Windhoek
To become a competitive country in an ever-globalising world, industrialised economies’ input costs – like power and other utilities – must remain competitive. Equally, energy supply for households must be affordable and accessible. This is according to Minister of Finance Calle Schlettwein, who is in Lusaka, Zambia, attending the annual meeting of the African Development Bank Group.
“Currently tariffs are around 30 percent higher in Namibia compared to the southern African region, making Namibia uncompetitive,” said a concerned Schlettwein during a dialogue on climate change and energy in Lusaka. He added that to remain competitive and relevant in an increasing competitive environment, power projects must be sustainable, reliable and affordable and that countries must finance these projects with their own resources as this avoids loan “conditionalities”, which tend to increase the developmental cost.
“For Africa to improve her ability to mobilise own financial resources, better utilisation of the natural resource endowment is pivotal. We must get better returns from natural resource, such as minerals and metals, oil and gas, but also fisheries, agriculture and other renewable resources, like wildlife, timber and the likes. Access contracts must be re-negotiated to bring about better rewards,” Schlettwein said.
His comments come at a time when the president of the African Development Bank Group, Akinwumi Adesina, committed to investing US$12 billion (about N$187 billion) in the continent’s energy sector over the next five years through the New Deal on Energy for Africa.
“Africa is simply tired of being in the dark. Our goal is clear: universal access to energy for Africa within ten years. Expand grid power by 160 gigawatts. Connect 130 million persons to grid power. Connect 75 million persons to off-grid systems, and provide access to 150 million households to clean cooking energy,” said Adesina during the official opening of the meeting on Wednesday.
Adesina elaborated that the focus of these annual meetings on energy and climate change: “Just last month I travelled to a number of countries and witnessed, first-hand, the effects of El Niño on the populations. Thirteen of the 14 countries affected by the severe drought are located in east and southern Africa. Africa, which contributes less than 3 percent of the global greenhouse emissions, now suffers disproportionately from the negative impacts of climate change.”
He continued that the effects of the El Niño weather phenomenon have resulted in devastating floods in Kenya and Rwanda, while in Malawi over 8.4 million people face food insecurity. “In Ethiopia, more than 15 million are at risk of food insecurity. Vast areas of South Africa, Zambia, Zimbabwe, Lesotho and Botswana face similar challenges. The African Development Bank immediately announced financing of US$549 million to support countries to deal with drought and reduce vulnerability,” Adesina noted.
Meanwhile, during the energy debates Schlettwein encouraged public-private partnership (PPP) approaches to enhance efficiency in operational, managerial, trading aspects and leveraging private sector capital. “Structural reform is needed. State monopolies may not be the ideal structure anymore. Also, renewable resources must be mixed with traditional resources and Namibia is best placed for renewables,” said Schlettwein, who also argued for deeper integration of power pools to bring about greater grid stability and pricing.
The African Development Bank’s lending reached its highest ever by the end of December 2015, when it stood at US$9 billion (about N$140 billion). In 2015, the bank provided US$1.3 billion for energy projects and has continued to lead the way by financing renewable energy projects, including the 300 MW Lake Turkana wind-power station in northern Kenya, which is the largest wind power plant in Africa.
The bank also supported the Noor complex, the world’s largest concentrated solar power plant in Morocco with the capacity to provide power over one million homes by 2018. It also financed the power interconnection that links Ethiopia, Kenya and Zambia, thus expanding regional power pools. In December 2015, the bank provided US$138 million to finance the Ruzizi III 147 MW power plant to provide electricity to Rwanda, Burundi and Republic of Congo.