Public-private solution seen boosting Africa hydro

An African bank official sees public-private partnerships as valuable tools to develop the vast hydropower potential of Africa, a continent that trails the rest of the world in needed electric capacity.

�Despite a significant practicable hydropower potential, Africa had only tapped less than 8 percent of it by the end of 2000,� Lead Infrastructure Officer Roger Gaillard of the African Development Bank (AfDB) said October 4.

The most significant undeveloped hydropower potential lies precisely in the least developed countries and continents, said Gaillard, who just returned from a presentation on the AfDB role in hydro development to the Hydro 2006 conference, September 25-27 in Greece. He said Africa has practical hydropower potential of 2,000 average terawatt-hours, but had only developed 8 percent, 160 TWh/a, by 2000.

Gaillard said recent drastic increases in oil prices have increased interest in hydropower as a renewable, non-polluting resource that can decrease dependence on fossil fuels.

However, he said hydro development is so capital intensive, it is difficult for governments and the public sector to mobilize sufficient funds. At the same time, political and market risks are perceived as high.

Public-private ventures allot risk among parties

The African bank official said public-private partnerships can help solve those problems by combining the skills and capacities of both sectors to handle complex transactions. Under such partnerships: Government sets policy, identifies need, and enforces regulations and contracts; private sector companies compete to fulfill the identified needs; and risks are transferred to the parties best suited to manage them.

�This approach seems to be the best guarantor of reality of the costs, optimization of technologies, and maintenance, without compromise, of expensive installations,� he said.

Gaillard said it is urgent to pursue the course outlined in March by the first African Ministerial Conference on Hydropower and Sustainable Development, which met in Johannesburg, South Africa. (HNN 3/15/06) The ministers called for joint action to develop Africa’s hydropower potential for sustainable development, water and energy security, and poverty eradication.

AfDB seen as �catalyst� for hydro development

The official outlined AfDB’s role in hydro development, including acting as a �catalyst� providing comfort to project sponsors and stakeholders, leveraging support, and offering advisory services. It also provides financing tools such as equity participation, senior loans, and guarantees.

Gaillard noted the AfDB, through its public sector �window,� has aided the 50-MW Bumbuna hydro project in Sierra Leone (HNN 8/11/06); the four-nation Gambia River development organization, Organisation pour la Mise en Valeur du Fleuve Gambie (OMVG); the potential 40,000-MW Inga complex in Democratic Republic of Congo (HNN 10/9/06); and the 61.5-MW Rusumo Falls project on the Kagera River in four East Africa nations. (HNN 7/13/06)

Working through its private sector window, AfDB has assisted the investment program of utility AES SONEL in Cameroon (HNN 6/5/06); 250-MW Bujagali Falls in Uganda (HNN 9/15/06); additional OMVG development; the Memvele hydro project in Cameroon, and mini-hydro plants in Madagascar and East Africa.

For information, contact R.M. Gaillard, Lead Officer, Infrastructure and PPPs, African Development Bank, B.P. 323 1002, Tunis Belvedere, Tunisia; (216) 71-102132; Fax: (216) 71-332695; E-mail: r.gaillard@afdb.org; Internet: www.afdb.org.

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