Media Contacts In Washington: Herbert Y. Boh 1 202 473 3548 hboh@worldbank.org In Tanzania: Rosalie Ferrao 255 22 2163251 rferrao@worldbank.org ARUSHA (Tanzania), June 3, 2008 - The power sector – long neglected in Africa – now demands urgent attention and a “New Deal”, the World Bank said Tuesday. “Inadequate power supply is constraining the growth of the continent, and curtailing the productivity of the enterprise sector,” the World Bank’s Vice President for the Africa Region Ms. Obiageli Ezekwesili said in her remarks delivered at the eighth edition of the Sullivan Summit holding in Arusha, Tanzania (1-4 June 2008). “African manufacturing enterprises report an average of 56 days of power outages per year. As a result, firms lose 5-6% of sales revenues – with losses as high as 20% of sales in the informal sector,” Ms. Ezekwesili noted. The cost of power outages typically amounts to around 2% of GDP. Average electricity tariffs in Africa have almost doubled compared to those in the developing world since 2000, but even so, revenues usually are barely sufficient to cover operating costs, not to mention capital cost. Among other reasons, the World Bank official blamed a “combination of poor planning and inadequate finance” as well as insolvent power utilities for the crisis in the sector. Africa’s power sector is also held back by insufficient capacity (only 68 GW of power generated, the equivalent of the power generated by Spain) and low access (only 25% of sub-Saharan Africans have electricity). “To redress its chronic power shortages and make progress on electrification, Africa needs to invest about 3% of GDP (or more than US$20 billion per year) in the power sector (mainly to generation assets), and allocate a similar amount for operations and maintenance, Ms. Ezekwesili said, pointing out that this would require quality planning, international cooperation and a dedication to transparency and good governance.” She called for sustained, concerted, and simultaneous action on strategic and interdependent priorities aimed at scaling-up regional generation capacity and improving the effectiveness and governance of utilities. “Regional power trade is the most cost-effective way to develop the continent’s energy resources, yielding handsome rates of return on investments in cross-border interconnection,” Ms. Ezekwesili said. Furthermore, by enabling development of otherwise prohibitive large scale hydro projects, regional trade will contribute significantly to reducing carbon emissions. The World Bank official urged African governments to ensure that any new energy supply must be more equitably distributed across Africa’s populations by rolling out electrification programs. She called on governments to ensure that power subsidies that are currently absorbed by under-pricing power supplies to the better-off should be redirected to fund access subsidies for the poor. Admitting that grid extension will take time, the World Bank made the case for the cost effectiveness of off-grid models based on innovative renewable technologies. For example, low-cost portable solar lanterns are one consumer product that could be accessible and affordable to the rural public, and the "Lighting Africa" initiative launched by the World Bank a few weeks ago in Ghana supports the development of such a market, she pointed out. The darkness trap in which the continent finds itself can be partially explained by the fact, she said, that some of Africa’s most cost-effective energy resources are concentrated in countries that are remote from major centers of demand, and too poor to raise the multi-billion dollar finance needed to develop them. For example, 60% of sub-Saharan Africa’s hydro-electric potential is to be found in DR Congo and Ethiopia alone.
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