2 African Energy Challenges in the Transition Era …
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2.3.5 Lack of Predictability in Energy Reforms
It is no doubt that both regions have the sufficiency to bridge the gap is
enormous, ranging from fuel, wind, solar, water to geothermal. In fact,
it is estimated that Africa has enough potential not just to power Africa
but the world.
61 However, there is a lack of predictability in terms of
energy reforms and policy that hampers the rapid development of the
energy sector despite the increasing demand. The investment must see
and perceive that every investment in the sector can yield its projected
return. Different countries in the region have different energy reforms
and policies capable of affecting the flow of huge capital investment in
the sector.
Therefore, there should be a harmonized regulatory framework that
governs regional and national regulatory and policy reforms. There must
be embedded in the elements of good practice as obtained in other
energy sufficient climes. This is not to say there is no predictability of
some sort. However, the tide has turned now. What is required at this
critical moment is to scale the existing predictability through political
will? Politicians and policymakers must not continue to see the job of
solving the issue of energy as the exclusive preserve of energy ministers
in the region.
Predictability of keeping the price fixed such that the investors see that
they will be paid and paid on time for each unit of energy generated,
automatically de-risks the chances of attracting capital flow and even
reduce the cost of capital in the sector. This is crucial because one of
the key things for investors in any economic environment is the issue
of political consistency. When politicians arbitrarily change any tier
of policy regulation in such a manner that affects their investments
adversely, it creates huge risks for future investors. Changes in political
leadership should not equal to a change in policy regulation that governs
the energy sector. When this happens, it makes investors start all over,
and this portrays a lack of security for investments for investors in the
sector. Another dimension to these changes that makes it very expensive
61 N Avila, JP Carvallo, B Shaw, and DM Kammen (n. 1).
55
2.3.5 Lack of Predictability in Energy Reforms
It is no doubt that both regions have the sufficiency to bridge the gap is
enormous, ranging from fuel, wind, solar, water to geothermal. In fact,
it is estimated that Africa has enough potential not just to power Africa
but the world.
61 However, there is a lack of predictability in terms of
energy reforms and policy that hampers the rapid development of the
energy sector despite the increasing demand. The investment must see
and perceive that every investment in the sector can yield its projected
return. Different countries in the region have different energy reforms
and policies capable of affecting the flow of huge capital investment in
the sector.
Therefore, there should be a harmonized regulatory framework that
governs regional and national regulatory and policy reforms. There must
be embedded in the elements of good practice as obtained in other
energy sufficient climes. This is not to say there is no predictability of
some sort. However, the tide has turned now. What is required at this
critical moment is to scale the existing predictability through political
will? Politicians and policymakers must not continue to see the job of
solving the issue of energy as the exclusive preserve of energy ministers
in the region.
Predictability of keeping the price fixed such that the investors see that
they will be paid and paid on time for each unit of energy generated,
automatically de-risks the chances of attracting capital flow and even
reduce the cost of capital in the sector. This is crucial because one of
the key things for investors in any economic environment is the issue
of political consistency. When politicians arbitrarily change any tier
of policy regulation in such a manner that affects their investments
adversely, it creates huge risks for future investors. Changes in political
leadership should not equal to a change in policy regulation that governs
the energy sector. When this happens, it makes investors start all over,
and this portrays a lack of security for investments for investors in the
sector. Another dimension to these changes that makes it very expensive
61 N Avila, JP Carvallo, B Shaw, and DM Kammen (n. 1).