Pricing mechanism, cleaner energy and private partnerships key to energy crisis

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Southern Times Writer

Harare - Power cuts in Southern Africa have become a serious threat to economic growth for the region.

Countries such as South Africa, Angola and Zimbabwe have been facing massive blackouts where in Zimbabwe the outages have been for more than 10 hours in a day. Recent reports from Malawi and Zambia have indicated that the countries are setting to initiate power cut schedules in the coming months.

The ongoing power cuts are severely affecting businesses and citizens livelihoods and if not addressed may lead to a decline in production and investment and increased unemployment.

According to the Africa Development Bank, the major causes of the power blackouts in Africa is that the continent’s power infrastructure is poorly maintained, prone to collapse and unable to keep up with surging demand. Another cause is that African utilities are heavily indebted.

They are selling power at a cost sometimes lower than that of production. So, they are making losses and have hardly any resources with which to maintain their current infrastructure, hence are failing to sustain the needed demand.

The International Energy Agency (IEA) revealed that Africa needs over USD$300 billion to generate additional electricity capacity, upgrade installed equipment and outspread transmission and distribution networks to households and factories.

The question therefore is, what are the immediate solutions to the blackout challenges that  can be implemented while funds are being raised to upgrade and extend the current stations? In an interview by Africa Renewal, Ram Babu, chief power engineer at the ADB, stated: “What are needed are smart subsidies, to facilitate connection to the grid and for those with lower levels of consumption. Most Africans, except the very poor, are willing to pay for electricity, since they already pay for candles, kerosene, firewood and other sources of power.

“Expanding access will thus mean reducing the costs of connection, while ensuring that the better off pay more for their electricity use. This would provide utilities with the resources to maintain their systems. Small businesses are often willing to pay a little more than the current rate, if that would enable utilities to maintain power and avoid periodic blackouts, which can inflict serious losses on business activities. So instead of keeping electricity prices artificially low, Babu argues, governments would be better advised to use a tiered system of charges.”

According to the World Bank the Kenyan route is a best practise that African governments can consider as a solution to power cuts. An initiative Kenya introduced is changing the price mechanisms of electricity to allow income to flow to the utility provider. An ideal scenario will be that poorer sectors of the community that consume less pay a lower rate than middle-income sectors that consume more. And industries and large businesses pay rates that increase steadily with their level of usage. These power revenues enable the government to subsidize grid connection fees.

The Kenyan government also opened the generation of electricity to private companies, which compete to sell power to the government-run transmission utility. The move increased the power supply and ended the blackouts. The government also sold shares in its transmission company and main power producer, increasing public scrutiny and pressure for better performance. This will resolve issues of corruption and inefficiency in management of the distribution and will also increase revenue through equity to upgrade the systems.

Cleaner energy is also a strong consideration as a solution although many have argued that it is not enough to produce high levels of power it can be expanded or offered by private companies for home levels or small business to even out the distribution of power.  “Renewable energy through solar power further reduces pressure on the environment, the emissions produced by coal and diesel damage the environment, as does the waste of water needed for production. Not only does renewable energy provide a sensible and sustainable solution to the energy crisis – it promotes and creates new economic opportunities”, stated Soventix, a solar company based in South Africa.

Africa needs to urgently implement energy solutions for it to meet its development goals and to align the energy needs and the rapid growing population. “There is no one-size-fits-all solution for meeting Africa’s complex energy needs. The options should be tailor-made for each region and country and should include energy efficiency at household and industry level, improved technology for use in the home and by industry, wider dissemination of renewable energy resources and technologies and development of diverse energy sources. The continent can no longer afford development setbacks; there is need for political will at the local level, and technical and financial support at the global level to choose priorities that address the majority of Africans’ needs” concluded a statement by International Rivers, an International Environmental NGO.

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