24 Jan

The selected countries have set ambitious goals in electric power generation and are making the utility and energy sector reforms to pave the way for investment and growth.

The countries also have plentiful of natural energy resources including, geothermal, hydro, wind and solar as well as gas and oil which the Power Africa project is targeting for exploitation. Sub-Saharan region alone has four percent of the world’s verified reserves of natural gas, and 10 percent of the world’s unexploited potential for hydro power.

One of the notable pronouncements by President Barrack Obama at the close of his tour of Africa in June 2013 was an intention of the United States of America to commit more than $ 7 billion to implement an ambitious project to double the access to electricity in sub-Saharan Africa in the next five years.
Premised on a survey by International Energy Agency which indicates that sub-Saharan Africa will require more than $300 billion in investment to achieve universal electricity access by 2030, President Obama stressed that the American initiative will serve to catalyze greater public and private sector investments to support Africa meet its critical energy needs.
Working with an initial set of six partner countries of Tanzania, Kenya, Ethiopia, Ghana, Liberia, and Nigeria
the first phase of Power Africa project is expected to add more than 10,000 megawatts of cleaner, more efficient
electricity generation capacity to at least 20 million new households and commercial entities with on-grid, mini-grid,
and off-grid power solutions.

Geothermal resources in the Rift Valley of Ethiopia and Kenya have the potential to provide up to 15,000 MW of power. Tapping into these plentiful, sustainable resources will advance efforts to mitigate climate change impacts; promote economic development; and improve education and healthcare.

The Approach

Power Africa will leverage US long history and technical expertise in energy technologies to propel private sector transactions, and policy and regulatory reform to address gaps in Africa’s energy sector.

The transaction-centered approach will provide host governments, the private sector, and donors with incentives to galvanize collaboration, map out result oriented opportunities, it’s notable that the funding will not be purely from the Us Government as International Financial and Insurance institutions. African Development Bank is one of the local institutions to support the Power Africa’s ambitious program.

Funding

A fact sheet released from the white house immediately after President Obama’s announcement of Power Africa initiative confirmed the agencies through which the funding to disbursed as;

  • The U.S. Agency for International Development (USAID) will provide $285 million in technical assistance, grants and risk mitigation to advance private sector energy transactions and help governments adopt and implement the policy, regulatory, and other reforms necessary to attract private sector investment in the energy and power sectors.
  • The Overseas Private Investment Corporation (OPIC) will commit up to $1.5 billion in financing and insurance.
  • The U.S. Export-Import Bank (Ex-Im) will make available up to $5 billion in support of U.S. exports for the development of power projects.
  • The Millennium Challenge Corporation (MCC) will invest up to $1 billion in African power systems through its country compacts to increase access and the reliability and sustainability of electricity supply through investments in energy infrastructure, policy and regulatory reforms and institutional capacity building.
  • OPIC and the U.S. Trade and Development Agency (USTDA) will provide up to $20 million in project preparation, feasibility and technical assistance grants to develop renewable energy projects. These efforts will be coordinated through the U.S.
  • Africa Clean Energy Finance Initiative (US-ACEF) and supported by the recently launched U.S. – Africa Clean Energy Development and Finance Center (CEDFC) in Johannesburg, South Africa.
  • The U.S. African Development Foundation (USADF) will launch a $2 million Off-Grid Energy Challenge to
    provide grants of up to $100,000 to African-owned and operated enterprises to develop or expand the use of proven technologies for off-grid electricity benefiting rural and marginal populations.

From the Private Sector

The US private Sector partners have undertaken to inject more than $9 billion in initial commitments to support the
development of more than 8,000 megawatts of new electricity generation in sub-Saharan Africa. Examples of commitments to-date include:

  • General Electric to help bring online 5,000 megawatts of new, affordable energy through provision of its
    technologies, expertise and capital in Tanzania and Ghana.
  • Heirs Holdings to $2.5 billion of investment and financing in energy, generating an additional 2,000
    megawatts of electricity capacity over next five years.
  • Symbion Power aims to catalyze $1.8 billion in investment to support 1,500 megawatts of new
    energy projects in Power Africa countries over the next five years.
  • Aldwych International commits to developing 400 MW of clean, wind power in Kenya and Tanzania –
    which will represent the first large-scale wind projects in each of these countries, and an associated investment of $1.1 billion.
  • Harith General Partners commits to $70 million in investment for clean, wind energy in Kenya and
    $500 million across the African power sector via a new fund.
  • Husk Power Systems will seek to complete installation of 200 decentralized biomass-based mini power
    plants in Tanzania – providing affordable lighting for 60,000 households.
  • The African Finance Corporation intends to invest $250 million in the power sectors of Ghana, Kenya
    and Nigeria, catalyzing $1 billion in investment in sub-Saharan Africa energy projects.

THE US GOVERNMENT CHOSES KENYA TO BE THE NERVE CENTRE FOR POWER AFRICA PROJECT

The U.S. Agency for International Development (USAID) Nairobi offices based at the US embassy premises in
Gigiri will serve as the coordinating centre for the Power Africa project announced by President Obama.

Mr. Andrew Herscowitz who will serve as the coordinator for both Power Africa and Trade Africa has already relocated from Washington to be roll-out the implementation plan.

The Six focus states are required to establish separate offices and hire transaction advisers and international legal experts whose responsibilities will include identifying bankable projects, tracking transactions as well negotiating power purchasing agreements. They will also be the key link persons between the partner states governments and US Embassies. This is for the purposes of sorting out any hitches that might delay projects.

The power purchasing agreements are a critical in determining the financial viability of the project and duration for investors to recoup their investments expertise deployed on the ground to participate in construction.

Aim of POWER PROJECT

  1. Create employment
  2. Industrializations
  3. Agri business
  4. Promote trade
  5. Improve livelihoods of the rural

Expected challenges

  1. Lengthy bureaucratic negotiations
  2. Land issues

In 2014, OPIC and USAID will jointly host an African energy and infrastructure investment conference. The conference will bring investors, developers, and companies together with U.S. and African government officials to demonstrate the opportunities for investment and the tools and resources available from the U.S. government and other partners to support investment.

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