Inside Africa blog

Legal developments around Africa

Looking back on Power Africa in 2016

Amala Nath

In 2013, the Obama administration launched Power Africa, a multi-faceted five-year financing and professional services initiative coordinated by United States Agency for International Development (USAID) and a diverse coalition of private and public sector partners. We highlighted the coming into law of the Electrify Africa Act a year ago – a significant step in implementing Power Africa.

The initiative aimed to double access to electricity in sub-Sahara Africa by adding 60 million new connections and 30,000 MW of new, cleaner power to the continent.  The Power Africa initiative is now in its fourth year – we look here at some of its notable achievements in 2016, as published in the Power Africa Annual Report 2016

Power Africa’s primary goal to increase investment in energy projects on the African continent reached a commendable point in September 2016, with the financial close of several private sector power transactions projected to generate over 4,600 MW.  Agencies and lenders are now financing power projects in sub-Saharan Africa at a greater rate, notwithstanding external challenges posed by economic and political conditions.  In Nigeria alone, in the past year Power Africa facilitated the execution of 14 independent power purchase agreements that authorize private firms to develop 1,125 MW of new solar power generation capacity in nine Nigerian states, which are projected to realize $1.5 billion in combined domestic and foreign direct investment.  Meanwhile, in 2016, the Overseas Private Investment Corporation (OPIC) granted over $2 million in reinsurance coverage for the development of a 30 MW solar photovoltaic farm in Senegal, and also promised to commit up to $91 million in debt financing and $25 million in political risk insurance coverage to the project developer of a major thermal power plant in Senegal.  To date, OPIC has provided over $1.7 billion in debt financing and insurance commitments to support 19 Power Africa projects.  

To complement its robust investment agenda, Power Africa has also coordinated professional services programs to consult and make grants to African governments and businesses.  In 2016, the U.S. Trade and Development Agency provided grants for 13 renewable energy projects expected to generate over 300 MW, bringing the agency’s total number of grants under Power Africa to 43.  The U.S. Africa Development Foundation also funded 10 grants in 2016 to support renewable, off-grid projects in sub-Saharan Africa.

The Millennium Challenge Corporation (MCC – see MCC Liberia Compact) also committed to a ground-breaking investment program in Liberia which provides a grant of up to $257 million to rehabilitate a major hydroelectric plant and facilitate the creation of an independent energy sector regulator.  Through Power Africa, MCC has assumed a role as an advisor to local African governments to establish regulatory and institutional agencies that will promote foreign direct investment. 

Also in 2016, the U.S. Department of Energy (DOE) provided advice to the leading power generation company in Kenya and organized a natural gas training event for government officials, researchers and students in Tanzania. As a follow-up, the DOE, along with a diverse group of experts, prepared an informative handbook for African governments and interested investors on the development of liquefied natural gas resources. 

Whether Power Africa continues to make such impressive progress towards its mission to increase access to power across the continent will be contingent upon the policies promoted by the new Trump administration.  For now, the results speak highly for themselves and the initiatives in 2016 significantly contributed towards the achievement of this goal.  

Inside Africa would like to thank Andrew Astuno*, Associate, for his contribution to this blog post.

*Andrew is admitted only in Colorado. Practice supervised by principals of the firm admitted in the District of Columbia.

 

About

Africa is as dynamic a market as it is diverse. We understand that changes impacting your business can arise rapidly and vary significantly across the continent.

Our understanding of Africa’s markets stems from extensive experience on the ground. Through our Inside Africa blog, we aim to apply this insight to provide you with timely commentary on the latest developments across Africa, as well as insight into the many nations that make up this vast continent.

Read more
Blog Network

Topics

Archives