• Saturday, May 25, 2024
businessday logo

BusinessDay

Dearth of private investments hinders West African sub-regional electricity market

businessday-icon

The West African electricity market presents huge benefits, especially to private generating, transmission and distributing companies. Regional electricity integration would open up the power market in the sub-region, deepen the existing market and lower cost, which is passed on to end users as lower tariffs – a win-win situation.

Despite its benefits, integrating West Africa’s electricity markets and developing the necessary generation remains a large and complex undertaking in terms of coordination, capital costs and significant project risks.

The investment requirement to develop the needed electricity transmission lines and power generation capabilities is about $24 billion according to a 2011 ECOWAS report.

This has made direct private sector investment in the regional electricity supply market low, with the public sector and International Financial Institutions (IFIs) contributing the majority of funding to West African Power Pool (WAPP).

The West African Power Pool (WAPP) is a specialized institution of ECOWAS. It covers 14 of the 15 countries of the regional economic community (Benin, Côte d’Ivoire, Burkina Faso, Ghana, Gambia, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo). The aim of WAPP is to ensure Regional Power System integration and the realization of a Regional Electricity Market.

To this end, $4 billion (N620 billion) had been raised by 2012 to fund electricity transmission projects across the sub-region.

“The interconnection system that we are putting in place is to put all ECOWAS member states together through an electricity network.

“Right now, we have Nigeria, Benin, Togo, Ghana, Burkina Faso, Ivory Coast, Niger, Mali, Senegal and Mauritania interconnected through the integration regime and we are up to start implementing interconnection between Ivory Coast, Liberia, Senegal, Nigeria in 225 KV Transmission lines with 12 Sub Stations”, said Ahmadou Diallo, Secretary General of WAPP.

He added that the group is also working on hydro power plants in Mali, Liberia, Guinea and Ghana, increasing the interconnection between Nigeria and Niger, and doubling the transmission line between Nigeria to Benin.

WAPP is made up of Public and Private Generation, Transmission and Distribution companies involved in the operation of the electricity in West Africa.

In Nigeria, Bart Nnaji, the former Minister for Power revealed at the Commonwealth Energy Summit in 2012 that Nigeria is currently selling power to two countries, Benin and Niger, under the West Africa Power Pool, WAPP.

He added that Nigeria plans to export power beyond the West African region to Central and South African countries as well. “We want to create highways for the export of power in Africa and the transmission highway will be done and the tariff will be governed by the same principles that govern such services”, he said.

Ghana, as well, is setting out to supply electricity to neighbouring countries. John Mahama, Ghanaian President, revealed recently that plans have been set in motion to enable Ghana export thousands of megawatts of electricity to Nigeria, Ivory Coast and other neighbouring countries that have a power deficit.

Mahama made this disclosure at the Africa Global Business and Economic Forum in Dubai adding that his government had made huge investments in power generation that would enable the country to export excess electricity to Nigeria and others.

“We have given priority to electricity generation in our country. We have prioritised energy in such a way that we want to become the hub for power production in West Africa. We want to generate electricity to the point that excess power can be exported to Nigeria, Ivory Coast and other countries that have power deficit,” he said.

Ghana has been making plans to achieve this feat since 2009 under the President Atta Mills administration. Oteng-Adjei, the Minister of Energy at the time, had disclosed that arrangements are at an advanced stage for Ghana to be “a major exporter” of electricity to Nigeria and other countries in the West African sub-region.

Oteng-Adjei, who was represented by his deputy, Kwaminai Donkor, at the fifth Aelex Lecture in Lagos in 2009 said, “The vision of Ghana is to provide adequate and reliable energy supplies to all sectors of the economy to support socio-economic development, poverty reduction and also for export. Ghana wants to be a major exporter of electricity and arrangements have been made for this.”

Mahama revealed at the Forum in Dubai that Ghana had secured export-import financing from China as well as special funds from Abu Dhabi to commence series of power generation projects, adding that a third hydropower dam project was already at an advanced stage.

Sub-regional electricity markets are not a novelty. In Europe, the UCTE grid serves 24 countries, and in North America, the US, Canada and Mexico have interconnected transmission lines. In East Africa, Zambia, Tanzania and Kenya are interconnected via the ZTK transmission line.

YINKA ABRAHAM