Summary:
The situation of energy access in Sub-Saharan Africa remains critical. According to the 2019 Tracking SDG 7: The Energy Progress Report, about 573 million people lacked access to electricity in 20171. Despite the proclaimed UN’s Sustainable Development Goal #7 (SDG 7) of a global energy access by 2030, the Agency forecasts that nearly 600 million Africans will still live in the dark2. As a matter of fact, Sub-Saharan Africa has demonstrated limited progress in energy access over the past decade. Less than a third of the region experienced electrification rates faster than 1% per year3 due to ailing electrification policies and rampant demographic pressure, and World Bank estimates suggest that the continent may not be in a position to achieve universal energy access with the next 50 years under current policy scenarios4. While various governance and financial models have been attempted over the past decades in order to foster private investments in energy access, sustainable and replicable business models for universal energy access remain elusive.
As national utilities still struggle to escape financially unsustainable business models and cycles of regular bankruptcy and bailouts, the new momentum in the energy access sector has sparked growing interest in the development of innovative governance models to restructure the distribution sector and accelerate electrification. An estimated $52 billion of investment is needed per year to reach universal electricity access by 2030 - a figure that far exceeds the $30 billion committed in 2015-165 and that is out of reach for public agencies. As a result, increased attention is being paid to business models that can attract private capital under socially, politically and economically sustainable terms.
Concession agreements, in which "the government grants a private company the right to extend a specific service under conditions of significant market power," 6 offer an interesting middle ground between traditional State-owned approaches to distribution and entirely private sector-driven strategies. While this model has already been tested in a number of Latin American, Asian and mostly African countries with mixed results, recent technological breakthroughs and the large experience derived from past experiences in the design and implementation of concessions may now pave the way for bright prospects for universal energy access. [...]
Registration date: 21/09/2019
IIT-19-129A
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