Africa’s chronic power problems : West Africa power pool could be a game-changer

• Main Author: Mulangu, Francis
• Other Authors: Nanyang Business School
• Format: Newsletter
• Language: English
• Published: 2020
• Subjects: Business; Business::General; Africa; Power Pool
• Online Access: https://hdl.handle.net/10356/142626
• Institution: Nanyang Technological University

The World Bank released its 2020 Doing Business report in October. Once more Sub-Saharan Africa (SSA), accompanied by South America, occupies the bottom rank. Despite steady progress and reform over the past decade, the gap between SSA countries and other regions remains vast. Reform of its electricity industry is one of the weakest links in the continent’s infrastructure. SSA has the world’s highest electricity cost per capita, while scoring lowest for supply reliability and tariff transparency. Several SSA countries sought to address this situation in recent years. Some countries, lacking natural endowment in hydroelectric or natural gas sources, imported electricity from better-endowed neighbors. Regional political bodies established wholesale markets to formalize these trades. Africa now has six power pools: member countries with surpluses or shortages trade electricity at market rates. Power pools address inefficient spatial distribution of electricity between low cost supplier and high demand countries. Results from these African power pools are mixed. This is due to limited resources for building the necessary infrastructure, rising demand for electricity as African economies develop, and the limited capacity of related institutions, such as regional regulators and dispatch entities. The West African Power Pool (WAPP) is positioned to rewrite that story. WAPP enjoys strong support from donors willing to build interconnectors. Ghana, Cote d’Ivoire, and Senegal have newly discovered natural gas reserves. These supply factors, combined with increasing government willingness to initiate tough sector reforms (such as reducing the monopolistic power of national utilities), may be a blueprint to re-wire the continent’s power pools to increase business competitiveness. After describing WAPP, this article profiles four WAPP countries, discuss challenges facing the two types of stakeholders, and closes with recommendations. The discussion will apply the EM classification of the selected WAPP countries to highlight the opportunities and challenges to WAPP in their private sectors.