below the market rate 1 = Access to debt equal or above the market rate 0 = At least one state guarantee 1 = No state guarantee 0 = No public listing 1 = Public listing Restriction to dismiss employees Labor market discipline Capital market discipline Wages compared with private sector Benefits compared with private sector No exemption from taxation Access to debt compared with private sector No state guarantees Public listing Source: Vagliasindi and Nellis 2010. .

6b Managerial and board autonomy Institutional Indicators: SOE Governance. SNEL 0 Dem.Table A4.Limited tion liability — — 1 0 1 1 1 0 0 0 — — Presence of Selection indeof Size pendent board of the Dividend Laying policy Hiring off Wages Production Sales board members directors 0 1 1 1 0 1 1 0 — 1 1 1 1 1 1 1 — — 1 1 1 1 1 1 1 0 — 0 1 1 1 0 0 1 1 — 1 1 1 1 1 1 1 1 1 1 1 1 1 — — 1 0 — 1 — — — 1 — 1 — 1 — 0 — 1 — 1 — — — — — (continued next page) — — 1 1 1 1 0 — — 1 0 — 1 1 1 0 0 — — — 255 . Côte d’Ivoire CIE 1 Ethiopia EEPCO 1 Ghana ECG 1 VRA 0 Kenya KENGEN 0 KPLC 1 Lesotho LEC 1 Madagascar JIRAMA 1 Malawi Escom 1 Mozambique EDM 1 Rate of return policy 0 1 1 1 1 0 1 — 1 1 1 — — 1 1 — 0 — 1 1 1 0 — 1 1 — 1 — 1 1 1 1 1 1 1 — 1 — 0 1 1 1 1 1 1 — 1 — 1 1 1 1 1 1 1 — 1 — 1 1 — 1 0 1 1 — 1 — 1 — — 0 1 0 1 — 1 — 1 1 1 1 1 1 — — Corporatiza. 2007 Ownership and shareholder quality Concentration of Provider ownership name Country Benin SBEE 1 Burkina Faso Sonabel 1 Cameroon AES SONEL 0 Cape Verde Electra 1 Chad STEE 1 Congo. Rep.

6b Managerial and board autonomy (continued) Ownership and shareholder quality Rate of return policy 1 0 1 1 0 1 1 — — — 0 0 0 1 0 Presence of Selection indeof Size pendent board of the Laying Dividend off policy Hiring Wages Production Sales board members directors 1 1 — 1 1 1 1 1 — 1 1 1 1 1 0 1 1 1 — 1 1 1 1 1 1 0 — 0 1 1 1 1 1 0 1 — 0 1 1 1 1 1 1 0 — 1 1 1 0 1 0 — — — 1 1 1 1 1 0 1 1 — — — — — — — — — — — — — — — — — — — — — — — — — — — — 0 1 1 1 — 1 0 1 1 0 1 1 1 0 0 0 1 — 0 1 1 1 1 0 0 0 1 1 1 1 1 1 1 1 1 — 0 1 1 1 0 — 1 1 — (continued next page) Concentration of Corporatiza.256 Table A4.Limited Provider ownership tion name liability Country Namibia Nampower — — — NORED 1 — — Niger NIGELEC 1 1 — Nigeria PHNC 1 0 0 Rwanda ELECTROGAZ 1 0 0 Senegal Senelec — — — South Africa Capetown 1 1 1 ESKOM — — — Tshwane 1 — — Sudan NEC 1 1 — Tanzania TANESCO 0 1 0 Uganda UEDCL 0 1 0 UEGCL 1 1 0 UETCL 1 — — Zambia ZESCO 0 — — .

private sector No exemption from taxation Access to debt vs. Dem. private sector No state guarantees Country Benin 0 Burkina Faso 1 Cameroon 1 Cape Verde — Chad 1 Congo. Rep. 0 Côte d’Ivoire 1 Ethiopia — Ghana 1 1 Kenya 1 1 Lesotho 0 Madagascar 0 Malawi 1 Mozambique — Namibia 1 0 1 1 1 1 0 1 1 — 0 1 1 1 0 1 1 — 1 1 1 1 1 1 1 1 1 — 1 1 1 1 — 1 1 — 1 1 1 1 1 1 1 0 1 — 1 — — 1 — 1 1 — 1 1 0 0 0 1 0 — 1 — 1 — — 1 — 1 0 — 1 0 0 0 0 0 0 0 0 — 0 — — 0 0 0 0 — 0 0 0 1 1 0 0 0 0 — 1 1 1 1 0 1 0 — — 0 1 0 1 0 0 0 1 — 0 1 1 0 0 1 0 — — 0 0 1 0 — 1 0 1 — 0 — — 0 0 1 0 — — 0 0 — 0 — — 0 0 — 1 — 1 0 0 1 1 — 0 0 1 1 1 1 1 1 1 — 1 1 1 1 — 1 1 — 1 1 0 1 1 0 0 0 0 — 0 — 0 0 0 1 0 — 0 0 — — — — — — — — — — — — — — — — — — 0 1 1 0 0 0 0 — 0 — 0 0 1 1 1 — 0 1 0 1 1 0 0 0 0 — 0 — 0 0 0 1 1 — 0 1 — — — — — — — — — — — — — — — — — — 1 1 1 1 1 1 1 — 1 — 1 1 1 1 1 — 1 1 — — — — — — — — — — — — — — — — — — 1 0 1 1 1 1 1 — 0 1 1 0 1 1 1 — 1 1 0 0 1 1 1 — 1 — 1 — 1 1 — 1 — — — — 0 0 0 1 0 0 1 — 0 0 0 1 — 0 0 — 1 0 — 0 0 0 0 — — — 0 0 0 0 0 0 — — — — Public listing 257 .6b Outsourcing Labor market discipline Capital market discipline (continued) Accounting and disclosure and performance monitoring Publication of annual reports IFRS External audits Independent audit of accounts Audit publication Remuneration of noncommercial activity Performance contracts Performance contracts with incentives Penalties for poor performance Monitoring Third-party monitoring Billing and collection Meter reading Human resources (HR) IT Restriction to dismiss employees Wages compared to private sector Benefits vs.Table A4.

private sector No exemption from taxation Access to debt vs. Note: IFRS = International Financial Reporting Standards. Public listing 258 Outsourcing Labor market discipline Capital market discipline Table A4. private sector No state guarantees Country Niger Nigeria Rwanda Senegal South Africa Sudan Tanzania Uganda Zambia 1 0 0 1 1 — — — 1 1 1 1 1 1 0 1 0 1 — — — 1 1 1 1 0 1 1 1 1 1 — — — 1 1 1 1 1 1 1 1 1 1 — — — 1 1 1 1 1 1 0 0 1 1 — — — 1 1 1 1 1 0 0 0 0 0 — 0 0 0 0 0 0 0 1 0 0 1 1 — — — 0 1 0 0 0 1 0 0 1 1 — — — 1 1 0 1 0 1 0 0 0 1 — — — 0 1 0 1 0 1 0 — 1 1 — — — 1 1 — 0 1 1 1 1 1 1 — — — 1 1 1 1 1 1 0 0 0 0 — — — 0 0 0 0 1 — — — — — — — — — — — — — 0 0 0 0 0 — — — 0 0 0 0 0 0 1 0 0 1 — — — 1 1 0 0 0 — — — — — — — — — — — — — 1 1 1 1 1 — — — 1 1 1 1 1 — — — — — — — — — — — — — 0 1 1 0 1 — — — 1 1 1 1 1 1 1 0 0 1 — — — 1 1 1 1 — 0 — 0 0 0 0 1 — 1 0 — — — — — — 1 0 0 0 1 0 0 — 0 — Source: Vagliasindi and Nellis 2010.Publication of annual reports IFRS External audits Independent audit of accounts Audit publication Remuneration of noncommercial activity Performance contracts Performance contracts with incentives Penalties for poor performance Monitoring Third-party monitoring Billing and collection Meter reading Human resources (HR) IT Restriction to dismiss employees Wages compared to private sector Benefits vs. — = data not available.6b (continued) Accounting and disclosure and performance monitoring .

Rep. Aubin Power Project 259 .7 Capacity Contract Termination year period year 2003 2006 2006 1998 1996 1994 1999 1999 1999 1996 1996 1999 1999 2006 1998 1998 1998 2004 1 — 20 20 20 23 2 25 7 7 20 20 2022 2001 2024 2011 2004 2019 2019 2007 — 2018 2018 2025 40 2 2 14 — 19 2044 2009 2009 2012 1998 2013 45 4. own. own. operate Build. own. operate Build. operate Build. operate Hydro Diesel Diesel Hydro Geothermal Diesel. operate Build.Table A4. 1990–2006 MW developed 16 30 30 12 240 99 420 39 220 56 46 75 13 100 29 100 40 34 (continued next page) Country Build.7 5. own.7 4. waste Project name Technology/fuel Project type Angola Chicapa Hydroelectric Plant Aggreko Cabinda Temporary Power Station Aggreko Caminhos de Ferro de Angola Burkina Faso Hydro-Afrique Hydroelectric Plant Congo.A. own. own. Mombasa Barge-Mounted Power Project Kipevu II Ormat Olkaria III Geothermal Power Plant (phase 1) Aggreko Embakassi and Eldoret Power Stations Mauritius Deep River Beau Champ Belle Vue Power Plant FUEL Power Plant St. operate Build. own. natural gas Natural gas Steam Natural gas Diesel Diesel Diesel Geothermal — Coal. own. waste Coal Coal. own. own. Compagnie Ivoirienne de Production d’Electricité (CIPREL) Azito Power Project Ghana SIIF Accra Takoradi 2 Kenya Iberafrica Power Ltd.3 0 0 Investment in facilities ($ million) Private Participation: Greenfield Projects. transfer Build. own. transfer Merchant Build. operate Build. Sounda S. own. waste Coal. operate Rental Build. operate Build. transfer Rental Rental Build. own. transfer Build. own. transfer Build.6 325 70 223 0 110 64 35 85 54 7.89 0 109.

operate Rental Rental Rental Rental Rental Project name Technology/fuel Project type Natural gas Natural gas Natural gas Hydro Rwanda — Senegal Diesel. rescheduling. own. own. MW = megawatts. own. operate Build.9 6 127 316 0 0 32 6.31 87 7 9. lease. own. own. natural gas Aggreko Dakar Temporary Power Station — Kounoune I IPP Diesel Hydro South Africa Bethlehem Hydro Darling Wind Farm Wind Tanzania Tanwat Wood-Fired Power Plant Waste Independent Power Tanzania Ltd Diesel Songas–Songo Songo Gas-to-Power Project Natural gas Songas–Songo Songo Gas-to-Power Project Natural gas Songas–Songo Songo Gas-to-Power Project Natural gas Natural gas Mtwara Region Gas-to-Power Project Aggreko Ubungo Temporary Power Station Natural gas Alstom Power Rentals Mwanza Diesel Natural gas Dowans Lease Power Ubungo Uganda Aggreko Kampala Temporary Power Station Diesel Diesel Aggreko Jinja Temporary Power Station Nigeria AES Nigeria Barge Limited Okpai Independent Power Project AEL Ilorin Gas Power Plant Dadin Kowa Hydropower Plant Aggreko 10 MW Power Station Rwanda GTi Dakar Ltd. own.8 Investment in facilities ($ million) (continued) MW developed 306 450 105 39 10 56 40 68 4 5 2. operate Build. transfer Build.78 11. Source: World Bank 2007. own.260 Table A4. transfer Rental Build. transfer Build. operate Build.7 Capacity Contract Termination year period year 2001 2002 2005 2005 2005 1997 2005 2005 2005 2006 1994 1997 2001 2004 2005 2005 2006 2006 2006 2005 2006 2 15 20 20 6 20 20 20 20 25 2 2 2 3 2 2008 2020 2025 2026 2000 2017 2021 2021 2021 2021 2009 2008 2009 2008 2008 — — — 25 2 15 — — — 2030 2007 2012 240 462 275 26 1. operate Build. own.5 100 — 115 190 12 40 40 100 50 50 Country Build. own. operate Build. own. or project cancellation. .31 15. — = data not available. transfer Build.83 11. own. own. own Build. own.58 59 6. operate Build.31 6. Note: Termination year can be year when the project is concluded according to the original agreement. transfer Rental Build. transfer Build.

rehab. rehab. transfer Build. 1990–2006 Country Operational 20 20 20 20 n. transfer Operational 20 2000 2010 411. Divestitures. n. operate..7 n. transfer Operational 20 1990 2010 100 39. transfer Rehab.8 21.a. Rehab.. 2001 100 2021 56 2021 56 2021 56 Operational Operational Operational Canceled 1998 2006 2005 2002 2001 2021 56 Project name Project type Project status Capacity Contract Termination % year period year private Concession: Cameroon AES Sonel AES Sonel AES Sonel AES Sonel Comoros Build. transfer Build. transfer Build.5 0 440 Private Participation: Concessions. operate. operate. operate.a. operate..a.Table A4.a. transfer 85 0 — — (continued next page) 261 ... transfer Operational 2005 20 100 0 760 n. operate. Management and Lease Contracts. operate.6 Côte d’Ivoire Rehab. — n..a. rehab. rehab.8 Investment in facilities ($ million) Number of connections (thousands) MW 452 — 528 528 0 n. 16 39.. Comorienne de d’eau et de l’electricité (CEE) Compagnie Ivoirienne d’ Electricité Compagnie Ivoirienne d’ Electricité Compagnie Ivoirienne d’ Electricité 2010 Rehab. operate.a..

n.a.a. rehab.a. Rehab. rehab... n.8 125 n. transfer Operational 15 45 Operational 2004 2005 2020 2049 100 100 238 50 n.a.a. transfer Build.a... operate. operate. rehab. rehab. transfer .. operate. 120 — 3000 180 n. 268 (continued) Country 1997 20 2017 100 Project name Project type Project status Capacity Contract Termination % year period year private Gabon Build. lease or rent. rehab. transfer Build. operate. transfer Concluded 10 26 26 20 2024 2020 2020 60 34 100 2005 66 Distressed 2000 2004 2004 Distressed Operational 1995 36.4 337 0 5. transfer Build. 400 — Société d’Energie et d’Eau du Gabon (SEEG) Société d’Energie et d’Eau du Gabon (SEEG) Guinea Société Guineenne d’Electricité Mali Energie du Mali (EDM) Energie du Mali (EDM) Mozambique Energia de Mocambique Lda (ENMo) Nigeria Afam Power Project São Tomé and Sinergie Príncipe concession contract Rehab..8 Investment in facilities ($ million) Number of connections (thousands) 84 MW n. transfer 2002 20 2017 0 100 Build..Operational ate. — n.Operational ate.262 Table A4.a. transfer Build. operate.. oper. oper. rehab.

Canceled 2000 30 2004 100 0 16 n. n..a.3 n.a.a.a.a.. transfer Rehab..a. transfer Uganda Kasese Electrifica. operate.a.5 300 Operational 2003 20 2023 100 11. Société Nationale Build. 67 3 — n. n. rehab. 0 2000 20 2006 100 36 — n.a. n..a.5 Operational 2025 2005 20 100 65 250 n. lease or Umeme Limited rent. 1995 n.a. transfer d’Electricité du Senegal (SENELEC) South Africa PN Energy Build.8 2003 n. rehab...Rehab. lease or Togo Togo Electricité rent. Electrification transfer Project Rehab. lease or Generation rent.a. n. operate. 300 Operational Canceled Operational Operational 2003 20 2023 100 6. operate.. — 5.Senegal Canceled 1999 25 2000 34 0 n. transfer Management and lease contracts: Chad Société Tchadienne d’Eau et d’Electricité (STEE) Gabon Société Management Africaine de contract Gestion et d’Investissement (SAGI) Concluded 1993 4 1997 100 0 — — (continued next page) 263 . transfer Company Limited Western Nile Rural Rehab. 3.a. transfer tion Project Uganda Electricity Rehab. Services (Pty) Ltd operate.

Management Service Gambia (MSG) National Water and Electricity Company Management Contract Ghana Electricity Corporation of Ghana Guinea-Bissau Electricidade e Aguas de Guinea-Bissau Kenya Kenya Power and Lighting Company Management Contract Lesotho Lesotho Electricity Corporation (LEC) Operational 2002 n. 10.a. 40 Management contract 4 Concluded 4 1997 1991 Concluded 1994 1998 100 0 500 n.264 Table A4.a.a.a.a.8 Investment in facilities ($ million) Number of connections (thousands) — MW — 0 (continued) Country Canceled 10 1996 100 1993 Project name Project type Project status Capacity Contract Termination % year period private year Gambia. 100 0 Management contract n. Management contract Operational 2 2006 2008 100 0 n.4 Management contract 100 0 800 n.a. n. The Lease contract Management contract Operational 5 2011 100 2006 0 n. — .a.

a. 2006 n.Madagascar Concluded 2001 2 0 n.a.a. n.a.a.a. 300 2003 100 Operational 2005 2 0 340 n. 2007 n. Malawi Management contract Management contract Mali Management contract Concluded Operational Canceled Canceled Concluded Concluded 2002 4 2006 1993 3 1996 100 0 2005 5 2006 100 2000 2003 n.75 — Management and lease contract Namibia Reho-Electricity Lease contract Management Rwanda ELECTROGAZ contract ELECTROGAZ Management contract São Tomé Empresa de Agua Management and Príncipe e Electricidade contract Tanzania Tanzania Electricity Management Supply Company contract (TANESCO) Togo Companie Energie Management Electrique du Togo contract Concluded 1997 4 2000 n.a.a.a. 0 n.a. 4.a. Concluded 1994 5 0 2000 100 — — Namibia Jiro sy Rano Malagasy (Jirama) Electricity Supply Corporation of Malawi Ltd (ESCOM) Electricité et Eau du Mali (Management) Northern Electricity n. 100 1 0 0 0 0 1996 5 4 2002 n. (continued next page) 265 .a. n.a.a. 5 n. — — n. n.a. — 25 67 n.

a. n.a. Note: Termination year can be year when the project is concluded according to the original agreement. Power Division distribution Lunsemfwa Hydro Power African Power Partial Source: World Bank 2007. 100 51 3 0 n. — = data not available. .a.a.a. 38 920 Zimbabwe Electra Electra Kenya Electricity Generating Company AES Kelvin Power Zambia Consolidated Copper Mines Ltd. n. MW = megawatts.5 n.8 Investment in facilities ($ million) Number of connections (thousands) 35 71 n. 600 n. n. or project cancellation.a.a.4 92.a. Operational 2001 n. n. Operational Operational 2001 1997 20 n. = not applicable.a. n.a.a. 2030 2030 n. 0 0 0 (continued) Project name Operational Operational Operational 1999 2003 2006 30 30 n.a. Full Operational 1998 n.a.a.a.a.266 Table A4. 51 51 30 Country Divestitures: Cape Verde Cape Verde Kenya Project type Project status Capacity Contract Termination % year period private year MW n. rescheduling.a. 50 80 28. 945 Partial Partial Partial South Africa Zambia Partial Partial 2021 n. n.

APPENDIX 5 Widening Connectivity and Reducing Inequality 267 .

Dem. Rep. Rep.1 Access to Electricity percentage of population By location Early 2000s 22 10 46 — 4 — — 35 — 12 — 44 21 13 6 19 7 13 23 11 — 6 1 16 1 0 21 — 16 27 2 31 21 3 4 1 10 2 3 3 1 10 51 54 77 11 20 54 — 51 90 86 91 77 63 51 28 52 34 41 51 30 75 0 0 1 0 0 0 — 5 4 0 17 8 0 0 0 0 0 1 0 0 1 1 0 14 0 0 7 — 14 19 0 69 39 0 0 0 0 1 3 2 0 1 3 1 37 0 0 17 — 20 41 1 93 28 4 1 0 1 0 2 5 1 6 Rural Urban Q1 Q2 Q3 Q4 24 2 78 1 0 48 — 47 87 3 98 57 18 7 1 11 3 5 29 4 51 By expenditure quintile Q5 82 57 98 25 21 84 — 88 100 56 99 90 83 57 27 82 34 54 81 51 100 By time period (national) Country 14 6 42 — 3 30 — — 50 11 75 39 17 12 — 11 6 8 — 10 32 Early 1990s Late 1990s Benin Burkina Faso Cameroon Central African Republic Chad Comoros Congo. Congo.268 Table A5. Côte d’Ivoire Ethiopia Gabon Ghana Guinea Kenya Lesotho Madagascar Malawi Mali Mauritania Mozambique Namibia — 6 31 5 — — — — 39 — — 28 — 9 — 9 4 — — — 20 .

Note: Location and expenditure quintile data are for the latest available year.6 26 2 25 — — 6 — 7 23 23 23 24 55 8 30 47 24 37 37 28 27 43 35 29 2 20 13 8 60 78 66 66 11 28 51 3 3 30 56 48 83 0 0 8 0 6 4 1 27 53 11 27 69 81 3 7 12 28 0 1 32 0 23 14 11 15 59 1 2 45 1 27 28 20 32 86 4 11 79 3 55 42 47 68 97 52 60 94 53 80 77 76 8 45 7 32 63 — 7 15 — 20 34 28 — 51 5 46 — — 11 — 8 20 — 31 0 35 1 19 36 — 2 2 3 3 7 12 41 84 27 82 86 — 39 44 47 50 90 71 0 10 0 4 10 — 0 0 0 0 0 4 0 37 0 12 36 — 0 0 0 0 12 14 0 40 1 46 74 — 0 2 2 0 12 20 4 78 1 76 98 — 3 10 2 15 50 38 36 91 25 94 100 — 50 62 38 84 97 72 17 59 Niger Nigeria Rwanda Senegal South Africa Sudan Tanzania Togo Uganda Zambia Zimbabwe Overall Income group Low income Middle income Urbanization Low Medium High Region East West South Central 8 24 37 17 25 36 25 Source: Banerjee and others 2008. 269 . — = data not available.

98 Côte d’Ivoire 100 Ethiopia 99 Gabon 100 Ghana 98 Guinea 89 Kenya 80 Lesotho 87 Madagascar 80 Malawi 84 Mali 81 83 62 98 33 28 82 86 99 90 99 95 78 72 42 86 48 62 51 54 77 11 20 54 51 90 86 91 77 63 51 28 52 34 41 .and Unserved demand-side Supply-side supply-side supply-side demand-side supply-side demand-side Access Hookup Coverage population gap gap gap gap factors only factors only factors Benin 83 Burkina Faso 92 Cameroon 94 Central African Republic 57 Chad 77 Comoros 100 Congo.2 Adjusted Access. Urban Areas Country Share of deficit Share of Share of attributable Mixed deficit deficit to both Pure Pure demand.and attributable to attributable to supply. Latest Available Year. Hook-Up. Rep.270 49 46 23 89 80 46 49 10 14 9 23 37 49 72 48 66 59 18 3 15 8 1 28 33 10 3 9 15 6 6 8 16 7 9 31 43 8 81 79 18 16 1 11 1 8 31 42 64 32 59 49 26 27 8 27 22 15 13 1 10 1 7 24 31 27 27 29 31 5 16 0 54 57 3 2 0 1 0 0 7 12 37 5 31 19 36 7 65 9 2 61 68 93 20 94 67 16 13 12 34 10 16 53 57 34 30 27 32 27 7 72 6 31 66 63 37 56 43 52 11 35 1 61 71 7 4 0 8 0 2 18 24 51 10 47 32 Table A5. Coverage of Electricity.

85 80 93 94 98 72 99 95 83 96 93 84 100 93 31 19 47 48 17 41 22 31 40 5 12 10 15 36 10 20 25 23 8 14 12 6 13 12 41 35 5 24 22 5 17 14 0 14 2 7 13 11 11 21 7 13 7 7 1 50 61 15 37 71 15 67 48 53 37 38 56 42 28 60 29 41 30 13 1 29 21 1 26 5 10 17 84 51 99 49 98 46 100 100 55 66 58 84 99 87 51 30 75 41 84 27 82 86 39 44 47 50 90 71 49 70 25 59 16 73 18 14 61 56 53 50 10 29 20 11 17 6 12 6 17 8 7 19 6 21 8 11 29 59 8 54 4 67 1 6 54 37 46 29 2 18 24 30 8 26 4 31 1 6 30 24 27 24 1 12 5 29 0 27 0 36 0 0 25 12 20 5 0 6 41 16 69 9 73 8 95 58 11 34 12 42 85 52 49 43 31 45 26 42 5 42 49 44 51 49 15 37 10 41 0 46 1 49 0 0 40 22 37 9 0 11 93 95 84 98 69 81 Mauritania Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Tanzania Togo Uganda Zambia Zimbabwe Overall Income group Low income Middle income Urbanization Low Medium High Region East West South Central 87 86 97 67 73 98 53 52 83 89 96 90 69 71 93 87 80 59 78 69 60 Source: Banerjee and others 2008. 271 .

3 Share in household budget (%) Q4 — — 6 — 1 2 12 2 — 7 1 21 5 — 2 2 4 12 15 9 6 — — 2 — 2 3 18 3 — 9 3 27 6 — 9 2 12 18 23 15 14 — — 3 — 1 2 4 2 — 3 3 4 3 — 5 1 14 7 3 20 10 — — 10 — 1 2 3 1 — 3 1 4 3 — 6 1 12 2 2 12 8 — — 1 — 1 1 3 2 — 3 2 4 3 — 3 0 9 5 3 12 6 — — 25 — 3 3 3 2 — 3 2 2 2 — 1 0 3 4 4 15 7 — — 15 — 0 2 4 2 — 3 2 4 4 — 2 0 1 15 3 17 7 — — 9 — 0 2 4 2 — 4 2 4 2 — 1 1 6 6 3 13 8 Q5 National Rural Urban Q1 Q2 Q3 Q4 — — 5 — 1 2 4 2 — 3 2 4 3 — 1 1 6 5 3 16 5 Electricity Expenditure and Its Share in Household Budget Expenditure budget (2002 $) Urban — — 1 — 1 3 15 2 — 7 2 21 6 — 8 2 11 16 15 14 12 — — 12 — 1 2 3 1 — 3 1 2 1 — 0 0 1 3 6 3 4 — — 10 — 0 2 5 1 — 5 1 13 4 — 1 0 1 20 9 6 5 — — 8 — 0 2 8 1 — 7 1 17 3 — 1 1 3 10 12 6 7 Q1 Q2 Q3 Country Year Nationalaa Rural Q5 — — 1 — 1 1 3 2 — 2 3 4 2 — 4 0 10 5 2 10 6 Angola Benin Burkina Faso Burundi Cameroon Cape Verde Chad Congo. Côte d’Ivoire Ethiopia Gabon Ghana Guinea-Bissau Kenya Madagascar Malawi Mauritania Morocco Mozambique Niger 2000 2002 2003 1998 2004 2001 2001 2005 2002 2005 2000 2005 1999 2005 1997 2001 2003 2000 2003 2003 2005 — — 4 — 1 2 13 2 — 7 2 20 5 — 8 2 10 15 14 13 12 — — 11 — 1 2 5 1 — 5 0 9 4 — 6 2 7 4 8 6 9 . Rep. Dem. Rep. Congo.272 Table A5.

— = data not available.2003 1998 2000 2001 2003 2000 2000 2002 2002 5 10 26 9 9 12 — 6 5 9 10 11 8 8 13 7 11 10 10 1 4 1 2 1 6 2 5 1 6 4 7 3 7 6 9 8 17 12 12 6 6 9 3 5 5 6 2 3 1 3 3 2 6 4 3 7 5 5 8 9 9 19 6 9 4 6 6 3 4 6 4 3 5 5 3 2 3 4 6 4 7 5 10 13 16 7 3 5 2 5 2 5 3 6 5 4 3 6 5 3 5 3 4 6 4 2 6 5 2 4 3 4 5 3 2 5 5 2 4 3 4 7 3 3 4 6 3 5 2 4 5 4 4 5 5 2 4 5 8 6 6 5 — 5 4 5 5 11 40 10 9 16 — 6 5 10 5 — 1 4 0 2 — 1 1 3 4 — 2 5 1 4 — 2 1 4 4 1 4 6 2 6 — 2 2 5 5 4 7 8 5 9 — 4 4 6 5 11 82 11 12 26 — 9 7 14 6 10 12 4 8 2 — 7 5 6 5 7 5 4 7 2 — 7 5 5 5 3 16 3 6 2 — 5 4 4 15 — 1 4 0 2 — 5 3 5 9 — 2 4 2 3 — 4 2 5 6 1 3 4 3 3 — 4 3 4 5 4 4 3 4 3 — 4 4 4 4 4 19 3 5 2 — 4 4 4 9 10 5 5 Nigeria Rwanda São Tomé and Príncipe Senegal Sierra Leone South Africa Tanzania Uganda Zambia Overall Income group Low income Middle income Urbanization Low Medium High Region East West South Central 7 7 11 6 4 5 6 10 8 9 4 6 5 4 Source: Banerjee and others 2008. Sample average. Note: Q = quintile. a. 273 .

Rep.274 Table A5. Rep.4 Share in household budget (%) Q4 2 1 2 — 2 — 1 — 3 1 4 7 — 2 11 1 2 4 — 2 1 2 — 2 — 1 — 4 1 4 3 — 3 3 6 1 5 — 2 1 2 — 1 — 1 — 1 1 1 2 — 1 1 3 1 1 — 3 1 2 — 2 — 1 — 2 1 2 2 — 1 1 2 1 1 — 2 1 2 — 1 — 1 — 1 1 1 2 — 2 1 10 0 0 — 5 2 4 — 2 — 1 — 3 1 5 3 — 2 0 2 0 2 — 4 2 3 — 2 — 1 — 2 1 1 3 — 2 0 2 1 1 — Q5 National Rural Urban Q1 Q2 Q3 3 1 2 — 1 — 1 — 2 1 1 2 — 2 0 2 1 1 — Q4 2 1 2 — 1 — 1 — 1 1 1 4 — 2 4 2 1 1 — Kerosene Expenditure and Its Share in Household Budget Expenditure budget (2002 $) Urban 2 1 4 — 2 — 1 — 4 1 3 5 — 4 4 13 1 2 — 2 1 1 — 1 — 1 — 2 0 5 2 — 1 0 1 0 3 — 2 1 1 — 1 — 1 — 3 0 5 3 — 1 0 1 1 3 — 2 1 1 — 1 — 1 — 3 0 4 2 — 2 0 1 2 4 — Q1 Q2 Q3 Country Year Nationalaa Rural Q5 2 1 2 — 1 — 1 — 1 1 1 1 — 1 1 5 0 0 — Angola Benin Burkina Faso Burundi Cameroon Cape Verde Chad Congo. Dem. Congo. Côte d’Ivoire Ethiopia Gabon Ghana Guinea-Bissau Kenya Madagascar Malawi Mauritania Morocco Mozambique 2000 2002 2003 1998 2004 2001 2001 2005 2002 2005 2000 2005 1999 2005 1997 2001 2003 2000 2003 2003 2 1 1 — 2 — 1 — 3 1 4 4 — 2 3 2 1 3 — 2 1 1 — 1 — 1 — 3 0 6 3 — 1 2 1 2 3 — .

a. Sample average. Note: Q = quintile. — = data not available. 275 .2005 2003 1998 2000 2001 2003 2000 2000 2002 2002 — 3 1 — 1 3 0 — 1 — 2 3 2 4 2 2 2 3 6 2 1 2 0 3 1 2 0 3 1 2 0 2 1 3 4 2 2 3 4 3 1 2 2 1 2 2 1 2 1 1 2 1 2 2 1 2 2 3 2 3 3 0 3 2 2 1 2 2 2 2 2 1 1 1 4 1 1 2 1 2 2 2 3 2 0 3 2 1 2 1 2 1 3 2 2 3 2 2 3 1 3 2 1 2 3 2 2 2 1 1 2 1 1 2 1 2 2 1 1 2 1 2 2 2 2 2 2 1 0 1 1 0 1 1 1 2 1 — 3 1 — 1 2 0 — 1 — 2 — 4 2 — 1 3 0 — 1 — 3 — 2 1 — 1 2 0 — 1 — 1 — 2 1 — 1 2 0 — 1 — 2 — 3 1 — 1 2 0 — 1 — 2 — 3 1 — 1 3 0 — 1 — 3 — 4 2 — 1 4 1 — 2 — 3 — 4 1 — 1 2 0 — 1 — 1 — 3 2 — 1 3 0 — 2 — 2 — 4 1 — 0 2 0 — 1 — 2 — 6 2 — 1 4 0 — 2 — 2 — 4 2 — 1 3 0 — 2 — 2 — 4 2 — 1 3 0 — 2 — 2 — 4 1 — 1 3 0 — 1 — 2 — 3 1 — 0 1 0 — 1 — 1 2 2 2 3 Niger Nigeria Rwanda São Tomé and Príncipe Senegal Sierra Leone South Africa Tanzania Uganda Zambia Overall Income group Low income Middle income Urbanization Low Medium High Region East West South Central 2 2 2 1 2 3 1 2 2 3 1 2 1 4 Source: Banerjee and others 2008.

276 Table A5. Côte d’Ivoire Ethiopia Gabon Ghana Guinea-Bissau Kenya Madagascar Malawi Mauritania Morocco Mozambique Niger 2000 2002 2003 1998 2004 2001 2001 2005 2002 2005 2000 2005 1999 2005 1997 2001 2003 2000 2003 2003 2005 — 1 5 — — 3 13 1 — 5 1 11 6 — 14 6 — 2 10 — 8 — 1 5 — — 2 12 0 — 4 0 11 5 — 11 6 — 1 9 — 2 . Dem. Congo.5 Share in household budget (%) Q4 — 1 5 — — 3 13 0 — 5 0 11 6 — 9 14 — 3 13 — 2 — 1 5 — — 3 15 1 — 5 2 10 6 — 14 5 — 4 16 — 10 — 1 4 — — 2 4 1 — 2 1 2 4 — 10 2 — 1 2 — 6 — 1 5 — — 3 6 0 — 3 0 4 4 — 10 3 — 1 3 — 2 — 1 2 — — 2 3 1 — 2 2 2 3 — 6 1 — 1 2 — 5 — 1 10 — — 2 7 2 — 2 3 10 — — — — — 0 4 — 2 — 1 7 — — 3 6 0 — 2 1 3 — — — 6 — 1 3 — 1 Q5 National Rural Urban Q1 Q2 Q3 — 1 5 — — 3 5 0 — 2 0 3 2 — 2 — — 1 3 — 1 Q4 — 1 4 — — 3 4 0 — 2 0 2 3 — 7 5 — 1 2 — 2 Liquefied Propane Gasoline (LPG) Expenditure and Its Share in Household Budget Expenditure budget (2002 $) Urban — 1 5 — — 3 13 2 — 5 1 11 6 — 14 6 — 4 11 — 10 — 1 5 — — 1 7 1 — 2 1 9 — — — — — 0 6 — 1 — 1 5 — — 2 9 0 — 3 0 11 — — — 8 — 1 8 — 1 — 1 5 — — 3 11 0 — 4 0 11 3 — 2 — — 2 10 — 1 Q1 Q2 Q3 Country Year Nationalaa Rural Q5 — 0 2 — — 2 2 1 — 1 2 2 2 — 6 1 — 1 2 — 4 Angola Benin Burkina Faso Burundi Cameroon Cape Verde Chad Congo. Rep. Rep.

2003 1998 2000 2001 2003 2000 2000 2002 2002 0 — — 1 3 3 5 4 1 4 0 3 3 7 1 3 1 7 3 4 6 8 7 6 6 9 5 3 3 2 4 2 2 3 3 1 4 6 2 5 8 5 6 4 3 2 4 1 2 4 3 2 5 2 3 2 3 6 4 7 6 7 3 2 3 2 3 1 3 4 5 2 2 2 2 1 6 2 2 4 1 2 1 2 3 3 2 2 3 2 2 1 2 1 3 0 — — 2 2 0 3 — 6 5 0 — — 6 5 7 6 10 5 5 12 5 5 8 1 2 0 6 3 1 3 2 4 3 2 3 2 2 3 2 3 2 2 1 3 3 1 3 2 3 2 0 1 — 3 1 0 — — 3 4 0 20 — 7 6 0 — — 10 7 0 0 — 2 0 0 — — 1 2 0 1 — 3 0 1 — 4 3 0 — — 1 3 0 1 — 6 2 0 — — 5 5 0 7 — 8 7 0 — — 12 7 0 3 — 3 5 0 — — 6 3 0 1 — 2 1 0 — — 3 2 0 6 — 2 4 0 — — 8 3 0 1 — 2 1 0 — — 2 3 0 1 — 2 0 1 — 2 4 0 — — 2 2 0 1 — 3 2 0 — — 5 2 0 3 — 2 3 0 — — 7 2 5 6 3 6 Nigeria Rwanda São Tomé and Príncipe Senegal Sierra Leone South Africa Tanzania Uganda Zambia Overall Income group Low income Middle income Urbanization Low Medium High Region East West South Central 7 3 5 5 1 4 6 5 4 8 4 3 3 8 Source: Banerjee and others 2008. — = data not available. a. 277 . Note: Q = quintile. Sample average.

Dem. Rep. Congo.6 Share in household budget (%) Q4 — 4 4 4 2 3 9 1 — 5 4 5 8 — 4 2 7 4 3 0 6 1 — 4 4 9 5 3 9 2 — 5 5 6 6 — 4 2 8 3 3 1 7 1 — 4 3 12 3 3 2 1 — 2 7 1 3 — 3 1 9 1 1 1 5 2 — 5 4 6 3 4 4 1 — 3 8 2 3 — 3 1 10 1 1 1 5 2 — 3 2 5 2 2 1 1 — 2 3 1 3 — 2 0 6 1 0 0 4 2 — 9 8 9 1 5 4 1 — 5 9 4 3 — 4 3 14 1 1 1 8 5 — 6 5 8 1 4 2 1 — 4 8 2 3 — 4 1 13 1 1 1 5 3 — 5 4 6 2 3 2 1 — 3 8 1 3 — 3 1 12 2 1 1 5 2 Q5 National Rural Urban Q1 Q2 Q3 Q4 — 4 3 7 2 3 3 1 — 2 7 1 4 — 3 1 10 2 1 1 5 2 Q5 — 3 2 8 3 2 1 1 — 1 6 1 2 — 2 0 7 1 0 0 3 1 Wood/Charcoal Expenditure and Its Share in Household Budget Expenditure budget (2002 $) Urban — 4 4 11 3 3 5 2 — 5 2 5 6 — 4 2 8 4 2 0 7 2 — 4 4 2 0 3 4 1 — 4 3 4 2 — 2 3 5 1 2 0 4 1 — 4 4 3 1 3 4 1 — 5 4 5 4 — 3 1 6 2 2 0 4 2 — 3 4 3 1 3 5 1 — 6 4 4 4 — 3 1 6 3 2 0 5 2 Q1 Q2 Q3 Country Year National a Rural a Angola Benin Burkina Faso Burundi Cameroon Cape Verde Chad Congo.278 Table A5. Rep. Côte d’Ivoire Ethiopia Gabon Ghana Guinea-Bissau Kenya Madagascar Malawi Mauritania Morocco Mozambique Niger Nigeria 2000 2002 2003 1998 2004 2001 2001 2005 2002 2005 2000 2005 1999 2005 1997 2001 2003 2000 2003 2003 2005 2003 — 4 4 8 3 3 6 1 — 5 4 5 6 — 4 2 6 3 2 0 6 1 — 4 4 4 3 3 8 1 — 6 4 6 4 — 4 2 6 2 3 0 5 1 .

a.1998 2000 2001 2003 2000 2000 2002 2002 8 — 1 3 3 — 4 4 4 5 3 6 3 3 6 4 4 4 2 2 2 2 3 3 3 3 3 3 3 3 4 4 3 4 7 4 4 6 7 2 3 2 6 3 3 3 3 1 2 3 2 3 4 2 3 5 2 3 6 4 4 5 3 2 5 2 2 3 2 1 3 2 2 1 2 2 3 3 3 3 4 3 5 4 4 2 4 2 2 1 5 3 7 3 3 7 4 5 3 4 2 5 3 2 6 3 4 2 4 2 5 2 2 5 3 3 2 3 1 5 2 2 5 3 3 2 3 1 4 2 1 4 2 2 2 5 — 1 2 4 — 3 2 3 10 — 1 4 3 — 4 7 4 1 — 0 1 3 — 2 1 2 1 — 1 2 4 — 2 1 3 3 — 0 2 5 — 3 1 3 4 — 1 3 3 — 4 2 4 11 — 1 4 2 — 6 9 5 8 — 0 3 1 — 5 4 3 7 — 0 3 2 — 5 2 3 3 — 0 2 0 — 3 5 2 3 — 0 3 3 — 7 3 5 3 — 1 3 3 — 5 3 4 4 — 0 3 2 — 5 2 3 4 — 0 3 1 — 4 2 3 4 — 0 2 0 — 3 5 2 4 3 3 4 Rwanda São Tomé and Príncipe Senegal Sierra Leone South Africa Tanzania Uganda Zambia Overall Income group Low income Middle income Urbanization Low Medium High Region East West South Central 5 3 3 5 2 3 5 3 3 4 4 3 3 5 Source: Banerjee and others 2008. — = data not available. Note: Q = quintile. Sample average. 279 .

560 1.500 19.000 397.013 928.250 34. Off-Grid Power. Rep.773 2.000 36.774 2.53 42.293 74. number of people Estimated rural population with access served by off-grid power (%) Existence of rural electrification agency Existence of rural electrification fund Yes Yes No No 500.209.301 84.000 192.027 250. Côte d’Ivoire Ethiopia Gabon Ghana Guinea Kenya 6 1 16 1 0 21 16 27 2 31 21 3 4 269.80 No Yes No No Yes Yes No Yes Benin Burkina Faso Cameroon Central African Republic Chad Comoros Congo.745 79.615.05 42. number of people Yes Yes Yes No Estimated rural population served by off-grid power.87 Rural population with access. rural (%) 93.500 25.7 Rural Access to Power.280 Table A5. and Rural Electrification Agency and Fund Residential access.81 1.378.302 195.145.828 .12 16.838 21.106 1.150 12.

98 Yes No No Yes No Yes No Yes Yes Yes Yes Yes No Yes No Yes Yes Yes Yes Yes Lesotho Madagascar Malawi Mali Mauritania Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Tanzania Togo Uganda Zambia Zimbabwe 462. Note: Blank cells = data not available.973 107.401 71.83 22.233 6.No Yes No Yes Yes Yes 1.490 610.540 Source: Banerjee and others 2008.879 1.700 135.824.370 1.000 4.062.56 14.564 23.000 285.240.75 1 10 2 3 3 1 10 0 35 1 19 36 2 2 3 3 7 12.965 28.364 47.500 75.185 238.964 498.274 617.258.286.500 16. 281 .555 254.024 256.275 189.

7 64. Dem.2 $16 0 0 1 1 17 10 35 67 71 78 67 81 78 76 95 85 93 98 93 97 100 94 100 100 84.3 $14 0 0 1 1 7 7 28 55 60 72 62 77 72 67 89 78 89 96 91 96 97 93 100 99 79.9 60.8 54.0 13.8 Share of Urban Households Whose Utility Bill Would Exceed 5 Percent of the Monthly Household Budget at Various Prices percent Monthly bill Group Country Cape Verde Morocco Senegal South Africa Cameroon Côte d’Ivoire Congo.4 0.3 4.2 44.1 1 3 Summary Source: Banerjee and others 2008. Rep. .7 $4 0 0 0 0 0 0 0 2 2 0 4 2 4 4 10 16 11 8 6 17 29 32 49 87 18.7 $12 0 0 0 1 2 5 21 46 45 62 54 64 62 58 78 68 79 89 89 90 90 92 99 99 72.2 $8 0 0 0 0 0 2 5 11 12 20 30 29 34 35 35 47 55 55 65 65 72 78 91 99 44. Ethiopia Low income Middle income All $2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 0 1 1 0 2 7 2 9 40 5.7 2. Ghana Benin Kenya Sierra Leone 2 São Tomé and Príncipe Burkina Faso Zambia Nigeria Madagascar Niger Tanzania Guinea-Bissau Uganda Burundi Malawi Congo.1 24.4 0.2 $10 0 0 0 1 1 3 12 30 33 36 44 46 47 50 57 61 70 75 81 82 82 87 98 99 59.0 0. Rep.2 33.3 1.7 $6 0 0 0 0 0 1 3 7 4 5 16 13 20 18 23 28 28 25 38 45 53 66 79 95 32.5 1.282 Africa’s Power Infrastructure Table A5.5 0.0 3.

31 0. Rep.22 0.31 0.02 .41 0.01 0.Widening Connectivity and Reducing Inequality 283 Table A5.06 0.36 0.10 0.78 0.27 0.62 0.48 0.79 0.47 0.9 Overall Targeting Performance (Ω) of Utility Subsidies Country Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo.41 0.51 0.06 0. Côte d’Ivoire Gabon Ghana Guinea Mozambique Nigeria Rwanda São Tomé and Príncipe Senegal Togo Uganda Source: Banerjee and others 2008. Omega (Ω) value 0.

08 0.06 1.87 Scenario 3 All unconnected households receive subsidy 1.01 1.18 1.08 Country Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo.10 1.10 Potential Targeting Performance of Connection Subsidies under Different Subsidy Scenarios Scenario 1 Distribution of connection subsidies mirrors distribution of existing connections 0.03 0.09 0.23 0.46 0.33 1.22 1.58 1.75 0.73 0.61 0.64 0.56 0.17 1.52 1. Côte d’Ivoire Gabon Ghana Guinea Mozambique Nigeria Rwanda São Tomé and Príncipe Senegal Togo Uganda Source: Banerjee and others 2008.23 0.25 0.52 1.03 1. Rep.05 1.38 0.06 Scenario 2 Only households with access but no connection receive subsidy 0.30 1.35 1.33 1. .33 1.15 1.40 1.35 0.23 1.55 0.10 1.83 1.63 0.15 1.27 0.77 0.17 0.02 1.98 0.02 1.284 Africa’s Power Infrastructure Table A5.08 1.47 1.92 0.12 0.36 0.41 0.47 0.

Côte d’Ivoire Ethiopia Ghana Kenya Madagascar Malawi Mali Niger Nigeria Rwanda Senegal South Africa Tanzania Uganda Zambia 10 8 9 9 7 3 10 5 4 6 7 7 5 17 16 5 8 6 3 7 5 3 11 6 8 7 2 3 5 2 7 4 5 3 6 26 13 6 8 3 1 12 6 3 285 Source: Briceño-Garmendia and Shkaratan 2010.11 Based on LRMC % of monthly budget Q4 $/month 10 13 4 — 4 2 3 8 10 5 6 — 3 13 13 7 6 22 3 5 6 4 12 7 7 8 2 3 5 2 7 3 5 3 7 31 14 5 9 3 1 11 5 3 7 3 5 5 1 2 3 1 5 2 3 1 4 12 7 3 3 1 0 8 2 2 11 10 3 — 1 2 1 3 17 3 4 — 4 19 10 8 6 9 1 8 8 4 23 26 7 — 4 4 4 9 30 8 11 — 8 54 26 22 20 21 4 18 23 11 16 19 5 — 2 3 3 5 23 5 7 — 6 38 18 13 12 16 2 13 13 7 13 15 4 — 2 2 2 4 19 4 6 — 5 29 14 9 9 13 2 10 9 5 11 11 3 — 1 2 2 3 16 3 4 — 4 23 11 7 7 10 1 8 6 4 Q5 Nationala Q1 Q2 Q3 Q4 Q5 7 6 2 — 1 1 1 2 11 2 3 — 2 9 5 5 2 5 0 5 3 2 Value of Cost Recovery Bill at Consumption of 50 kWh/Month Based on total historical cost % of monthly budget Q1 24 16 18 14 7 8 14 7 13 10 13 8 14 73 33 16 28 6 4 25 20 9 17 11 12 11 4 5 9 4 10 6 9 5 10 51 23 9 17 4 2 18 11 6 14 9 10 9 3 4 7 3 8 4 7 4 8 39 18 7 13 3 2 14 8 4 Q2 Q3 Country $/month Nationala Benin Burkina Faso Cameroon Cape Verde Chad Congo. Dem. . a. Q = quintile. Rep.Table A5. Rep. — = data not available. Sample average. LRMC = long-run marginal cost. Congo. Note: kWh = kilowatt-hour.

1–13.286 Africa’s Power Infrastructure Table A5. n. for typical residential customers.0–12.6–31.0 7.2 7.a.98–8.0 11.4–20.2 — 4. The country has two tariffs.6–12. n.2–8. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawia Mali Mozambiquea Namibia Niger Nigeria Rwanda Senegala South Africa Sudan Tanzaniaa Uganda Zambia Zimbabwe Tariff type IBT FR IBT IBT IBT IBT IBT FR IBT IBT IBT IBT FR FR IBT/FR IBT IBT/FR FR FR IBT FR IBT IBT — IBT/FR IBT IBT IBT Number of blocks 3 1 3 3 2 3 11 1 2 7 3 4 1 1 3/1 4 4/1 1 1 5 1 3 2 — 2/1 2 3 3 Range of block prices (cents/kWh) 9.0 6.5 14. Congo.1/11.8–26.6–3.a.5–28.7 13.4–23. 40 50 300 50 n. equally applicable.12 Residential Tariff Schedules Fixed charge/ month Yes/no No Yes Yes No No No No Yes Yes Yes Yes Yes No Yes Yes/no No Yes/no No Yes Yes No No No — No/yes Yes Yes No Border between first and second block range (kWh) 20 n.a.2 0. — = data not available. .52 11.3 5.0 4.3 1. a.0 15.0–4.7 0.a. Rep.0 7. Note: FR = fixed rate.1 3.a.1/3.9 18.6 23.3 4.0 22.8 3. 50 50 40 30 100 n. Dem.6–16.a. 30 200 100 n.6–13.6–15.2 3.0/10. n.6 2.9–44.9–6.9–14. kWh = kilowatt-hour.1 26. IBT = increasing block tariff.0–7.7–38.a. = not applicable. Rep.6 0.5 Source: Briceño-Garmendia and Shkaratan 2010. 150 50 — 50 15 300 50 Country Benin Botswana Burkina Faso Cameroon Cape Verde Chad Congo.8 8. 20 n.a.

Rep.6 22. 1.200 per kW if it is above 200 hours. 6.4 1.2 7.6 0.a.6 4. — 0. 14. 150 Source: Briceño-Garmendia and Shkaratan 2010.a.0 27. Dem.0 n.a.7 4. n.6 n. — = data not available.a. = not applicable.90 — n. Block 1 Block 1 residential Block 1.a.9 27.a.0 3.a.31 n. 0.a.a.a. Block 1 residential Block 1 residential Block 1 residential Block 1 residential — Economic tariff Block 1 residential Social tariff Block border 25 >25 50 100 200 >200 Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Sudan Tanzania Uganda Zambia Zimbabwe Block 1 residential n.24 — — 3.6 Country Benin Botswana Burkina Faso Cameroona Cape Verde Chad Congo.6 2. Rep. n.a.9 — 6. n. n.a.2 20. residential Block 1 residential Social tariff n.74 — 0.16 0.a.Widening Connectivity and Reducing Inequality 287 Table A5.64 0.13 Social Tariff Schedules Fixed charge ($/month) n. — 3.a.a.7 4. a.92 n.500 per kW if subscribed load is up to 200 hours and 4.5 15.a.54 1.3 8. 0.3 23.0 13. — Pensioners’ tariff — Tranche 1 residential Block 1 residential — n.18 12. Block 1 residential Block 1 residential Tranche 1 residential n.a.0 — 0. — n. Congo. .09 1.23 — n.a. Note: kWh = kilowatt-hour. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mali Type of tariff Social tranche n.01 n. In Cameroon fixed residential charge is 2.a. Price per block (cents/kWh) 9.9 3.30 0. 0.0 n.

7 9.1–10.7 Country Benin Botswana Burkina Faso Cameroon Cape Verde Chad Congo.4–20.2 14.2 16. Rep.8 4. kWh = kilowatt-hour.9–40.1–16.9 6.9 21.7–6.288 Africa’s Power Infrastructure Table A5.14 Industrial Tariff Schedules Fixed charge/month Yes/no Tariff type FR FR TOU DBT FR IBT DBT FR DBT TOU IBT FR FR FR FR FR FR FR FR IBT FR TOU IBT/FR FR TOU FR No No Yes No No No No Yes Yes Yes Yes Yes No Yes Yes No Yes Yes Yes Yes No Yes Yes Yes Yes Yes Demand charge Yes/no No No Yes Yes No Yes No No No No No No Yes Yes Yes No Yes Yes Yes No No No No Yes No No Number of blocks 1 1 2 2 1 3 5 1 2 3 3 1 1 1 1 1 1 1 1 4 1 2 3/1 1 1 1 Range of block prices (cents/kWh) 15.1 6. Congo.0–9.7 31.8 3.3–9. .4 8. IBT = increasing block tariff.5 17.3 11. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mali Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Tanzania Uganda Zambia Source: Briceño-Garmendia and Shkaratan 2010.2 5.6–15.9 3.7 18.3 21.4 12. Dem. FR = fixed rate.0 11.5 5. Note: DBT = decreasing block tariff.0 21.8 15.0 23. TOU = time of use.8 11.4 1.2 5. Rep.0–6.6–16.

2–1.9 4. Rep.7 2.7–8.7 20. FR = fixed rate.6–10. kWh = kilowatt-hour. Dem.7 3.8 5.4 8.0 1.5 12.8 4.1 9.8 4.9 2.9 5.1 22.4 16.4 16.2 13. .2–14.9 16. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mali Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Tanzania Uganda Zambia Source: Briceño-Garmendia and Shkaratan 2010.2 Country Benin Botswana Burkina Faso Cameroon Cape Verde Chad Congo. TOU = time of use.7–5.5–37.3 8.0–6.Widening Connectivity and Reducing Inequality 289 Table A5.9 15.5 17.6 11. IBT = increasing block tariff. — = data not available.0–18. Rep.6–1.15 Commercial Tariff Schedules Fixed charge/month Yes/no Tariff type FR FR TOU TOU FR TOU DBT FR TOU TOU FR DBT FR FR FR — FR FR FR IBT FR TOU TOU FR TOU DBT No Yes Yes No No No No Yes Yes Yes Yes Yes No Yes Yes — Yes Yes Yes Yes No Yes Yes Yes Yes Yes Demand charge Yes/no No Yes Yes Yes No Yes No Yes No No Yes Yes Yes Yes Yes — Yes Yes Yes Yes No No Yes Yes Yes Yes Number of blocks 1 1 2 2 1 3 5 1 3 3 1 3 1 1 1 — 1 1 1 5 1 2 2 1 1 4 Range of block prices (cents/kWh) 10.4–14.7 2. Congo.5 17. Note: DBT = decreasing block tariff.7–8.2 10.

Rep. . Dem.290 Africa’s Power Infrastructure Table A5.16 Value and Volume of Sales to Residential Customers as Percentage of Total Sales Country Benin Burkina Faso Cameroon Cape Verde Chad Congo. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Tanzania Uganda Value of sales (%) — 63 60 56 67 47 47 27 35 42 — — — 70 36 59 39 50 63 17 48 — Volume of sales (%) 96 63 33 56 63 70 — 56 71 39 30 61 36 59 47 — 51 — 59 51 44 36 Source: Briceño-Garmendia and Shkaratan 2010. Note: — = data not available.

APPENDIX 6 Recommitting to the Reform of State-Owned Enterprises 291 .

1 7.7 10.9 4.1 17.7 11.0 15.6 2.3 Residential at 100 kWh/month Average revenue 14.0 — 7.9 8.7 11.4 15.9 15.8 20.4 6.3 13.2 17.0 14.5 20. Congo.2 10.2 18. Dem.1 17.0 11.0 32.3 9.2 10.9 4.6 7.292 Table A6.0 6.0 6.7 6.0 4.1 10.9 13.8 44.7 4.0 8.6 11.9 13.4 21.8 1.0 4.2 14.0 6.4 14.8 7.0 16.0 19.7 14.8 13.0 7. Rep.7 16.0 12.4 12.0 Benin Botswana Burkina Faso Cameroon Cape Verde Chad Congo.4 19. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho 13.4 6.9 25.0 9.9 8.0 7.9 18.1 8.1 3. Rep.6 11.0 10.1 4.8 14.1 7.2 .4 3.1 cents/kWh Costs Industrial at demand level of 100 kVA 10.3 12.8 Historical operating costs Historical total costs Electricity Sector Tariffs and Costs Effective tariffs Commercial at 900 kWh/month 15.0 10.1 LRMC 19.5 12.7 38.0 15.7 4.0 25.0 10.5 8.9 21.7 9.4 19.7 6.0 6.2 26.3 11.8 30.

0 4. LRMC = long-run marginal cost.8 3.4 15.4 2.9 4.2 14.0 5.7 16. kWh = kilowatt-hour.1 — 5.4 6.0 21.0 13.3 7. Effective tariffs are prices per kWh at typical monthly consumption levels calculated using tariff schedules that are applicable to typical customers within each customer group.1 33.2 15.3 23.0 9.1 9.8 7.0 25.1 13.0 6.8 19.7 21.Madagascar Malawi Mali Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Tanzania Uganda Zambia 5. Note: kVA = kilovolt-ampere.5 45.0 11.6 9.0 11.4 2.3 6.0 8.7 5.3 5.5 5.5 15. 293 .0 14.0 25.6 9.0 14.4 14.0 26.9 16.0 10.6 12.5 3.0 7.0 10.8 22.3 6.7 8.1 17. — = data not available.5 8.9 3.4 10.2 18.2 6.8 2.6 Source: Briceño-Garmendia and Shkaratan 2010.9 16.0 2.2 8.4 3.0 17.0 43.9 25.0 13.6 23.2 5.5 2.3 32.7 5.0 3.8 11.6 25.0 6.1 3.0 12.7 14.6 6.0 4.9 23.2 22.0 12.4 17.3 3.6 6.1 10.4 8.6 7.

1 27.6 6.1 19. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mali Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Tanzania Uganda Zambia Zimbabwe 12.6 24.1 8.6 6.5 36.5 2.2 6.6 25.8 4. See note to table A6.4 5.7 13.8 3.8 7.5 3.2 6.0 16.0 21.5 20.0 3.8 22.0 27.2 19.2 10.5 6. Congo.Table A6.2 14.8 26.7 11.0 27.6 23.6 23.0 4.9 4.0 3.0 10.3 12.0 6.9 3.0 4.0 10.5 36.8 10.1 3.7 3.9 14.6 28.0 11.3 26.0 13.8 2.8 2.0 27.2 3.5 22.6 3.3 6.5 13.6 22. Rep.9 7.0 5.9 10.2 7.2 0.0 9.1 7.9 25.1 7.2 0.5 8.6 7.6 13.9 4.9 25.7 6.6 7.9 34.7 26.6 20.2 6.4 36.0 13.5 11.1 3.2 0.7 5.7 6.0 20.2 9.3 2. Note: kWh = kilowatt-hour.4 2.9 19.0 7.6 25.0 14.7 11.1 13.2 20.7 6.2 11.4 8.5 20.7 8.3 8.6 23.9 4.9 26.7 21.5 3.5 13.6 14.8 7.8 30.8 26.9 11.1 9.9 7.6 12.0 Source: Briceño-Garmendia and Shkaratan 2010.4 12.7 5.5 300 kWh 400 kWh 450 kWh 900 kWh Residential Effective Tariffs at Different Consumption Level 294 50 kWh 13.0 2.2 1.1 9.8 4.2 4.7 13. Rep.0 26.0 17.3 35.0 6.1 24.1 7.5 29.6 8.9 2.2 20.3 4.6 9.7 6.5 10.1 6.9 20.4 14.9 12.0 4.6 7.7 13.0 500 kWh 14.0 3. Dem.1 4.8 21.6 2.3 3.6 6.4 5.6 9.2 5.0 11.3 8.5 14.6 25.8 11.3 3.2 5.0 14.6 23.7 13.8 0.6 7.6 7.4 8.7 7.7 13.4 3.8 11.1 4.6 23.2 2.2 cents/kWh 150 kWh 200 kWh 14.0 4.5 28.5 32.1 20.4 6.7 37.4 14.8 19.1 7.7 13.6 25.2 27.9 12.0 27.0 20.1 6.8 14.3 8.3 75 kWh 100 kWh Benin Botswana Burkina Faso Cameroon Cape Verde Chad Congo.8 9.1 2.3 10.4 12.7 19.0 11.4 12.1 8.6 3.5 29.4 11.6 11.7 14.3 14.7 14.8 22.6 11.6 23.4 7.9 18.5 6.4 7.8 6.3 3.7 3.0 23.1 9.2 6.2 0.7 13.5 4.9 4.3 20.9 26.7 4.1 7.2 3.8 22.7 11.8 8.0 22.1 regarding effective tariffs.3 12.9 12.7 14.1 7.8 14.6 9.2 0.9 22.6 5.7 22.4 30.7 3.6 24.9 7.9 12.8 2.1 19.7 5.9 8.2 13.2 6.0 16.6 13.2 14.2 1.4 20.1 12.6 6. .0 27.4 9.

Dem. ratio of residential effective tariff to total historical cost) 69 54 133 64 144 220 59 80 109 48 66 104 67 20 44 79 75 103 44 35 88 95 60 48 206 44 System losses (% production) Benin Botswana Burkina Faso Cameroon Cape Verde Chad Congo. Note: LRMC = long-run marginal cost. revenue to tariff) 100 62 88 106 77 91 107 83 7 108 90 85 108 397 79 72 102 107 110 67 152 66 277 117 76 173 Cost recovery (%. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mali Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Tanzania Uganda Zambia 18 10 25 31 17 33 40 47 — 22 25 18 20 24 23 22 25 15 27 30 23 21 10 26 36 12 Connections per sector employee 148 179 180 112 43 — — 57 84 146 227 95 — — — 99 38 118 127 189 257 132 124 444 — Residential effective tariff/LRMC (%) 72 125 80 156 429 100 267 79 22 82 123 121 — 81 106 169 106 56 26 121 55 60 67 178 36 Source: Eberhard and others 2008. Congo. Rep. . — = data not available.Recommitting to the Reform of State-Owned Enterprises 295 Table A6. Rep.3 Electricity Sector Efficiency Collection ratio (implicit.

5 8.2 0.2 0.3 8.3 0.8 0. Congo.9 24.1 11.1 — 18.3 2.3 0.6 0.5 61.1 0.0 32.6 0.3 0.0 39.1 16.0 0.1 0.0 0.8 — 9.1 34.1 138.0 T&D losses Underpricing Undercollection of bills 0.0 1.7 0.1 — 0.5 .0 0.2 0. Côte d’Ivoire Ethiopia Ghana Kenya Lesotho 12.0 0.2 0. Rep.7 1.1 — 1. Dem.5 36.296 Table A6.6 0.6 — 30.3 — — 0.0 33.0 21.0 163.0 29.2 0.3 1.0 0.9 0.9 0.6 26.2 — Benin Botswana Burkina Faso Cameroon Cape Verde Chad Congo. Rep.9 0.2 — — 5.7 0.0 0.7 12.1 1.5 0.0 0.5 52.8 0.6 63.2 4.1 0.3 1.0 0.6 30.7 0.4 Percent Percent of GDP Overstaffing 13.4 0.8 0.0 417.2 0.3 0.2 — 0.6 0.8 23.3 Hidden Costs of Power Utilities as a Percentage of GDP and Utility Revenue Percent of revenues T&D losses 0.4 0.3 0.1 6.8 0.0 0.5 9.6 19.9 201.5 Underpricing Undercollection of bills Overstaffing 0.1 14.6 9.0 57.3 20.2 0.0 0.

6 0.0 0. 297 .8 1.9 51.1 0.6 0.0 116.3 0.0 1.0 1.4 2.1 — Source: Eberhard and others 2008.6 0.3 36.4 0.7 0.2 0.5 0.1 4.9 0.0 75.3 0.5 23.0 40. GDP = gross domestic product.4 17.1 0.3 0.3 0.0 0.3 1.0 — — 0.9 2.3 105.1 76.0 0.6 — 0.6 0.0 0.2 0.3 — 0.2 — 0.0 39.9 90.0 0.5 34.5 0. Underpricing = end-user consumption x (average cost recovery price – average actual tariff ). Collection inefficiencies = end-user consumption x average actual tariff x (1 – collection rate).2 — 0.0 0.1 0.1 39.0 0.2 — 5.8 5.1 5.1 — 0.2 0.9 0.0 5.2 1.8 9.0 0.0 0.4 — 6. Note: Unaccounted losses = end-user consumption x average cost recovery price x (total loss rate – normative loss rate) / (1 – normative loss rate).8 0. T&D = transmission and distribution.3 0.Madagascar Malawi Mali Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Tanzania Uganda Zambia — — 6.1 9.6 2.0 0.3 0.1 0.5 195.0 1.0 0.5 — 6.0 1. — = data not available.3 0.2 0.0 72.6 39.0 50.8 10.3 0.0 33.3 0.4 19.0 0.8 15.7 — 12.0 10.9 1.

.

APPENDIX 7 Closing Africa’s Power Funding Gap 299 .

Côte d’Ivoire Congo.65 1.54 2.40 2. million p.15 0.33 0.00 0.13 0.01 0.00 0.90 2.93 71 101 52 173 33 36 62 348 0 417 129 406 21 103 47 94 29 35 10 8 23 1 32 — 0 19 60 110 1 8 15 19 Total spending Public sector Public sector NonOECD financiers 1 0 1 2 1 1 31 1 0 20 59 0 0 4 0 12 Capital expenditure Current US$.61 1.36 1.66 1.00 0.23 Capital expenditure Country Public sector Public sector ODA PPI 0 0 0 60 0 0 0 0 0 0 6 13 0 0 0 20 Total CAPEX 43 35 44 84 24 17 65 — 4 200 146 197 1 18 16 61 Total spending 114 137 96 258 56 53 128 348 4 618 275 603 22 121 63 155 Benin Botswana Burkina Faso Cameroon Cape Verde Chad Congo.04 0.00 0.00 0.a.06 1.22 1.53 — 0.04 0.05 0.08 0.19 0.04 1.02 0.51 2.45 2.36 0.36 0.96 1.02 2.61 0.55 0.00 0.68 0.56 1.00 3.31 0.62 0.04 3.17 1.58 0.05 2.33 0.20 2.63 1. Dem.10 2.00 0.56 3.300 Table A7.51 0.02 2.13 0.01 0.06 1.36 0. Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mali 1.10 0.00 0.09 0.05 0.06 0.00 0.01 0.24 0.00 0.00 0.31 0.21 2.97 0.00 0.00 0.81 0.02 0.01 0.30 1.23 0.51 0.17 0.40 0.13 0.76 1.39 1. Existing Spending on the Power Sectora O&M NonOECD financiers PPI 0.21 0.00 0.09 0.01 0.00 0.38 0.00 0.01 0. Rep.07 0.08 — 0.19 .28 1.16 2.1 GDP share (%) O&M Total CAPEX ODA 13 1 33 15 0 14 2 0 4 161 22 74 0 6 1 10 1. Rep.00 0.15 0.56 0.00 0.00 0.77 0.55 5.65 0.00 0.06 5.00 0.30 0.37 0.

PPI = private participation in infrastructure.00 0. except for Botswana.23 2.345 260 104 129 2.86 1.94 2.10 0. — = Not available.96 0.75 0.59 2.07 0.28 0.92 1.96 0.033 430 0 2.50 0.600 0. fragile Sub-Saharan Africa 0.240 58 1 0 35 15 18 8 40 88 3 33 75 5 0 14 309 1 12 0 0 0 9 1 736 1 0 0 209 0 16 5 44 65 0 5 278 — 60 25 1.03 0. OECD = Organisation for Economic Co-operation and Development. nonfragile Low-income.13 — 0.61 0.01 0.96 0.00 0.00 0.19 1.89 0.629 — 59 11 716 0 6 631 16 121 69 777 1.33 2.00 0.98 0.07 1.76 0.10 0.17 0.00 0.27 0.11 1.15 0.01 0. the Republic of Congo.68 0.78 63 60 30 685 21 140 2.04 0.269 17 52 644 99 275 81 816 2.14 0.959 3.96 1.84 1.10 0.989 358 378 210 3.21 1.97 1.370 549 37 694 129 210 1.64 0.16 1.00 0.05 0.56 0.33 0. and Mali. CAPEX = capital expenditure.330 63 120 56 1.55 0.74 1.00 0.38 0.77 1.954 38 192 2.72 2.81 1.21 0.00 0.01 0.241 830 11.05 0.03 0.00 0. ODA = official development assistance.30 1.03 0.14 1.28 1.70 3.39 0.Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Tanzania Uganda Zambia Middle-income Resource-rich Low-income.01 0.01 0.18 0.12 0.61 0.00 0.07 0.26 0.93 0.13 0.95 0.00 0. Note: a.49 1.19 0.633 1. which are average for 2002–07.34 0.60 0.89 1.41 0.37 0.90 0.73 — 0.00 0. 301 .28 1.11 Source: Authors.01 0.78 1.654 1.272 260 4. Average for 2001–05.969 571 7.12 0.076 165 12 460 1.67 1.53 4.00 0.15 0.70 0.29 0.64 0.31 0.470 3.

526 48 231 5 348 158 160 906 3. Rep.256) (32) (570) (10.989 358 378 210 3.959 3.019) (26) (478) (57) (178) (771) (285) (76) (7.350) Source: Authors. Total potential gain from achieved efficiency 17 55 343 19 66 45 668 335 82 317 109 20 19 91 9 74 0 126 1.470 3. Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mali Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Tanzania Uganda Zambia Middle-income Resource-rich Low-income. Note: a. and Mali. Côte d’Ivoire Congo.473) (3.770) (9.021 Total needs Benin Botswana Cameroon Cape Verde Chad Congo. nonfragie Low-income.954 38 192 2. except for Botswana. Average for 2001–05. fragile (178) (116) (745) (24) (39) (482) (825) (1.511) (910) (601) (472) (14.2 Size and Composition of the Power Sector Funding Gapa current US$. which are average for 2002–07. the Republic of Congo.201) Total spending 114 137 258 56 53 128 348 4 618 275 603 22 121 63 155 63 120 56 1.191) (11.541 1.814) (4.736) (118) (993) (13.241 830 Funding gap (47) (145) (310) (1.681) (137) (306) (338) (13) (634) (166) (4.380) (728) (1.a.704) (5. million p.645) (2.134) (2.818 2.516) (204) (64) (102) (9. Dem.269) (4.302 Africa’s Power Infrastructure Table A7. . Rep.

31 0. Rep.34 0.00 2.01 0.09 4.72 0.01 0.26 — — 0.00 0.18 0.02 0.23 0.03 0.09 0.30 0.05 0.78 0.00 0.00 0.51 — 0.42 0.00 0.00 Total 0.73 0. Ethiopia Ghana Kenya Lesotho Madagascar Malawi Mali 1 20 205 1 43 0 — 0 42 70 8 15 0 72 — 6 2 105 3 17 20 — 92 24 85 54 5 19 16 — 0 3 0 8 0 7 626 243 15 153 0 0 0 3 — 303 . Côte d’Ivoire Congo.07 1.01 0.65 0.43 0.00 0. million p.95 0.17 — — — 0.a.00 0.73 4.00 0.85 1.12 3.19 1. Reduce overmanning 10 30 30 6 6 17 42 — — 7 31 — — — 9 Increase cost recovery Improve system losses Address undercollection Raise budget execution 0.00 0.05 1.37 3.28 0.37 0.55 — 0.00 0.80 0.60 0.10 0. Dem.52 2.15 0.08 0.28 0.33 — 1.00 — 0.66 2.23 0.01 0.3 GDP share (%) Raise budget execution Total 17 55 343 19 66 45 668 335 82 317 109 20 19 91 9 0.83 3.32 0.17 0.29 0.64 0.41 0.17 (continued next page) Benin Botswana Cameroon Cape Verde Chad Congo.00 0.29 0.13 0. Rep. by Componenta Current US$.02 0.00 0.00 0.00 0.10 — 0 0 3 1 0 0 0 0 0 0 15 0 0 0 0 0.13 1.Table A7.17 Increase cost recovery Improve system losses Address undercollection Reduce overmanning Sources of Potential Efficiency Gains.00 0.40 0.07 0.58 1.03 0.08 0.20 0.

00 0.609 826 0 2.59 1.19 — 0.08 0.00 0.03 (continued) Current US$. Note: a.00 0.10 0.00 — 0. .00 0.31 0.54 0.00 0.93 0.84 0.13 0.3 GDP share (%) Raise budget execution Total 74 0 126 1.75 0.a.81 2.18 0.021 6.842 Source: Authors.00 0.53 0.00 2.818 2.28 3.55 1.00 0.33 1.98 0. which are average for 2002–07.00 0.00 1.82 0.29 0 0 0 151 0 2 1 1 0 2 2 234 20 0 210 Increase cost recovery Improve system losses Address undercollection Reduce overmanning Raise budget execution 0.00 0.304 Table A7. Average for 2001–05.00 0.26 1.02 0.46 1.24 0.09 — 0.73 0.00 0.27 — 0.78 1.423 1.00 2.36 0. Reduce overmanning 18 — 6 — 2 14 — 12 8 — 840 410 160 99 1.147 Increase cost recovery Improve system losses Address undercollection Total 1.32 0.30 0.36 0.340 0 — 28 344 0 0 0 0 86 0 12 528 308 1.00 0.862 0.17 0.31 0.00 0.72 0.02 0.00 3.07 Mozambique Namibia Niger Nigeria Rwanda Senegal South Africa Tanzania Uganda Zambia MIC Resource-Rich LIC-NoFragile LIC-Fragile SSA 36 0 64 672 37 165 0 260 0 152 38 1.84 0.66 0.90 0.526 48 231 5 348 158 160 906 3.01 0.01 0.323 21 0 27 359 9 51 5 75 64 6 14 761 504 498 1.00 0.15 0. the Republic of Congo.08 0.18 0.34 0.21 0.00 0. and Mali.58 0.01 0.01 2.07 0. million p.02 0.65 5.26 0.71 0.11 0.46 1.16 — 0.00 0.36 2.541 1.31 0.00 1.60 1.00 0.12 0. except for Botswana.

118–19 African Development Bank.Index Boxes. 81f. 70. 12. 59 in WAPP. 13f bank lending. 41 access rates national. A Abuja Treaty. 170. 1 power imports. 49 African Economic Community. 73–74. f. 169 African Development Fund. 80. 54 power outages and. and tables are indicated by b. 73–74 Arab countries. n. 12 transmission projects. 7. 47 Africa Infrastructure Country Diagnostic (AICD) study investment model. 2 political consensus. 42b power generation capacity. 84b AU. 70. 41. 9 power sector reform and. infrastructure financing from. 73. 68–69 in SAPP. 133 tariffs for electricity. See Africa Infrastructure Country Diagnostic aluminum smelters. 170 annualized capital investment costs in CAPP. 226–37t under trade expansion. See African Union Azito power plant (Côte d’Ivoire). 77 regional. 82. 66–67. 48. 38 prices of electricity. 67 targets for. 66. 105 SOEs and. 47 Agence Malienne pour le Developpement de l’Energie Domestique et d’Electrification Rurale (AMADER). 47. 173–75. 127b AICD study. 9f. 176t 305 . 7–10. 70. 31 power trade benefits. 48. 50n Angola oil reserves. 76–77 Africa–European Union Energy Partnership. 94 REAs and. notes. 41 African Union (AU). 77 defined. 76. 42b. 28. 48. and t following page numbers. 84b B backup generators. 61b in EAPP/Nile Basin. figures. 43–44. 67. 179 Asea Brown Boveri.

54. 153 PPI projects. 74. 39. 16 Cameroon aluminum-smelting industry. 30 Burundi diesel power. 182 CDM (Clean Development Mechanism). 42b blackouts. 50n1 Calderón. 178 cost recovery. 160 electricity connections. 33 power trade benefits for. Cesar. 39–40 Central African Power Pool (CAPP) costs in. 152b power sector spending. 178–79. 76–77 household utility connections in. 158 electricity connections. 30. 53.306 Index Benin corporate bonds. 112–13. 6. 165 grid-related costs. 160–61t management of. 116b capital costs. 94 certified emission reduction credits (CERs). 85 as resource-rich country. 150. 12 central nonexclusive buyer models for utilities. 49 political consensus. 139b Botswana Power Corporation (BPC). 15. 7 power trade benefits for. 29. 33. 114 power generation capacity. 76–77 investment requirements and. J. 42b power imports. 96 cost recovery. 38 PPI projects. 54 as middle-income country. 103. 160–61. 112t. 38 business-as-usual approaches to service coverage. 85 tariff structures. 39–40 Chad cost recovery. 114 off-budget spending of SOEs. 81 BHP Billiton. 179f capital markets. 160 Burkina Faso corporate bonds.. 2 power generation capacity. 33 war in. 105 oil reserves. See power outages bonds. 54 concession contracts. 5 financing instruments for. 2 as power exporter. 76. 61 power expansion costs. 158 costs study. 74t. 272–79t funding gap and. 28 SOEs in. 105 funding gap. 113f. 59. 147 budgets electricity expenditures in. See corporate bonds Botswana coal power. affordability of. 125 Besant-Jones. 28 rural electrification. 158 electricity. 139b bottom-up approaches to electrification. 160–61 monthly household. 77 Central African Republic market demand. 76 power imports. 32 power outages. E. 28 rural electrification. 74–77. 152b power imports. local. 74–75 oil reserves. 74 power imports and. 127b to SOE performance reform. 178 gas-fired power plants. 74t membership of. 2 investment requirements. 38 transmission and distribution in. 76 hydropower potential. 12 hydropower potential. 33. 69 power imports. 1 market demand. 117 Cape Verde cost recovery. 119 C Cahora Bassa hydroelectric plant (Mozambique). 125 tariff structures. 75 . 159 in CAPP. 109. 23. 58. 77 generation capacity. 77n2 trade expansion scenario. 3 power imports. 116b thermal power. power. 76. 28. 33 as nonfragile low-income country. 171–73 carbon dioxide emissions. 152b subsidies and tariffs.

183. 3. inequality in electricity access policy challenges. 30. 105–10 rates of. 104f.Index 307 power trade benefits for. 116b war in. 158–60. 55. 126f subsidies for service expansion. 30 charcoal use. investment requirements. 152b funding gap. 285t inefficiencies of. 84b oil reserves. 6. 278–79t China. 84b Clean Development Mechanism (CDM). 28. 119–29 affordability problems.. 1–2. 84b Compagnie Ivoirienne de Production d’Electricité (CIPREL). 71 Coastal Transmission Backbone. 84b Cinergy. 16 electricity. 152b independent power projects. 115f. 81–82. 5. 6f contracts and agreements. 104–5. 71 power imports. 153 power trade benefits for. 107f. 31. 2 power exports. 190–91t inequality in electricity access. 76 power imports. 61 oil reserves. 24. 171. 105 as fragile low-income country. 215–17t cost recovery funding gaps and. 54 investment requirements. 16 Congo. hidden costs of SOEs. 112. 120–21 periurban and rural electrification. 40 coal power plants. Republic of in CAPP. 96 cost recovery. 38 tariff structures. 12–15 Côte d’Ivoire concession contracts. 56t. 58–64. 119. 33 connectivity to electricity.g. 2 political consensus. 55. 77n3 in power sector overall. 65. 84b CIPREL (Compagnie Ivoirienne de Production d’Electricité). 177–78. 147 Commission for Africa Report. 113–14. 173–75. 75 investment requirements. 85 . 28. 65. 178 Compagnie Ivoirienne d’Electricité (CIE). 42b power generation capacity. 12. 3. 121–22 demand-side factors. 12 Congo. 39 economic growth. 268–71t constant access scenarios. 125 thermal power. 125–29. 84b concession contracts. 3. See specific types (e. 114 as fragile low-income country. 66 power sector spending. 66. See also household utility connections. infrastructure financing from. 164–65 as hydropower exporter. power infrastructure damage by. overnight investment costs market demand in. 169 Communauté Electrique de Benin. 74–75 power generation capacity. 178t cost estimates. 38 rural electrification. private management contracts) corporate bonds. See also annualized capital investment costs. 72 PPI projects. 45b commercial bank lending. 164 power prices and. affordability of. 39–40 climate change. 158 economic growth. 23. 67. 6. 56t suppressed demand in. Democratic Republic of backup generators. 173. 54–55. 16 efficiency savings. 74–75 notional demand in. 55. 54. 179 CIE (Compagnie Ivoirienne d’Electricité). 28. 163 electricity connections. 64 market demand. 55. 127b. 176t Commercial Reorientation of the Electricity Sector Toolkit (CREST). 122–25 progress in. 159f. 96 conflicts. 60t. 170. 63f social demand in. 7 CDM and. 64–69 consumption of electricity. 103. 38 power generation capacity.

146 D decreasing block tariffs (DBTs). See regional power trade rural. 39. 10–12. 7 oil reserves. 69 power import. 75 power sector needs. See rural areas subsidies for. 31 investment requirements. 120 development assistance. Alvaro. 40 constant access scenario. Arab Republic of in EAPP/Nile Basin. 166–68. 24 customer-owned enterprises. 54. 119. 110–11. 128b Electricité de France (EDF). 33. 70 Eberhard. 68–69 generation capacity. 84b electricity access rates. 19n6. 69 domestic finance sources. 167t. 47–49 cross-border transmission investments. 193t Energy Protocol.308 Index Côte d’Ivoire (continued) rural electrification. 16 E East African/Nile Basin Power Pool (EAPP/Nile Basin) climate change and. 177t Escribano. 12 Djibouti. 38 transmission and distribution in. 147 cross-border finance. 175–77. 67–70. 116b country typologies. See emergency power household. 46b. costs of power expansion in. See Congo. 32. 67 Electricidade de Moçambique (EDM). 48 diesel power. 83b Electric Power Act of 1997 (Kenya). 152–53b. 83b Equatorial Guinea backup generators. See also funding gaps CREST (Commercial Reorientation of the Electricity Sector Toolkit). 29. 175 Economic Community of West African States (ECOWAS). 68–69. 31. 111t. See also specific country types. 77n2 trade expansion scenario. 120–21 Democratic Republic of Congo. See access rates capacity. power. 49–50 economic development. fragile low-income countries) coverage gaps for urban electricity supply.g. 106b Electricity Regulatory Board (Kenya). 61 power expansion costs. See subsidies supply needs estimations. 7 Electricity Company of Ghana. 67–69 costs in. 76 power imports. 149 equity financing. 58. 54 gas-fired power capacity. 152. 53. See household utility connections outages. 16 . 70 investment requirements and. Anton. 109 tariff structures. See power outages policy challenges. See estimations of supply needs tariffs. 188–89t connectivity. 82 Ecobank. 68t household utility connections in. See connectivity to electricity consumption rates. See tariffs unreliability of. 16–18. 68t membership of. 59. 116b demand-side barriers to connectivity. 119–29 reform and planning. (e. See consumption of electricity emergency. 12. 103. 19n1. 49 Energy Regulatory Commission (Kenya). 1. 61. 67–68. 183 droughts. 83b emergency power. 41. power infrastructure constraints on. 2 power generation capacity. See generation capacity characteristics of national power systems. See official development assistance (ODA) Development Bank of Southern Africa. See power sector reform and planning regional trade in. Democratic Republic of densification programs. 17–18f Egypt. 23.. 11t.

179. 73 private management contracts. 110. 169 Gabon concession contracts. 175–77. 30. 149–85. 193–94t of SAPP. 69 as power exporter. 31. 179f capital markets. 76–77 cost of. 224–25t of WAPP. 169 funding gaps. 180 non-OECD financiers. 109. 39. 31. 160–61t capital. 116b European Commission. 299–304 additional financing sources. 303–4t regional integration. 173. 85 generation capacity of CAPP. 162–64. 67–68. 159 bank lending. 158–60. 28 power generation capacity. 153. 96 market demand. 173–75. 85 private management contracts. 72 power sector spending. 74–75 oil reserves. 180 ODA in. 15. 196–97t of EAPP/Nile Basin. 125 tariff structures. 180 France. 85–86 subsidies for electricity. 57–58. 152b power expansion costs. 150 spending needs of. 164 investment requirements. 177t existing resources. 39. affordability of. 58. 177–78 Eskom Conversion Act (South Africa). 285t domestic finance. local. 24. 164. 33 PPI projects. 162t. 71t. 3. 38 tariff structures. 68 power trade benefits for. 114 electricity connections. 74t. 167t. 166. 117 The Gambia fuel costs in. 160–61. 61 as nonfragile low-income country. 122 rural electrification. 181f utility performance and. 180–81. 171. 165 gas-fired power plants. 158f. 2 outsourcing. 161–62 G G-8 Gleneagles Summit. 68t installation lag in. 174t annual gap. 58. 165f bank lending. 166–68. 164–66. 214–15t. 169 European Union–Africa Infrastructure Trust Fund. 3–4f. 183 official development assistance (ODA). 90b. 155 SOEs in. 166. 183 equity financing. 154–56t. 168–69. 149. 109. 39. 152b domestic finance in. 183. 178–79. 1. 183 reforms and. 31–32 power generation capacity. 57t. 167 funding gap in. 157–58 future considerations. 64–65. 181–82 size of. ODA from. 171–73 corporate bonds. 151t. 223–24t Ethiopia electricity. 48 power sector spending. 142–43b. 101n2 F fragile low-income countries defined. 70. 110 Ethiopia-Sudan interconnector. 64t. 142b estimations of supply needs. 178t cost recovery. 176t budget spending and. 58. costs of. 19n2 power exports. 12 efficiency savings. 116b unbundling of utilities. 155 oil reserves. 155 prepayment electricity meters. 38. 58. 67 scenarios for. 179. 23.Index 309 Eskom. 106b funding gap. 163f. 170. 39. 149–50. 166. 182–83 increasing of funding. 173 diesel power. 170–71. 55–58. 74 Ghana aluminum-smelting industry. 49 funding gap. 300–301t private investors. 302t time horizon extension. 1 power imports. 166–78. 177–78. 172f. 164t. 152. 163 electricity connections. 66. 70–71 power imports. 159f. 105. 97 power generation capacity. 74. 2. 183 . 151–57. 33 non-OECD financing.

23. 54. 147 inequality in electricity access. 7. K. 66–67 trade expansion. 147 Gratwick. 2. 170. 77 regional access targets. 59t in WAPP. 111f. 94 in sector reform. 91–92. 50n1 I ICAs (Investment Climate Assessments). J. 147 electricity connections. 117 Guinea-Bissau electricity. 149. 84b Investment Climate Assessments (ICAs). 179 International Energy Agency. 33. See also cost estimates CAPP and. 76–77 in EAPP/Nile Basin. 218–22t SAPP and. 110–31. 60t. affordability of. 259–60t Group of Eight Gleneagles Summit. 58–64. access rates under. 84b hybrid markets and. 61. 53. 24 EAPP/Nile Basin and. 70 trade expansion. 134–36. 88–95. 135–36. 33. 94 KenGen and. 72. 66 scarcity of. 74–77. 70–71 power trade benefits for. 16 Guinea CREST. 5f policy challenges. 39 International Finance Corporation. 114 power trade benefits for. 61 as power exporter. 70 in SAPP. 119. 82 greenfield projects. 138b. 112–19. 49. See also connectivity to electricity in CAPP. 87 sector reform and. 292–94t. 151 IDA. 63f cross-border transmission. 30. 67–70. 93t SOEs and. 30 H heavy fuel oil (HFO)–fired thermal capacity. 149. 38 subsidies for electricity. 73 power generation capacity. 5–6.. overall. 23. 81–82. 142t. 140–41f. 43–44 International Development Association (IDA). 124 independent power projects (IPPs) CIPREL and. 58. 16 investment requirements. 290t consumption rates. 70 regional access targets. See also connectivity to electricity affordability issues. 6. 147 infrastructure financing from. 136–37.310 Index governance of SOEs. 110 investment requirements. access rates under. 64–66 . 73–74 hybrid markets independent power projects and. 88 private management contracts and. 7. 16 ICT sector (information and communication technology). 38–39. 135–36f. Luis. 119–31 information and communication technology (ICT) sector. 151 Infrastructure Consortium for Africa. 71 hidden costs of SOEs. 74–76 cost requirements. 142–43b. 53–78. 38. 68t national access targets. 79–80 India corporate practices. N. access rates under. 53. 133. 169 Guasch. 53. 61. 23. 169 Inga hydroelectric program. 91 hydropower development. 6f electrification rates. 64–67. 91–92. 42b institution strengthening. 137f. 84b. use of. 38 thermal power. 67 regional access targets. 171. 296–97t household utility connections. 74t national access targets. 179 inefficiencies of SOEs. 1. 67–69 investment needs modeling. 42b. 169. 1 targets for. 83b performance indicators for. 65t national access targets. 48. 90–91b SOEs and. See International Development Association increasing block tariffs (IBTs). 213–37. 116b. 54–55. 76–77 trade expansion. 33.

Index 311 supply needs estimations. 153 private management contracts. 32 private sector participation. 135 kerosene use. 70–74. 165 geothermal plants. 31 power sector spending. 152b power generation capacity. 153 prepayment electricity meters. 116b unbundling of utilities. 129 load shedding data. 12 funding gap. 91 J Japan. affordability of. 54 diesel power. 3 PPI projects. 2 Kyoto protocol. 178 M Madagascar costs study. 3. 61 power trade benefits for. 85 rural electrification. 127b. See marginal costs in regional power trade loss-of-load probabilities. See independent power projects IPTL (utility company). 153 prepayment electricity meters. 223–24t WAPP and. 34. ODA from. 53. 85–86 rural electrification. 177 Kenya Power and Lighting Company (KPLC). See fragile low-income countries Lunsemfwa Hydro Power. 164–65 power generation capacity. 7. 100n2. 30 war in. 83b tariff structures. access rates under. 158 diesel power. 274–75t Koeberg nuclear power station (South Africa). 138b independent power projects. 122 rural electrification. 39 Liberia investment requirements. 56t. 178 cost recovery. 36t. 125 . 29. 12 tariff structures. 127–28b Mali Folkecenter. 74–75 L Latin America infrastructure spending. 122 prices of electricity. 114 power generation capacity. 166 power generation capacity. 169 K Kenya corporate bonds. 83b. 12 “Lighting Africa” initiative. 83b. 67. 12 funding gap. 114 power generation capacity. 128b marginal costs in regional power trade. 214–15t. 160 electricity. 73–74 regional access targets. 171–73 long-run marginal costs (LRMCs). 61. 54–55. 71t national access targets. 73 trade expansion. 168 power generation capacity. affordability of. 178 Lusaka Stock Exchange. 38 thermal power. 173 as middle-income country. 83b local capital markets. 96 electricity. 70–73 IPPs. 116b Mali concession contracts. 81–82. 19n5 local capital markets. 39 cost recovery. 55–58. 31 power sector spending. 100–101n2 Kenya Electricity Generating Company (KenGen). 1 power sector spending. 85 private management contracts. 125 Malawi CDM and. 2 power imports. 109. 38. 101n4 low-income countries. 2–3 Lesotho bank lending. 101n2. 112. 83b. 2 hidden costs in power sector. 68 power imports. 202–5t market demand in cost estimates. 2 power imports.

65. 155 power imports. 49. 19n3 corporate bonds. 147 domestic finance. 38 rural electrification. 19n3 cost recovery. 19n3 costs study. 30. 28 power outages. 110 funding gap. 106b natural gas reserves. 124 New Partnership for Africa’s Development (NEPAD).. 28 power generation capacity. 9 power trade benefits for. 33 power exports. 113. affordability of. 101n3 network rollouts. 152b domestic finance in. W. 175 CREST. 152. 19n3 corporate bond market. 125 thermal power. 81 as resource-rich country. 70–71 power sector reform. 177. 67. 30 uranium reserves. 42b power generation capacity. 16 middle-income countries defined. 164. 167 funding gap in. 7 gas-fired power plants. 12. 158 political consensus. 166. 170. use of. 128b Niger coal power. 2 national access target scenario. 1–2. 103. 180 nongovernmental organizations (NGOs). John. 166 funding gap. 173 CDM and. 178 electricity connections. 164–65 investment requirements. 77 National Electrification Master Plan. 42b. 90b notional demand in cost estimates. 119–20. See also East African/Nile Basin Power Pool (EAPP/Nile Basin) nonfragile low-income countries defined. 160 electricity. 54 Niger River. 28. 125 tariff structures. 66 power imports. 55. 73–74. 55. 86 unbundling of utilities. 178 cost recovery. 2 Nigeria bank lending. 106b National Electrification Scheme (NES). 28 rural electrification.312 Index Mauritania backup generators. 31 prepayment electricity meters. 180 spending needs of. 1–2. 114 non-OECD financing. 2 natural resource savings accounts. 144–45 Mostert. 3. 27. 2 power exports. 122 private management contracts. 81 as regional leader. 33. 152b thermal plants. 77n3 nuclear power plants. 54 independent power projects. 109–10 Mozambique Cahora Bassa hydroelectric plant. 61 as power exporter. 180 Nellis. 38 Mauritius coal power. 41. 81 oil reserves. 164 local capital markets in. 157. 70. 152–53. 170 unbundling of utilities. 173 ODA in. 43 NGOs (nongovernmental organizations). 149. 152b funding gap in. 128b non-OECD financiers. 66 power trade in. 122. 31 power generation capacity. 114f. 101n2 in WAPP. 165 independent power projects. 149. 101n2 uranium reserves. 183 nonpayment for infrastructure services. 50n1 coal power. 2 . 140 NordPool. 33 Nile basin. 179. 40 coal power. 116b N Namibia bank lending. 160 moral hazard problems. 155 spending needs of.

76–77 . 40. 149. 150. 239–58t private management contracts and. See power sector reform and planning political consensus. 12. redesign of. 66–67. 112. 8f. 55. See operations and maintenance Obasanjo.. See rural areas regional access target scenario. 87 tariffs and. 162. 239–58t periurban electrification. 41–43. 56t. 78n5 operating costs for power generation. 162t. 88f.g. efficiency-oriented. 43 OECD. 95f contract regulation. 82. 87–88. 157. 155 off-take agreements. 239–66 hybrid markets and. 99–100f outsourcing and. 122. 48. 192t. See power outages outsourcing government reforms and. 80. 195–96t power pools. 84b propane gas use. 47 R REAs (rural electrification agencies). 69t. Southern African Power Pool) power purchase agreements (PPAs). 97–98 in Sub-Saharan Africa. 144–45 priority setting for regional power trade. 172f. 23. 145 SOEs and. 65t. 16 performance contracts. 168–69. 94. 152. 144–45 performance indicators for sector reform. 151. 24–26. Jorge. 73. Olusegun. 85–87. 163f. 7. 72–73. 157 Program for Infrastructure Development in Africa. 88f. See Organisation for Economic Co-operation and Development off-budget spending of SOEs. 2 one-third. 42b power generation. two-thirds principle. 88f. See also urban areas PJM (utility company). 88–95. 47 prepayment metering. 98 independent regulation. 134 overnight investment costs. 261–66t private participation in infrastructure (PPI). 75t overstaffing in power utilities. 16 oil reserves. 183 in low-income countries. 87–88. 162–64. See rural areas reforms. 96–97 improvements in. 123f principal-agent problems. 160 official development assistance (ODA) as external funding source. 26–28. 12 outages. 70. 44–47. 261–66t regulatory institutions. 85. 152. 157 funding gaps and. See also specific pools (e. 48 open-cycle gas turbine generators. 150. 151. 88f. 98–100. 125–29. 157. 82t PPI. 55. 169 performance indicators and. 126f. 26f operations and maintenance (O&M). 151 ODA and. 9. 96 power sector reform and planning. See private participation in infrastructure PPIAF (Public-Private Infrastructure Advisory Facility). 166. See also power sector reform and planning REFs (rural electrification funds). 75–76. 66. 80–85. 303–4t. 276–77t Public-Private Infrastructure Advisory Facility (PPIAF). 94–100. 46b private investors as funding sources.Index 313 O O&M. 183 P Peña. 166. 79–102. 152–53. 183 Organisation for Economic Co-operation and Development (OECD) funding increase from. 90b planning. See generation capacity power outages. 92 oil prices. 88. 170–71. 68. 95–96 model for. 81 public-private partnerships (PPPs). 47 Promotion et Participation pour la Cooperation Economique. 93t performance indicators for. 72t. 80. 85–87. 179. 44. 41. 183 private management contracts. 81 PPPs (public-private partnerships). 81–83. 10f. 65.

28–29. See Southern African Development Community SAPP. 97–98 in regional power trade. 39–40 climate change and. 12 funding gap. 103. 234–35t regulations and regulatory functions by contract. See regional trade stagnation scenario water resources management. 66 WAPP. 44–47. 226–33t. 68. 47–49 regulatory frameworks. 54. 114 electricity connections. 125 S SADC. 30f. 46b regional power trade. 96–97 institutional redesign. 23–51. 152b power outages. 41. 28 prepayment electricity meters. 23. 105 funding gap. 84b Self-Help Electrification Programme (SHEP). 36t. 50 Clean Development Mechanism (CDM). 125–29. 50 Regional Electricity Regulatory Authority of the Economic Community of West African States. 34–35f environmental impacts of. 41. 29. 40. 153. 105. 126 rural electrification funds (REFs). 109. 38. 109. 164 local capital markets in. 108f. 41. 91 power generation capacity. 40 distribution and economies of scale. 125 thermal power. 206–7t hydropower development and. See regional trade expansion scenario generation portfolios. 50 resource-rich countries defined. 152b domestic finance in. 70 electrification of. 178 economic growth. 38–39 infrastructure integration. See Southern African Power Pool SAUR Group. 166 funding gap in. 199–211 benefits of. 58. Republic of RERA (Regional Electricity Regulators Association). 152. 42b priority setting for. 74 Rwanda diesel power. 38 CDM and. 236–37t benefits of. 40–50. 41–43. 49–50 for SOEs. 99–100f outsourcing and. 57–59 cross-border power trading. affordability of. 23. 28. 39 expansion scenario.314 Index Regional Electricity Regulators Association (RERA). connection costs in. 32. 3. 126f. 202–5t patterns of. 280–81t rural electrification agencies (REAs). 29–33. 80. 55 rural areas CAPP. 39. 108f. 43–44 political consensus. 164–65 as nonfragile low-income country. 200–201t power pools and. 25f environmental impacts of. 160. 34. 106b Senegal coal power plant. 103. 39 power exporting countries. 33 regional trade expansion scenario access rates under. 40 costs of. 105. 31–32t regional trade stagnation scenario. 126 SAPP. 7 rural electrification. 165 hybrid market. 30–31. 40. 173 spending needs of. 24–26. 72. connection costs in. 122 rural electrification. Orvika. 73. See Congo. 16 electricity. 100 Republic of Congo. 31–33. 77 EAPP/Nile Basin. 36–37t. 109–10. 39. 208–11t institutions. 40. 68 power imports. 109. 33. 119. 33–38. 64–76. 26–28 stagnation scenario. 105. 94–100. 2. strengthening of. 149. 80. 28–31. 71 corporate bonds. 119. 30 Senegal River. 41. 49–50 marginal costs in. 107. 73. 95f. connection costs in. 28. connection costs in. 46b project preparation and cross-border finance. 33 . 180 Rosnes. 28.

175 funding gap. 177. 12 South Africa aluminum-smelting industry. 12 rural electrification. 146 dominance of. 55. 159 bank lending. 19n6 overhead distribution network. 296–97t hybrid markets and. 139b CDM and. 27 priority setting in. 64–66. 2. 38 war in. 135–36f. 64t. 133. 28 . 142–43b. 145–46 roles and responsibilities. 31. 31 power plants. 66. 214–15t. 295t performance improvement tools. 46b promotion efforts. 128b Somalia. power. 124t. 39. 91 independent power projects and. 105 electricity consumption. 150 governance of. 46b. 12 single-buyer models for utilities. 40 constant access scenario. 166. 23 generation capacity. 89. 90–91b local capital markets. 50n prepayment electricity meters. 152b open-cycle gas turbine generators. power imports to. 137–47. 44 short-term energy market in. 66 interconnectors. 42b power generation capacity. 31. 147 political economy and. 66 power imports. 122 prices of electricity. 145 subsistence consumption of power. 7. 134–36. war in. 92. 2 as power exporter. 29. 109. 101n1 trade expansion scenario and. 147 off-budget spending of.” 147 state-owned enterprises (SOEs). 152b oil reserves. 115. 66 power sector planning and reform. 67 household utility connections in. 89–90 effectiveness of. 147 hidden costs of. 170 supply needs estimations. 283–84t transparency of. 140–41f. return on investment on. 64–67. 61. 47. 142–43b. 153 power trade in. 30. 55–58. 79–80 inefficiencies in. 19n8 power exports. 116b unbundling of utilities. 15. 81. 54. 175 corporate bond market. 67 Spain. 136–37. 90–91b. 103 cost recovery and. 77n2 political consensus and. 58–59. 113–14. 175. 100 stock exchanges. 38. 54. 138b. 64 tariff structures. 94 social demand in cost estimates. 165 independent power projects. 105. 133–48. 177–78 electricity connections. 142t. 3. 49 as fragile low-income country. 122–25. 291–97 competition in. 292–94t. 58. 66. power generation capacity of. 38 transmission and distribution in. 173 as middle-income country. 31–32 power generation capacity. 106b Sierra Leone emergency power. 78n5 political consensus. 55. 67 costs in. 171. 65t membership of. 178 subsidies. 27–28. 67 cross-border transmission investments in. 223–24t suppressed demand in cost estimates. 215–17t Swaziland. See also tariffs connectivity and. 49. 137f. 2 Southern African Development Community (SADC). 135–36. 117–18f. 12. 42b power trade in. See state-owned enterprises solar photovoltaic panels. 119. 162 for electricity. 110 in SAPP. 65. 64–65. 2 “spot billing. 6 financing options. 42b. 160 regulation of. 53. 31 investment requirements and. 139–45 fragile low-income countries and. 68 thermal plants. 50 Southern African Power Pool (SAPP) BPC and. 5.Index 315 SHEP (Self-Help Electrification Programme). 117–18. 173. 115f Sudan Ethiopia-Sudan interconnector. 101n2 uranium reserves. 56t SOEs.

12 electricity. 94 performance indicators and. 81 as nonfragile low-income country. 140. 83b. 90b. 114 electricity connections. See transmission and distribution Tanzania coal power. 15. 175 United States. 80–81. See also subsidies costs recovery and. 105 funding gap. 81 natural gas reserves. 57 losses in. 120. 3 power imports. See state-owned enterprises (SOEs) V Vennemo. 16 water resources management. 160 diesel power. corporate practices in. 82. 110–11. 12. 150. 100n2 unbundling of utilities. 55 Volta River Authority. 162–63 decreasing block tariffs (DBTs). 107. 7. 178–79 domestic finance and. See regional power trade transmission and distribution (T&D) in CAPP. 158 diesel power. 178 cost recovery. 77 in EAPP/Nile Basin. 157 UNICEM power plant. 12 electricity. 7. 2. 9 private management contracts. 116b. 89. 150. 116b. 183 underpricing of power. 67 in WAPP. 145–46 Tsavo IPP (Kenya). 40. 87 in SAPP. 116b for electricity. 124 schedules for. 167–68 Togo gas-fired power plants. 28. 76. 106b W WAPP. 109. 147 University of Cape Town. 54. 129. See West African Power Pool wars. 85 regulation in. 19n4 Uganda bank lending. 73 transparency electrification funds and. 165 hybrid market. 45b utilities. 115. 104–5. 121 coverage gaps in. 83b U UCLFs (unplanned capability loss factors). 292–94t increasing block tariffs (IBTs). 173 corporate bonds. 152b oil reserves. 97 SOEs and. 19n3 cost recovery.S. 111t rural electrification rates and. 68–69. power infrastructure damage by. 125 tariff structures. 70 expansion of. 282t U. 134. 76 connectivity in. 68 power sector spending. 119. connection costs in. 2 power generation capacity. 47 of regulatory contracts. 19n2 power generation capacity. 49 unbundling of utilities. 157. 150 taxation capital costs and. 7. 114 funding gap. 28 total factor productivity (TFP). 286–89t underpricing of power and. 68 power outages. 157. affordability of. 66. state-owned. 118–19. 19n7. 158–60. 97 rural electrification. 170 tariffs. 110 priority setting and. 17–18f trade. affordability of. 83b unplanned capability loss factors (UCLFs).316 Index T T&D. 162. 72. 116b transmission projects. Haakon. 33 power generation capacity. 87 rural electrification. 91 independent power projects. 86. 39. 165 independent power projects. 12. 121–22. 100–101n2 undercollection of revenues. 155 PPI projects. 125 thermal power. 19n4 urban areas CAPP. Agency for International Development. 33 .

29. 127b. 53. 7. 77n2 power trade in. 70. criteria for. 3. 73–74 generation capacity. 16 ODA and. 33 Zambia bank lending. 112. 169 regional projects. 71t. 5 investment requirements. 58. 70–74. 49 trade expansion scenario. 59. 66 power imports. 84b West African Power Pool (WAPP) costs in. 38 transmission and distribution in. 72. 48 WAPP and. 42b wood as fuel. 2. 73–74 investment requirements and. 178 cost recovery. 61 political conflict. 65. 31 prices of electricity. 165 mining industry. 12 as resource-rich country. 61. 152b on grid-supplied power. 278–79t World Bank capacity building of. 3. 12 . 160 funding gap. 72. 39. 71t membership of. 28 as regional electricity regulator. 45b WSS sector (water supply and sanitation). 54. 15. 32. 159 power generation capacity. 125 tariff structures. power. 149 prices of electricity. 49 Country Policy and Institutional Performance Assessment. 43 West African Bank for Development. 173 CDM and. 45b regulatory framework for. 74 household utility connections in. 152b rural electrification. 42b Western Power Corridor. 40 corporate bonds. 151 West Africa Gas Pipeline. 73 Westcor. 12 power generation capacity. 7 Investment Climate Assessments (ICA). 66 power sector needs. 116b Zimbabwe coal power. 44. 151 Z Zambezi River.Index 317 water supply and sanitation (WSS) sector.

Integration. The Office of the Publisher has chosen to print Africa’s Power Infrastructure: Investment.greenpressinitiative. Efficiency on recycled paper with 50 percent post-consumer waste.ECO-AUDIT Environmental Benefits Statement The World Bank is committed to preserving endangered forests and natural resources. For more information.org. in accordance with the recommended standards for paper usage set by the Green Press Initiative. visit www. Saved: • 9 trees • 3 million British thermal units of total energy • 820 pounds of net greenhouse gases (CO2 equivalent) • 3. a nonprofit program supporting publishers in using fiber that is not sourced from endangered forests.951 gallons of waste water • 240 pounds of solid waste .

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characterized by insufficient capacity. The continent faces an annual power sector financing gap of about $21 billion. with much of the existing spending channeled to maintain and operate high-cost power systems.Africa’s Power Infrastructure: Investment. retarget electrification strategies. and poor reliability—and on what can be done about it. build on the lessons of private participation in infrastructure projects. power costs would fall and full cost recovery tariffs could become affordable in much of Africa. This book asserts that the current impediments to economic growth and development need to be tackled through policies and investment strategies that renew efforts to reform state-owned utilities. Integration. and mobilize new funding resources. Data from this study have provided new insights on the extent of a power crisis in the region. low electricity connection rates. leaving little for the huge investments needed to provide a long-term solution. ISBN 978-0-8213-8455-8 SKU 18455 . high costs. With increased utility efficiency and regional power trade in play. which is essential to close the huge financing gap. Efficiency is based on the most extensive data collection exercise ever undertaken on infrastructure in Africa: the Africa Country Infrastructure Country Diagnostic (AICD). reducing energy system costs by US$2 billion and carbon dioxide emissions by 70 million tons annually. the power crisis is taking a heavy toll on economic growth and productivity. Meanwhile. expand regional power trade. This will make utilities more creditworthy and help sustain the flow of external finance to the sector. it also requires a large number of importing countries to muster the requisite political will. But reaping the promise of regional trade depends on a handful of major exporting countries raising the large volumes of finance needed to develop generation capacity for export. Further development of regional power trade would allow Africa to harness larger-scale and more cost-effective energy sources.

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