 The Middle East and North Africa (MENA) region is rich in natural resources: it sits on 56 percent of the world’s proven oil reserves and 41% of proven natural gas resources. However, these resources tend to be unevenly distributed within the region, leading to a large gap between countries rich in natural resources and countries dependent on them. In terms of the population’s energy access, the regional average, estimated at 90 percent, is good with many countries’ performance close to reaching a 100 percent. But despite this encouraging figure, an estimated 28 million people still lack access to electricity, especially in rural areas and about 8 million people rely on biomass for all their energy needs. Furthermore, in many countries, a weak regulatory framework, sub-optimal utility performance, and low cost-recovery remain common threats to the financial viability of the sector, which in turn prove to be a heavy burden on government budgets, and to overall economic growth.
Perhaps a unique feature of the region’s energy sector is its fast growth in the levels of total and per capita energy consumption. According to the most comprehensive data now available, the low and middle income countries in the region produced 26 percent more energy in 2002 than in 1990. Over the same period, energy consumption in these countries has grown by 75 percent and energy use per capita has increased by 36 percent. The average annual growth of energy use between 1990 and 2002 estimated at 4.5 percent has been the largest across the regions. Energy efficiency is a major issue. There are considerable differences across the region’s client governments in the energy sector and solutions are tailored to fit each country’s specific national context. However, there are also a number of noteworthy commonalities: Ø In most countries where oil and gas resources are large, but per capita incomes have been falling, price distortions are considerable and cost recovery in electricity is low. In many countries this has led to the inefficient use of supply, high energy intensive use and increased environmental problems accompanied by a rapidly increasing burden on government finances, particularly within the energy sector; Ø Energy subsidies consume a high percentage of revenue in many countries and although intended to benefit the poor, it is not always the poor that benefit most. In addition, energy subsidies encourage wasteful consumption, environmental degradation, and transport congestion. The importance of energy subsidy reform to sustainable development and the possibility of effectively using savings from these reforms to construct targeted safety nets for the poor are often not recognized by these countries. Ø In countries which are net importers of fossil fuels, efforts have been made to reduce price distortions and improve cost recovery within the sector. However, rising prices of imported fossil fuels poses a major challenge to these efforts; Ø Overall, the region offers a wide scope for reducing the cost of electricity supply, improving the efficiency of supply and energy conservation, as well as the development of renewable energy resources. Currently, the energy portfolio in MENA consists of seven investment operations under implementation, aggregating to over US$500 million. In addition, three Guarantees totaling about US$150 million and two Global Environmental Fund (GEF) operations amounting to about US$52 million are also under implementation. The portfolio continues to grow with fifteen projects under preparation totaling over US$2 billion in Yemen, Morocco, Egypt, Jordan, Lebanon, West Bank and Gaza and Tunisia. The projects range from investment operations to Development Policy Loans and climate change activities. There are also numerous pieces of analytical work addressing issues such as energy efficiency, sector restructuring and gas market development amongst others. For more information, see the Regional Energy Brief |
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