During the Africa Oil and Power Conference in Cape Town, South Africa, African governments were urged to create an attractive environment to ensure financial viability of the power sector. The maiden edition was themed, “A Continent of Abundant Resources Yet Lagging in Many Areas of Development”.
Mr. Alex Kofi Mensah Mould, the CEO of Ghana National Petroleum Corporation (GNPC) said the African government and energy companies must help make the continent’s energy projects bankable and attractive to market-based financing.
He said, the move would involve nurturing strong and financially independent National Oil Companies and improving the management of power utilities.
“It will also involve setting the right tariff, whilst creating the necessary social safety nets for the extreme poor and, indeed, public sanitation on energy efficiency,” Mr Mould said.
He noted that Africa had more than 130 billion barrels of oil and over 500 trillion cubic feet gas reserves, also had approximately 30 percent of the earth’s remaining mineral resources, the largest deposit of diamond, enormous power potential from hydro to solar, to wind, to thermal and geothermal.
“Today, the continent contributes about 10 per cent of global oil supply, and it is fast becoming a major source of natural gas supply to the world with West and East Africa, leading the charge,” he said. “Nigeria, Algeria and Equatorial Guinea are among the top 15 of the world’s largest Liquefied Natural Gas (LNG) exporters.”
In order to maximize the benefit of the resources to the continent, African countries must cooperate, public and private sectors should collaborate and sub-regions should have a regional Power Pool towards the goal. Such collaboration in West Africa, though challenging at this moment, held the promise to pool gas resources and energy investments from the region, and provide regional energy security.
Mr Mould explained how Ghana was working towards this: the government was tackling this through a number of ways such as setting cost-reflective tariff, reforming the power utilities and creating a sector-wide cash waterfall to ensure that revenues from the sector were allocated to various entities in the value chain in line with their value addition.
He said this was an opportunity for the private sector to join the governments and NOCs of Africa to bridge the financing gap in the oil and gas sectors.