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World Bank grant to help attract energy investment for Southern Africa

Out-Law News | 20 Nov 2014 | 10:12 am | 1 min. read

The World Bank has approved a $20 million International Development Association (IDA) grant to help generate international investment in large-scale sustainable energy projects in Southern Africa.

The bank said the grant will  finance the preparation of regional energy projects under the 12-country Southern African Power Pool (SAPP) and “help leverage the investment needed to support transformational projects that generate large amounts of electricity and transmit it across Southern Africa”.

Southern African countries “have significant resources for generating power” but need specialised technical expertise to develop sources of energy “so that they are able to raise the significant investments required from the private sector”, the bank said.

The programme will fund feasibility studies and assessments “with an aim to attracting investors, who often require high quality information and legal agreements”, the bank said. The programme will also support brokering and “finalising cross-border political, technical and commercial agreements in order to attract sufficient private sector financing”.

In addition, a dedicated team of experts will provide support for the preparation of key investment projects for potential investors.

The SAPP (92-page / 11.3 MB PDF) coordinates the power systems of 12 Southern Africa Development Community countries (Angola, Botswana, the Democratic Republic of Congo, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe). Nine of the countries are so-called ‘operating members’, meaning they are linked to the interconnected grid that carries around 97% of energy produced in the SAPP.

The bank’s regional integration director for Africa Colin Bruce said: “Across Southern Africa, insufficient and unreliable electricity is a huge barrier to attracting investments, expanding exports, and creating jobs.” The bank’s support “will help strengthen the capacity of Southern African countries to prepare and mobilise funding for priority regional projects”, Bruce said.

According to the bank, annual IDA commitments “have increased steadily” and averaged about $16 billion over the last three years, with about 50% of commitments being made to Africa.

Earlier this year, the bank committed $5 billion in new technical and financial support to encourage increased international investments in energy infrastructure projects in six African nations under the US-backed Power Africa programme.

Bank president Jim Yong Kim said the package would include direct financing, investment guarantees and advisory services for project preparation in Power Africa’s initial partner countries Ethiopia, Ghana, Nigeria, Tanzania, Kenya and Liberia.