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US plans to back energy infrastructure investment in Africa move ahead

The US House of Representatives has passed a bill which paves the way for the federal government to support increased US investment in Africa’s development and growth, with the goal of giving more than 50 million Africans access to reliable energy supplies.

The ‘Electrify Africa Act of 2014’, passed on 9 May, has now moved to the Senate. If enacted, the US will be able to offer government-backed credits for energy structure investments by the private sector. The US Trade and Development Agency would be given the task of promoting private sector participation in energy sector development and seeking opportunities to fund project preparation activities including power generation.

The administrator of the US Agency for International Development (USAID) Rajiv Shah said the proposed legislation would boost cooperation under the Obama administration’s ‘Power Africa’ energy initiative.

Shah said: “This act will increase Power Africa’s ability to catalyse private investment and spread energy access in Africa. I just returned from the World Economic Forum in Abuja, Nigeria... What came shining through each interaction was how African entrepreneurs are ready today to grow their economies if given reliable access to energy.”

Power Africa was launched by President Barack Obama in June 2013 in South Africa. The programme’s goal is designed to boost energy security, increase economic growth and decrease poverty by investing in oil and gas, wind, solar, hydropower and geothermal resources across the continent.

For the first five-year phase of Power Africa, up to 2018, the US government has already committed more than $7 billion in financial support and loan guarantees, in addition to the support and expertise of 12 federal US agencies. Development finance partners include the African Development Bank and the World Bank.

According to USAID, every dollar the US government has committed to Power Africa has already attracted $2 in private sector investment commitments. Power Africa’s financial partners have committed to providing more than $14bn in project finance through direct loans, guarantee facilities, and equity investments.

Projects include an agreement between Ethiopia’s government, the Ethiopian Electric Power Corporation and Reykjavik Geothermal of Iceland to establish the Corbetti geothermal power plant, which will be the first independent power project in Ethiopia’s history. Drilling for the $2bn plant, which is planned to have a generating capacity of 500 megawatts by 2020, is expected to begin in July of this year.

Under another deal, the Kinangop wind park will be built in Kenya with the support of Kenya’s government. Africa’s Standard Bank Group and its Kenyan subsidiary CfC Stanbic Bank have signed a deal with independent power producer, Aeolus Kenya, to build the $150 million 60MW wind plant, which will be the largest wind power generation farm in sub-Saharan Africa to date.

The International Energy Agency (IEA) said in 2012 that Africa is “ripe for a boom in renewable energy, in particular solar power, offering a new, cleaner energy that will bring more jobs and a resource that will never dry up”.

IEA executive director Maria van der Hoeven said: “It seems odd to advocate solar and wind power in an area which holds 50% of the world’s crude oil and 40% of its gas. But even the world’s biggest oil and gas exporters have an interest in diversifying their energy portfolio.”

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