China points the way forward

Country has 'immeasurable role to play' as Africa builds its energy infrastructure, official says

Africa's desire to develop green economies will strengthen its ties with China as the continent moves to replicate China's growth story, says Mosad Elmissiry, head of energy for the New Partnership for Africa's Development, the implementation arm of Africa Union.

"China has an immeasurable role to play whether it's building big or small hydro, thermal, wind or solar projects located on grid or off grid because of its technical advancement and manufacturing base," Elmissiry says.

"China is well-advanced in hydro systems and it is known globally," says Elmissiry in an interview on the sidelines of a two-day energy policy conference in Nairobi.

"It has clinched a number of projects in Africa, and it has been doing a commendable job."

Chinese electricity infrastructure firms are engaged in two projects in Zimbabwe (expansion of a thermal and a hydropower station) and a thermal project in Botswana.

Elmissiry says China's huge economic success means it can play a key role in shaping Africa's energy growth.

"We have massive energy infrastructure projects planned and we look at China to participate in the realization of these projects."

The Project for Infrastructural Development in Africa has been endorsed by African leaders as a priority infrastructure project. The New Partnership for Africa's Development agency has been put in charge of its implementation.

The program has an energy component that includes 15 energy projects to be implemented by 2040. It outlines the implementation of four energy transmission corridors to link all the power generation in Africa from north to south and from west to east.

One of the corridors is from Egypt to South Africa, while the other is from Senegal to Djibouti. The central corridor runs from Angola to South Africa and then to Cameroon and Chad. The North Africa corridor runs from Egypt, to Libya, Tunisia, Algeria and finally Morocco.

"So these four corridors will link up power generation in Africa," Elmissiry says. "Where we generate energy will be transmitted to energy deficient countries cheaply and sustainably."

However, he acknowledges that the success of these projects lies in securing finance and advanced technology, which is where China fits perfectly into the equation.

"China stands at a very good opportunity because it has a price advantage and a massive manufacturing base. It also has an edge over other investors due to our existing bilateral trade relations, which gives it a good understanding of Africa's business environment. It knows Africa's strengths and weaknesses and it understands how to deal with them. Other investors demand a lot in policies, regulations and frameworks before they invest. But China, because of its history and support of Africa, knows how to operate in the African environment."

Although there is a growing desire in Africa for the continent to power its growth using renewable energy, Elmissiry says this may be impossible in the short term. That solution is capital intensive, he says, and its output cannot replace conventional energy production found from thermal.

"There is no way you can do that. You need to understand that of the bulk of energy generation in Africa, over 70 percent is thermal and about 20 is hydro. Our policy right now is to reduce thermal production and gradually increase renewable energy output. It has to be gradual because you can't stop generation and replace it straight away with renewable energy. So the sensible policy is to run them parallel to each other."

He says he thinks Africa will be a test bed for the competing claims of renewable energy and fossil and coal energy. China, on the other hand, had no choice during its decades of growth, he says.

"We have to understand that as a country China had a responsibility to provide good services to its people, and this meant increased power. Of course this came at the expense of the environment. But we are seeing the country implementing policies to cut its greenhouse emissions while increasing use of clean and sustainable technologies in the country and overseas."

China is the only country vilified over climate change, he says, and he does not understand why.

"Europe has already polluted its environment. Why aren't we talking about that? Why are we vilifying China all the time? Development comes at a price, and so we have to intelligently come up with measures to address the negative impact on the environment. Remember, Africa is behind in terms of development so everyone needs to come together now, otherwise the continent's development will be curtailed."

Elmissiry says he thinks China is already doing its duty by investing in innovative renewable energy technologies that are deployed globally. However, its presence in Africa is still limited compared with elsewhere.

But there are opportunities galore as the continent presses on to meet goals set by the International Energy Agency of having half of energy production derived from clean sources by 2040.

"Hydro provides a good solution at a reasonable cost. Solar on the other hand becomes expensive when storage is required. But what is pleasing and assuring is that the cost of solar is dropping, and it is almost half compared to what it was five years ago."

However, most African countries still lack an environment that is conducive to investment, Elmssiry says.

"Investors would like to see legislation that protects their investments, and that makes it easy to repatriate profits while receiving attractive incentives such as feed-in-tariffs," says Elmissiry, adding that investors also love tax breaks.

"A clear and stable environment boosts investor confidence of getting healthy returns. Corruption is also a challenge that should be dealt with."

Kenya is the second African country after Gambia to launch energy plans with the aim of speeding up project development based on the public-private partnership model.

"Kenya is on the right track," Elmissiry says. "It has tax waiver policies on imported solar components, and this helps to build investor confidence. It has also put in place risk guarantees in case there are defaults on payment. This is the ideal situation. But one can't expect that all countries have such measures in place. Therefore, investors can operate within the prevailing conditions because with every challenge there is an opportunity and investors have to really take advantage of these."

By using Kenya as a case study, Africa can improve its profile and shore up its infrastructure projects, he says.

The New Partnership for Africa's Development needs to increase its capacity, and it has launched programs aimed at equipping regional economies and national government institutions to develop technical capacity for project development and implementation.

"We have a capacity development unit that is working all over Africa to help institutions. And from the Program for Infrastructure Development in Africa there exists a program launched last year and now in its first phase. About 38 participants from all over Africa have been selected.

"The continental framework prepared by the African Union will not only speed up integration but will make China's work easy when developing infrastructure."

lucymorangi@chinadaily.com.cn

(China Daily Africa Weekly 03/27/2015 page32)