Obama’s electricity project to force changes in EA energy sector

By Kevin J Kelley Special Correspondent

Posted Saturday, July 27 2013 at 15:42

In Summary

• US officials said that President Obama’s Power Africa initiative shares the approach of the 10-year-old Millennium Challenge programme whereby aid is given to countries that meet US conditions for liberalising markets.
• The fundamental aim of Power Africa is to create a better enabling environment for the private sector to come in.

 

DPresident Barack Obama’s plan to expand access to electricity in Kenya, Tanzania, Ethiopia and three other sub-Saharan countries is designed to force changes in governments’ energy policies.

US officials said that President Obama’s Power Africa initiative shares the approach of the 10-year-old Millennium Challenge programme whereby aid is given to countries that meet US conditions for liberalising markets.

READ: $16bn US fund targets energy projects

“Basically, what we are doing is putting a large carrot on the table,” Andrew Herscowitz, a co-ordinator of the Power Africa effort, said in a July 12 talk at a Washington think tank.

He explained that African governments taking part in the programme will be told, “If you want to increase the amount of electricity by one Gigawatt, two Gigawatts, 400 Megawatts, you have to make the following reforms.”

The terms could include “breaking up a utility” and instituting “cost-reflective tariffs,” Mr Herscowitz said. Those terms refer to privatisation of government-controlled energy operations and to price increases for electricity users.

“Our tools are not meant to be government subsidies,” the US Agency for International Development official declared.

The fundamental aim of Power Africa, Mr Herscowitz said, is to create “a better enabling environment for the private sector to come in.”

“If African leaders make the right decisions and reform energy sectors and create a business climate where investors are welcome, private investors will build tens of thousands of Megawatts of energy,” said USAid director Rajiv Shah.

President Obama’s administration said Power Africa is placing strong emphasis on the role of private business partly in order to win political support for the initiative from Republican Party legislators who control one half of the US Congress.

Other speakers at the July 12 event at the Centre for Strategic and International Studies noted that Africa’s power shortage stems in part from government red tape and resistance to free-market dynamics.

Janet Cooke, Africa programme director at the think tank, noted, “it has taken 10 to 15 years in Kenya to get a regulatory structure in place.”

Christopher Camponovo, an executive with Symbion Power, referred to “ a bureaucratic muddle” as an obstacle to developing electricity-generation projects in Africa.