US commits $7b to African energy sector

The United States is committing more than US$7billion in financial support over the next five years to African countries, including Ghana, to directly address constraints in electric power generation and help pave the way for energy sector reforms.

The investment support under the “Power Africa” initiative is US President Barack Obama’s new plan to double access to power in sub-Saharan Africa through bringing to bear a wide range of US government tools to shore-up investment in Africa’s energy sector.


“The U.S Power Africa partner countries, including Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania, have set ambitious goals in electric power generation and are making the utility and energy sector reforms necessary to pave the way for investment and growth.


“Power Africa takes a transaction-centred approach that provides incentives to host governments, the private sector, and donors,” Mr. Andrew M. Herscowitz, Coordinator for the Power Africa initiative, told journalists in Accra at a roundtable discussion.


He explained that the U.S government will work with host governments to further develop delivery units charged with driving progress on specific projects. These delivery units, he said, will help increase technical skills and accelerate energy sector regulation, market structure and environment reforms.


He said the establishment of a delivery unit in Ghana will be closely coordinated with the Millennium Challenge Corporation’s (MCC) compact slated for signature in 2014.


“From policy and regulatory best practices to pre-feasibility support and capacity building, to long-term financing and technical assistance, Power Africa will provide coordinated support to help partner countries expand their generation capacity and access.”

Mr. Herscowitz mentioned that Ghana seems to be well-positioned and is on track already in terms of reforms in the energy sector with specific items that need to be achieved.


He said: “There are some 170 items that the MCC and USAID have identified and are working with the government of Ghana and agreeing upon these areas in order to achieve the market conditions that will create the opportunities for growth in the energy sector.


“I am confident that the Power Africa initiative will help achieve those reforms, such as undertaking feasibility studies to pave the way for US investments.”


The country’s power output currently stands at 2,311 megawatts (MW) with plans to increase generation to 5,958.5MW by 2016, according to Energy Ministry figures. The power sub-sector requires investment of US$4.2billion, according to a study conducted by the Energy Ministry in October 2011.


The International Monetary Fund (IMF) in April 2013 warned that if Ghana fails to solve its energy crisis, it could curtail the country’s economic growth currently led by the services sector -- which mainly depends on reliable power supply.


“Energy sector problems could curtail growth,” the IMF said in a statement. Even though the power blackouts seem to be over, the IMF has cut Ghana’s projected growth to 7% for 2013. “As energy problems have now subsided, the mission expects full-year growth of about 7%, compared with 8% in 2012,” the IMF statement said.