Major investors called for Africa’s energy transmission and distribution sector to be opened to private capital during the Africa Energy Summit in Dar es Salaam.
Addressing African leaders and senior officials from multilateral institutions, Patrick Pouyanné, CEO of TotalEnergies; Hussain Al Nowais, Chairman of UAE energy giant AMEA Power; Aminu Umar-Sadiq, CEO of Nigeria Sovereign Investment Authority (NSIA); and Makhtar Diop, Managing Director of the International Finance Corporation (IFC), expressed consensus: the private sector has a role to play in electricity transmission and distribution in Africa to allow greater investment and extend electricity to millions of Africans currently living without it.
The sector, has traditionally been reserved in many African countries for public enterprises, particularly transmission, and distribution, but a succession of top energy entre
Speaking in a panel session titled The Role of Private Investment in Africa’s Energy Sector, Diop said, “The private sector is not yet as involved as it should be in financing the energy sector in Africa… The primary challenge is to engage it in financing electricity transmission in Africa, which is essential and critical.”
“When you build a renewable energy plant, you must then transport that electricity, and that is where the challenge lies,” stressed Patrick Pouyanné, lamenting that some energy projects are stalled on the continent due to a lack of transmission infrastructure.
“It is time for developers to start investing in the distribution network. Production is easy, but how do you evacuate that production? How can it be done with a weak network?” asked AMEA Power Chairman Hussain Al Nowais. He cited Morocco, Egypt, and South Africa as examples of successful energy sector reforms.
Present in 20 African countries, AMEA Power produces 600 megawatts on the continent, and its chairman stressed that currency convertibility is crucial to attracting more private investments to develop electricity in Africa.
Energy projects also require sovereign guarantees to be developed. “We need to have a guarantee instrument to develop projects. This has been discussed for years (with development finance institutions), but now it is time to act,” said Patrick Pouyanné, stressing that the potential exists to develop renewable energy, such as hydropower and solar, in Africa.
“Financing institutions should not be afraid because there are no payment defaults [in energy projects],” he added.
The IFC has established a new $1 billion fund to invest in private companies working on decentralized renewable energy and off-grid solar solutions led by the private sector in Africa. Under this initiative, $70 million will be allocated to private renewable investments in Nigeria.
For Africa to achieve an energy transition, the gas sector must also be developed.
“If you need reliable electricity 24/7, without intermittency, you have to combine it with gas… You need to advocate for this in every international forum. Gas will enable progress, drive Africa’s development, and support both economic and social growth,” said Pouyanné to African heads of state and government leaders.
“Liquefied Petroleum Gas is available in Africa for clean cooking. It is an affordable and clean energy source,” he added.
According to Aminu Umar-Sadiq, emphasis must also be placed on mobilizing local capital to fund Africa’s energy infrastructure, in addition to the financial guarantees needed by investors. “Capital structure is essential. Equity is critical, but it is also important to attract equity in local currency,” said the NSIA CEO.
“Lenders want to take the minimum risks. Another suggestion I make to governments is to establish one-stop shops to provide investors with all the required documentation,” said Al Nowais, citing Togo as an example where AMEA Power completed its project in just 14 months, thanks to reduced administrative bottlenecks.
The Africa Energy Summit, Mission 300, brought together around thirty African heads of state and government, as well as investors, foundations, and leaders from bilateral and multilateral financial and development institutions, on Monday and Tuesday. Its goal: to mobilize energy and resources to provide 300 million Africans with access to electricity by 2030 through National Compacts implemented by governments with the support of technical and financial partners, as well as private investments.
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Publish date : 2025-01-31 16:01:55