Plenary 2 | “Power Sector in Africa: Fundamental for Sustainable Development”
In “The Power Sector in Africa: Fundamental for Sustainable Development,” panelists examined how African governments are trying to take advantage of the opportunities to generate electricity from coal, hydro, natural gas, solar and wind energy in order to meet Africa’s power needs. They highlighted the success stories in investment in the African power sector, and the aggressive reforms being pursued by various African governments to attract foreign investment into the power sector. It was also noted that adequate power supply in Africa is the key to unlocking other sectors in Africa, which would bring about sustainable economic development in the continent.
However, the African power sector has a huge funding deficit, and it will require concerted effort and partnership between the public and private sector to mobilize the huge funding required for investment in the sector. The panel discussed the concept that providing investment incentives to the private sector and embarking on investor friendly legal and regulatory reforms is fundamental to attracting private sector investors into the African power sector, as well as the imperative for alternative sources of clean energy in the African continent.
Workshop 1 | “Financing the Power Sector in Africa: Challenges and Opportunities”
In “Financing the Power Sector in Africa: Challenges and Opportunities” panelists touched on how the lack of adequate power supply is a key constraint in actualizing Africa’s economic growth potential. According to information from the International Finance Corporation, Africa’s power sector alone requires an estimated $29 billion per year in capital expenditure over the next ten years. Mobilizing private sector investment is crucial if this level of investment is to be achieved. However, this investment flow has been difficult to achieve as the private sector is generally still hesitant to get involved, resulting in increased costs for acquiring capital to finance investment in Africa’s power sector. The workshop addressed both traditional and alternative sources of generating capital to finance Africa’s power sector, and highlighted other mechanisms that should be part of the conversation. The panel also highlighted the high returns that could be earned from investing in the power sector as well as the incentives being provided by governments to encourage investment in their respective countries.
Workshop 2 | “Policy and Partnerships to Develop the Power Sector in Africa”
In “Policy and Partnerships to Develop the Power Sector in Africa,” panelists discussed how demand for electricity continues to surge in most parts of Africa, with no corresponding increase in the availability of electricity. This is due to the capital intensive nature of generating, transmitting, and distributing electricity. Several African governments have realized that they cannot cope with the financial burden of maintaining these facilities, and have turned to the private sector to fill the vacuum. The panel examined the policy initiatives being pursued by concerned African governments to encourage greater private sector participation and the challenges being encountered by governments in the region. Questions addressed by the panel covered topics from the types of Public Private Partnership (PPP) initiatives are being initiated in the region, to the measures governments can take to implement new tariff rates that encourage greater private sector participation.
Workshop 3 | “Renewable Energy: Prospects for Sustainable Power Supply in Africa”
The workshop “Renewable Energy: Prospects for Sustainable Power Supply in Africa” highlighted the consensus among governments, the private sector, development experts, individual consumers and other stakeholders that the lack of power is one of the single most important elements keeping African economies from achieving desired growth. This is the reality despite the diversity of resources to generate power throughout Africa, which can be used to meet growth in demand with combination of right policy initiatives and room for private sector participation in power generation, transmission and distribution. From the Lake Turkana Wind Power project in Kenya that will add 30 percent or more to installed capacity in the country, to South Africa’s Integrated Resource Plan that calls for 17.8 GW of renewable energy capacity to be built by 2030, renewable energy will play a role in Africa’s future. While some countries are well ahead in their planning and implementation process, others have set of goals that require clarification and practicality. From a policy and project stand point, panelists examined factors that may contribute to the success of renewable energy programs and recommended what needs to be done to expedite its adoption in Africa.
Workshop 4 | “Ghana and Mozambique: A Closer Look at Power Sector Development”
With only eight percent of the population having access to electricity, Mozambique is aggressively developing its power infrastructure. The country recently approved a 15-year renewable energy development strategy, and the Ministry of Energy has said private sector investors might fund and own the projects. With hydroelectric as one of the country’s biggest sources of power and plans to supply Southern Africa with 6,000 MW from Cahora Bassa dam by 2014, Mozambique is a major source for power in southern Africa. Ghana, on the other hand, is a case study that offers lessons for both governments and companies on how to establish partnerships in the power sector and apply effective stakeholder management. The session looked closely at these countries, examined how others are improving their power infrastructure to similar or greater degree, and provided critical input to businesses interested in getting involved in this challenging but lucrative sector in Africa.
Plenary 4 | “Africa's Role in Global Energy Supplies: Opportunities and Challenges”
In “Africa’s Role in Global Energy Supplies: Opportunities and Challenges,” panelists covered topics including managing revenues and spending wisely; energy, poverty and access; introducing renewables; improving efficiency; and structural reforms and the importance of transparency. The panel noted several challenges to global energy supplies, from recent turmoil in the Middle East, to rapidly increasing consumption in China and India. Africa’s role as a major provider of global energy supplies therefore has huge implications for the continent’s development. Panelists noted that even as the global economy weakens, demand for energy remains strong. Plenary discussions also addressed key challenges from good governance, to corporate operational integrity. A key concern is how African countries blessed with energy resources can use the opportunity and global energy challenge as a platform for economic transformation and improve living standards of their citizenry.
From Nigeria, Foluso Phillips shared valuable lessons for emerging global energy suppliers on how to maximize benefits to the local economy. Phillips emphasized that countries must work out what their revenue expenditure model and comparative advantage will be, and use revenue to drive development in more sustainable sectors of the economy, such as infrastructure or agriculture. David Sandalow touched on future trends in renewables and clean energies, and cited examples including South Africa’s electric vehicle industry and Angola’s wind development. Sandalow commented on the need to facilitate positive relationships with oil companies through procedures, rules, and regulations that allow value to be drawn from the whole scheme. From the private sector, Michael Fry outlined some of Exxon’s major programs to address a number of community challenges, as well as issues in the energy sector. In 2010 alone, Exxon’s direct community investment in Africa totaled $33 million. Fry also discussed the importance of production efficiency in the energy sector, as the world’s total energy demand is expected to grow by about 35 percent by 2030.
Workshop 1 | “Maximizing National Energy Potential through Local Content Initiatives”
In “Maximizing National Energy Potential through Local Content Initiatives,” speakers shared insights on key issues surrounding local content initiatives, including supply chain management and skills development and driving local economic growth. Panelists brought local, global, private and public perspectives to the discussions. Moderator Stanley Subramoney raised central questions on local content initiatives, from how to manage the local in local content, to whether local content is a cost benefit. Dierdre Lapin discussed how the new local content regulation constitutes a paradigm shift in the evolving relationship between the energy industry, and the economies and societies of Africa. These local content initiatives point to a changing dynamic of the shared benefit and responsibility between a company and society, while opening up a more democratic process of engagement. K.C. Stewart shared how Chevron looks to develop knowledge sharing opportunities to enable global success at the local level. A central topic of the workshop was how, increasingly, oil companies have sought out the well-planned, long-lasting and high impact programs found in local content initiatives. Laurie Schmidt outlined Shell’s work in the Niger Delta to train local community members to industry standards. Moreover, Shell has been working to help local communities form more viable companies through training in project management and entrepreneurship. Michael Levett also highlighted the growing importance and prominence of local content initiatives; CDC Development Solutions is unique among organizations doing development work in that it is largely financed by corporate contracts and works to build the capacities of local companies to be suppliers of goods and services to oil companies.
Workshop 2 | “Extractive Industry Transparency Initiative (EITI) & Voluntary Principles: Impact on National Governments”
The Workshop on “Extractive Industry Transparency Initiative (EITI) & Voluntary Principles: Impact on National Governments,” discussed the issues associated with EITI, its potential, and whether EITI can be successful in achieving the goals that its initial proponents laid out. The session then discussed the voluntary principles and its impact and potential to serve as an enabler for business. Revenues from oil and mining represent the single greatest source of financing for development in Africa. In 2008, aid for Africa was $36 billion; the size of natural resource rents, on the other hand, was $240 billion. Such figures underscore the vast amount of financing that is potentially available from natural resources. In this way, the transparency that EITI works towards is of vital importance, first to assess whether governments are getting a fair deal, and, second to assess what governments are doing with the money once they get it. Judge Mark Bomani shared the value of EITI and the Voluntary Principles in Tanzania specifically, as it offers a means of easing the public’s concerns about extractive companies. Alexandra Gillies emphasized the fact that EITI is fundamentally a governance and development initiative which seeks to enhance the overall management of natural resources in ways that include civil society. This principle has global importance, as a lack of transparency has frequently translated into poor governance. While panelists brought up some of EITI’s enduring shortcomings, they also emphasized the immense progress that has been made. As Bennett Freeman highlighted , with both initiatives there has been a fundamental convergence of interest in the past five years around achieving greater transparency in revenue payments, both on the government side, and on the company side. Sarah Altschuller described the Voluntary Principles as providing a platform for engagement and discussion on a number of security issues in the extractive sectors. Similarly, Bennett Freeman noted how the Voluntary Principles can act as an enabler for business.
Workshop 3 | “Corporate Social Responsibility as an Incentive for Business in Africa”
The energy workshop which focused on “Corporate Social Responsibility as an Incentive for Business in Africa,” stressed the move away from corporate philanthropy towards CSR as a form of strategic community investment. Done properly, CSR can be a competitive advantage for a particular company, and, accordingly, support has been growing among companies for integrating CSR into both business and daily operations. Paula Luff discussed how, for Hess, the company’s social and environmental footprint is increasingly regarded in the same way as other financial risks. Benefits must be framed in a way that ensures value on both sides, otherwise, by definition, an initiative won’t be sustainable. Similarly, Dafna Tapiero discussed the development of the financial valuation tool, which is one method of quantifying the return of a company’s investment in sustainability. CSR specialists can now talk in dollar terms about the value that they are bringing back to the business. Panelists elaborated on why CSR has been particularly fundamental to the extractive sector; the extractive sector often necessitates uniquely long time commitments of 20-30 years on the ground, which creates an imperative to manage relationships and address regional issues. Dennis Flemming noted that by working with other donors in partnership, CSR initiatives result in better programs by providing diverse perspectives. Michael Oxman discussed the importance of tailoring a portfolio of tools and processes for certain circumstances and for certain companies. Panelists stressed that attention to CSR will continue to evolve as it gains prominence as a means of delivering value from sustainable local benefits.