The U.S initiative, termed Power Africa and pioneered by Millennium Challenge Corporation (MCC) and Overseas Private Investment Corporation (OPIC), which plans to double access to electricity in sub-Saharan Africa has drawn new investments to the region.
“We are seeing developers investing for the first time in power in emerging markets. We are seeing developers we have never seen before. We are also seeing with the private sector in Africa an opportunity to partner with American companies,” said Mimi Alemayehou of the U.S. Overseas Private Investment Corporation (OPIC). OPIC mobilizes private capital to help solve critical challenges in developing countries.
President Barack Obama announced the Power Africa initiative in June 2013. Vanguard learnt that through a public-private approach, Power Africa wants to increase generation capacity by about 10,000 megawatts in six partner countries with the objective of increasing access to electricity for 20 million people, improving reliability and reducing costs for African businesses.
The partner countries – Nigeria, Ethiopia, Ghana, Kenya, Liberia, and Tanzania and others in Africa were said to have identified energy insecurity as a binding constraint to economic growth. Alemayehou said that with a combined population of 800 million people, the countries of sub-Saharan Africa use the same power capacity as does Spain, with a population of 45 million.
He also said that OPIC has committed $1.5 billion to Power Africa for its first five years while MCC has committed around $1 billion to the initiative. USAID will provide $285 million in technical assistance, grants and risk mitigation to assist private sector energy transactions and help governments adopt policy and regulatory reforms to attract private investment.
“Power Africa is intended to bridge the gap between Africa’s power shortage and its economic potential by working with U.S., international and African businesses and governments to develop newly discovered resources responsibly, increase power generation and transmission capabilities, and expand the reach of mini-grid and off-grid systems.
“One example is a partnership in which U.S. and Icelandic businesses have joined to build 1,000 megawatts of geothermal generation capacity,” Alemayehou said.
She also said that investments in Africa’s power could add as much as two percentage points to the region’s already strong growth rate and create jobs.
Alemayehou said Power Africa is encouraging countries to continue reforming their power sectors. “They want to be part of Power Africa,” she said.
– Sebastine Obasi, Vanguard