African leaders seek power generation enhancing policies
The Africa Progress Panel has emphasised the need for African governments to set a higher level of ambition by initiating policies aimed at a 10-fold increase in power generation and universal access to energy by 2030.
African leaders who made this demand in the Africa Progress Report 2015, Power People Planet: Seizing Africa’s Energy and Climate Opportunities, said that countries such as Brazil, Thailand and Vietnam have demonstrated that, with sustained political leadership, these outcomes are attainable.
According to the report, far too much public finance is wasted on inefficient and inequitable energy subsidies. “Governments spend $21 billion a year covering utility losses and subsidising oil-based products, diverting resources from more productive energy investments.
“Africa’s poorest households are the unwitting victims of one of the world’s starkest market failures. We estimate that the 138 million households comprising people living on less than $2.50 a day are spending $10 billion yearly on energy-related products, such as charcoal, candles, kerosene and firewood.
Translated into equivalent cost terms, these households spend around $10/kWh on lighting, which is about 20 times the amount spent by high-income households with a connection to the grid for their lighting. The average cost for electricity per kWh in the United States is $0.12 and in the United Kingdom is $0.15”.
The report added that the size of the market points to significant opportunities for investment and household savings. “Halving costs would save $5 billion for people living below $2.50, or $36 per household. Plausible price reductions of 80 per cent would raise these figures to $8 billion overall and $58 per household.
Such savings could release income for investment in productive activities, health and education. We estimate that the monetary saving from cost reductions would be sufficient to reduce poverty by 16-26 million people.
What would it take to expand power generation and finance energy for all”, it added? It put the current energy-sector investment levels at just $8 billion a year, or 0.49 per cent of gross domestic product (GDP). “This is inadequate. We estimate the investment financing gap for meeting demand and achieving universal access to electricity is around $55 billion, or 3.4 per cent of Africa’s GDP in 2013.
“While this financing gap figure is large, it has to be placed in context. Energy financing is an investment with the potential to generate high social and economic returns by increasing productivity, job creation and economic growth. Almost half of the gap could be covered by increasing Sub-Saharan Africa’s tax-to- GDP ratio by 1 per cent of GDP.
Additional revenues could be mobilized by halting the wasteful subsidies now transferred to loss-making utilities, stemming the finance lost as a result of illicit financial transfers, and cautious recourse to bond markets”, it said. It called on African governments to mobilize around $10 billion to expand on-grid and off-grid energy access.
“The international community should match this effort through $10 billion in aid and concessional finance aimed at supporting investments that deliver energy access to populations that are being left behind.
“It is not just comparisons with the rich world that highlight the gap. Nigeria has almost twice as many people as Vietnam but generates less than one-quarter of the electricity that Vietnam generates. The disparity within Africa is equally marked. South Africa consumes nine times more energy than Nigeria, despite having just one-third of the population.
“Governments increasingly recognize that underpowered and unequal energy systems are a barrier to developing dynamic economies and more inclusive societies.
While there is a long way to go and the record is mixed, the potential for a breakthrough in energy is increasingly evident.
Measured on a global scale, electricity consumption in Sub-Saharan Africa excluding South Africa is pitifully low, averaging around 162 kilowatt hours (kWh) per capita a year.
This is the lowest level of consumption for any region. One-third of the region’s population lives in countries where annual electricity use averages less than 100 kWh each.
The global average consumption figure is 2,800kWh, rising to 5,700kWh in the European Union and 12,200kWh in the United States. Electricity consumption for Spain exceeds that of the whole of Sub- Saharan Africa (excluding South Africa)”.
Get the latest news delivered straight to your inbox every day of the week. Stay informed with the Guardian’s leading coverage of Nigerian and world news, business, technology and sports.
1 Comments
End corruption and the money would flow to useful investment. elected creative and innovative leaders, and our power generation and usage will increase.
We will review and take appropriate action.