African Utility Week - Is Africa Open for Business?

Africa’s utilities need to transform themselves as they tackle challenges holistically.
Published: Tue 26 May 2015
Interviews with industry speakers at African Utility Week

The theme of this year’s African Utility Week was ‘Africa is open for business.’ The statement was certainly echoed by many of the top industry representatives and speakers during the live studio interviews that Engerati conducted during the course of the event. However, many also hinted at the urgent need for a 'return to the basics' and suggested a significant transformation in the way in which the continent aims to meet its energy development goals.

Less talk, more action

For instance, Mr Hindpal Jabbal, former chairman of the Kenya Energy Regulatory Commission, believes that decision-makers in the industry need to change the way in which they tackle energy development projects. He explains: “Planning must be done properly and should be based on real needs to avoid undersupply or oversupply, which can be costly. Often unrealistic (however optimistic) expectations lead to incomplete or unsuccessful projects. It is important to set realistic targets that are likely to be achieved.” He added that communicating project processes effectively to all roleplayers is critical if they are to work towards the same goals together.

“African countries plan too much, without much execution. Our planning in Africa is poor and unrealistic. Role players should focus on short-term projects and tackle one project at a time. They should plan no more than five years ahead.”

While South Africa’s Independent Power Producers Programme (IPPP) has been labeled a success by many, it would seem that transmission grid planning has become a challenge. Mbulelo Kibido, general manager of Transmission Grid Planning, Eskom explained that the increase in roleplayers had added another level of complexity to transmission grid planning. “My department has to now work with people with different timelines and different objectives, which makes our planning a challenge.”

Mr Kibido explained that his department was never sure of where successful bidders’ plans will materialize because the bidding process runs independently of Eskom. Only when successful projects are announced does the transmission sector know where the grid must be strengthened and sometimes there isn’t always enough capital available as it hadn’t been budgeted for. Going into the fourth bidding phase, Mr Kibido assures us that the project planning gap is about to be closed. When asked about meeting transmission grid planning goals, Mr Kibido says that there has always been an “inability to execute all of these highly ambitious plans.”

Mr Jabbal also makes mention of the fact that African countries need to start sharing more power with each other as this will alleviate the problem of power shortages. “Trust and efficient planning between countries is lacking and this is what is standing in the way of power interconnection which could solve power security.” [Engerati-Network Interconnection in Africa is Critical to Transmission Development.]

The simple matter of economics

Another issue which came up is that many Africans simply cannot afford electricity.

Mr Jabbal says that many African governments ignore the fact that many Africans simply cannot afford electrical appliances so electricity usage is low as a result. The majority of Africa’s energy needs are met by wood and charcoal. In order to increase consumption levels, income levels need to be elevated.

Imraan Mohamed, Marketing Director, Itron discusses the need for African countries to focus more on developing their own power needs instead of spending so much on power exports. The International Energy Agency reports that over the last decade, sub-Saharan Africa invested $55 billion per annum in the energy sector. Two thirds of that is spent on the export of energy. Mr Mohamed says that this scenario has to change if Africa wants to develop its own energy sector and economy. He explains, “Governments need money from exports but somewhere along that line, the ratio might be a bit off.”

“It is difficult to find a balance between investing in the energy sector and developing basic needs like providing clean water and food. Priorities need to be managed better. On the energy sector side, too much emphasis is placed on the generation side and not enough focus exists on the value chain further down.”

Mr Mohamed suggests that all role players need to get involved, including communities. “They should break down the challenge into smaller manageable sizes with achievable goals-goals that can be realised in a two to three year period. Africa can leapfrog many structural and financial challenges by creating sustainable community-based microgrids so that access is made quicker instead of waiting for large infrastructure projects to materialize.”

Prioritising customers

Rob Doepel, a partner at Ernst & Young, believes that when it comes to planning energy projects, specifically smart metering, it is critical that utilities are more confident when engaging with customers. “The relationship needs to change. Utilities have to start engaging in different ways to reach out to their customers.”

Robert Mubiru, UMEME in Uganda, says that while utilities enjoy the benefits of having smart meters, customers should know what’s in it for them too. "It is important for customers to know that it will benefit them too. They can look forward to a more proactive and reliable service, and improved power quality, for instance."

According to Mr Mubiru, it is important that both customers and roleplayers understand the development or deployment process because without this buy-in, a project has the potential to fail.

It is clear that a fundamental shift has to take place for many stakeholders as they tackle their challenges in a more holistic manner.