 Good afternoon. My name is Murad Sunmaz, a member of the managing board of the World Economic Forum. A warm welcome to all of you, and to all of you who are watching this webcast session on Powering Africa. Powering Africa is part of our ongoing effort as the World Economic Forum on Energy, Electricity, Oil and Gas. And the insights that we generate from this session will be carried into the work and will be published on our online platform Top Link and Transformation Maps. Electricity, which is the topic of today's session, is vital. It's a lifeline for economies. And when there's power, there's development. And at the World Economic Forum, we focus on increased access to energy, improving its affordability and security, and actively pursuing environmental sustainability. And trade-offs have to be made, but they're all essential ingredients. Without further ado, I'll hand the session over to Trevor, who will be guiding us through this session. Trevor, the floor is yours. Thank you very much. Good afternoon, everybody. We're still waiting for two speakers to join us. But in the interim, we'll get the show going. Essentially, the idea is that we have a conversation around the middle where we are, and we involve everybody else. Let me start, first of all, by introducing to my right Innocent Lutiro, who is a partner and head of South Africa Financial Services Practice at Bain and Company. And then move on to my left, Linda Mabena or Lugunju, who is managing director at DLO Energy Resources in South Africa. And lastly, but certainly not least, Babs Omotoa, managing director and chief executive officer at LNG in Nigeria. The way we want to frame it, I think, let's see how the conversation is going to evolve, is to say, this is a crisis, that's a huge opportunity for the African continent. How do we turn the crisis into an opportunity? There's over 600 million Africans at the moment who are without electricity. That's a huge challenge. They don't have means of cooking with clean energy and that kind of stuff. Another very frightening statistic is that the entire sub-Saharan Africa uses electricity far less than that that is used by Spain. That's shocking, isn't it? And that, at current trends, is going to take us, I think, until 2080 for the majority of Africans to have access to power. And another negative is that the absence of power, the blockages, the shortages, results in about two to four percent GDP slowdown. That's how much it costs us. That Africa needs 55 billion US dollars a year from now until 2030 for us to be able to catch up. But the good thing is that not all that money needs to come from outside the continent. So we're going to be looking at what are the challenges, what are the opportunities, what are the financing, what is it that cannot be done. Let me start, if I may, with you, Innocent, to sort of give us a rundown of what it looks like of what the key challenges are, what the opportunities are in about two minutes. Great. Thanks, Trevor. Good afternoon, everyone. As Trevor mentioned, I'm from Beynon Company in our financial services practice. But I have a history in the power industry. My first ever job was as a power station engineer. So I've spent time in nuclear, coal fired, and hydroelectric plants. So I know a little bit about the industry. Africa, as Trevor said, needs sufficient, sustainable, and affordable power to fuel its development. Growth and job creation is heavily dependent on us being able to power our economies. Our desire and quest to industrialize cannot happen if we don't have sufficient power. And socioeconomic benefits like improved living conditions will flow from that. So this is really a critical cornerstone and enabler of all the conversations that we're having about developing the continent, moving us to a different and a new paradigm in terms of economic development. Trevor mentioned the statistic which African Development Bank has put out there that says if we address our power problems, we will have an extra two percent on our growth, on our GDP growth. That's quite key. And there are key considerations for each country. Remember, this has historically been a country competence. So for each country, the key considerations which are the quantity of supply that you need as a country for your own economic aspirations, the security of supply. Are you going to be relying on a supply source that you control and you confident in its security? And also the energy mix over time, which the issue of climate change and emissions has brought to the fore. If you look at – if you use South Africa as a proxy, 94 percent of our energy is from coal and with probably another 4 percent or 5 percent from nuclear, renewables are growing but still miniscule. And that is a function of the kind of primary energy sources that we have in this part of the world. In the Sadiq area, coal is the primary supply – source of our primary energy. There's a bit of hydro but not that much. And traditional sources – the key thing that we also need to understand is that electricity supply falls into two categories. There's the base load, which basically is defined as the load that powers the minimum load that is required by a country. And then there's the picking load. Traditionally, coal and hydro and nuclear have been – because of the efficiency that comes from it, the scale, et cetera, have provided base loads. So one needs to have that at the back of your mind when you look at solutions and now you want to solve the challenges that we have. And there are a number of factors that are detracting from sustainable solutions. And I think I'll pause here and we will continue the discussion. Can I invite you to, in the first instance, just introductory remarks and then we get into the meeting, how do you perceive issues, particularly within an area community-based solutions, as far as power is concerned, the supply side and the demand side? Okay, my name is Linda and I'm an IPP developer in the renewable space so my bias is obviously towards renewables. As was mentioned, I think the power issue varies across the continent, country to country. I think South Africa recently has done very well in its IPP program, in particular with renewables. As was mentioned, you do need a diversity of supply, a mixture of your base load and peaking and a mixture of technologies as well. However, the advantage of renewables, I would say, is the quick construction time and how quickly you can get renewables onto the grid and the fact that they are clean energy. So to give an example, since the inception of the renewable energy IPP program, ESCEM has connected 36 projects which has amounted to 2,030 megawatts of electricity being put on the grid in under three years. So it doesn't solve our base load issues, as was mentioned. However, it goes a long way in reducing demand and meeting some of the energy needs. What I think is required across the continent really is regulatory framework that is clear for investors to put money in, whether it be coal, nuclear, gas to power, etc. What took so long for the South African program to take off was the clarity in the legal regulatory framework. And why we haven't had a large-scale IPP program similar to the South African model across the continent is again that lack of clarity and also commitment from government to underwrite these power purchase agreements so that investors feel comfortable putting their money into these projects. What's the state of play as far as regulatory situations concerned all across the continent, not just in South Africa? Are we in a happy place? It varies from country to country. So an example, I've done some projects in Namibia. And one of the issues we had getting projects off the ground there was because the Bank of Namibia wouldn't underwrite power purchase agreements. And also there wasn't an overall renewable IPP or an IPP program. So you almost need that drive from government to say we want to do a large-scale program. So you do have projects popping up in different countries. So for example, I know in Ghana there's a large-scale solar plant that's meant to have gone up 200-odd megawatts. But again, there's nothing at a national level. So what's required, if you're going to address these issues, is a national policy on energy similar to what has been done in South Africa if that can be replicated. That's one point. Just a quick one. What are the concerns as far as the governments are concerned in terms of the legal framework to buy back the power and that kind of stuff? Well, the issue is always a risk. Where does the risk lie? How do you allocate risk? That's what we always fight over when we're negotiating PPAs. And you need to allocate risk and risk needs to sit with the party who can handle it. The South African PPA is not 100% perfect. However, it's the closest thing we've had, and it is bankable. The banks were supporting it. I think what's important is governments involving the private sector when they are drafting this policy. So what they did right here is that national treasury involved the major banks, involved investors. And we got that PPA relatively correct, and it's always changing. I mean, the things that are changing to the program, it's not stagnant. And now that program for renewables is being replicated for the core program and for the gas utilization master plan that's going to come out as well. Fantastic. At this juncture, let me welcome and introduce Mr. Gubane, who is the Interim Chairman of FISXCOM. Thank you, sir, for joining us. And also to welcome Elizabeth Littlefield. Thank you. We're delighted to have you on board with us. Omator, you are in the gas sector. What are the constraints? What are the opportunities? Do you see this being a solution for the continent? Thank you very much, Trevor. When I look at the situation of power in Africa, which I think you described as a crisis, what always comes to my mind is when I remember the thousands of Africans who have been found in recent times to be moving on boats from North Africa to Europe, Italy, and hundreds, if not thousands, dying in those endeavors. And when you look at it, while some of those may have been from political or security challenges, I think a lot of it is economic-driven. And the power situation in Africa, just 68 gigabytes in sub-Saharan Africa, I think is a huge contributor to the level of poverty and desperation you see in Africa. So I think it's indeed a huge crisis, which I think requires, in my view, an emergency action by leaders in Africa. Coming specifically to the solutions, of course, the diversity of options, gas, I think, has remained one of the biggest part of the equation, like all other hydrocarbons, coal and oil. But gas has the advantage of being the cleanest hydrocarbon. It's also cheaper, more available, and has been a big solution. What we've seen in Africa in the last few years is quite a huge variation in developments that have occurred. In the conventional space of gas, we've seen new countries like Mozambique and Tanzania who never featured on the gas equation become the biggest gas reserve countries in Africa. And what that tells you is that we just haven't even explored enough in Africa, especially on the east and west coast of Africa, huge gas opportunities that we haven't touched. And when you think about the unconventionals, I think, you know, South Africa has been one of the biggest areas of opportunity in Cairo, Mauritia, Nigeria, opportunities in gas. So I think when you think of gas, Africa really has not explored the potential that I think we have quite a lot of. Why? Why have we not pursued the potential? It's a combination of factors. I think in many of the countries in Africa, of course oil and gas is quite heavy in terms of investments and technology. It requires very good fiscal and regulatory framework. It requires infrastructures to be in place. And when you think about the number of Mozambique and Tanzania, it's only just about developing their first set of real regulations around this area. Nigeria, another country with oil and gas, just about maturing the level of regulation of fiscal. So I think regulation infrastructures have been key issues, of course financing, because these are hugely expensive projects to run. But finally just to add that apart from even what we know today, there are new technologies also emerging. A few years ago most people didn't know about shale gas, which today has changed the whole world. But we also know that there are new technologies coming through called methane hydrates, which Japan has started to already pilot, which can even have five times more what we see in shale and conventional gas. So huge opportunities. And I think projection is that by 2040, close to half of the power solutions for Africa, we'll still have to come from baselots like gas. And I think that's where we need to pay attention to. Okay, Mr. Govane, you've been in the news, XCOM in terms of power supply and the constraints. And how long are we going to be in this space, you know, of load shedding? How long will it take us to get out of this and plan properly so that we don't have the kind of negative effect that, you know, load shedding is having on the economy, on job creation and things of that nature? Well, it's a very complex area. You know, it means sufficient money. It means sufficient technical skills being available all the time. We have a number of old power stations reaching the end of life. Most of them will have to be retrofitted with the flu gas desalphurization to meet the current emission standards. But of course, it's been 20 years since South Africa built a new power station. So it's a fairly complex area. But I can probably ask you whether we've experienced any load shedding since you arrived in the country. And the answer will be no, because we are dealing with the issues. We are minimizing load shedding through the use of the 800 megawatts being brought in by the 60-unit MEDUPI. Next year, we are hoping to finish the Engula, you know, pump storage. We should give us probably about 3,000 megawatts. Escom has been fixing and maintaining some of their units. They have now come back online. And this is why we have not seen load shedding. And as we move along this trajectory, we hope to make load shedding just a nightmare, a thing of the past. We have a very clear governance structure coming in into Escom, you know, contracting with all the management, right from the CE, right down to the manager, the power station. Liquidity has got to be maintained by every cost center. Governance has to be very clear in terms of performance contracting and evaluation, which is operational excellence and financial management in terms of liquidity. So the stage is being set for effective governance. So I am hoping that my wish that by the end of this year, I see the end of load shedding will come true and from the way the steps we are taking, we are getting there. Our CEO goes to, with his senior executives, to power stations every Friday. You know, that is now a standing routine to check, to track, to monitor and to report back to the board. Fantastic. In terms of your toolbox, nuclear is featuring. What other options do you have? And also the next phase of the build up of infrastructure, what does that look like? So your toolbox and then the build up of infrastructure moving forward. Well, the two major infrastructure projects we have, only three rather. It's Engula, Palm Storage, the two coal-fired power stations, Osila and Medupi. Those are the new build. You know, the allocation of licenses for the independent power producers lies with the Department of Energy. But they've also been very proactive in calling for bids. We are now in the fourth wind of bidding for solar wind. The minister has called in requests for information from industry in terms of gas use. In other words, we'll first convert some of the power stations we have into gas, but we'll also build new gas electricity generation in the country. So that's going to be a very big project. The results are still going to come in so we can see what shape it's going to take. Nuclear will only be about 9,500 megawatts. So it's not as big as people tend to project in the newspapers. It's just part of the mix. We are moving more towards renewables because in the long run, renewables will be cheaper than coal. But of course in all this, we need leadership from the regulator. The regulator decides what pass-through money's come through us and that's what determines the pace and the rate of development. But of course I must add that we are part of the Grand Inga negotiations. 2,500 megawatts will pass from Grand Inga to South Africa. We are talking with Zimbabwe and Zambia about how we'll share that pass-through from Inga with them. So the southern African power pool is also going to be very intimately involved as far as Inga developments. And this will be just the first take on the Inga project. Obviously it's going to grow much, much bigger. Fantastic. I want to set some point to get to how we look at the regional cooperation to make energy a thing of the past. Elizabeth, allow me to move over to you and welcome. Thank you. Clearly one of the problems that we keep coming up, apart from the regulatory framework, apart from the pricing issue, is the appetite for investing in these huge projects. Before you came in, I was talking about Africa needing 55 billion a year until 2030 to close the gap. That's a huge gap. What's the view within the investor community as far as investing in infrastructure and all the issues related to making that investment pay within a reasonable time? Thank you very much for that question. But maybe I could start by just saying what my organization has been doing in the power sector, and then I maybe can come to the challenges to talk about the regional cooperation as well. For those of you that are not familiar, I work at the Overseas Private Investment Corporation, which is the U.S. Government's Development Finance Institution. Where our job is to help stimulate private capital flows into sustainable economic development in emerging markets. We do that by providing long-term financing loams, as well as political risk insurance and other things that mitigate the risks of private stimulus for that capital to flow. Actually, we've made Africa a priority for ourselves, and we're very proud to say as evidence of the kind of investor demand that you mentioned, that we've seen our portfolio in Africa grow from about 6, 7, 8% of our $10 billion portfolio to a full quarter, and by the end of this year it should be a third of our portfolio. Which I think is indicative of how much investor demand we see, because of course our long-term loans are accompanying some private investors' capital. So it's been a priority for us and we're really proud to have seen how big it's become. On the renewable energy front as well, we've made renewable resources a priority since I joined the agency in 2010. It's grown tenfold renewable energy across the globe, so now we're doing a little over a billion dollars a year in financing of renewables. And on the continent here, you know that ranges from everything from geothermal where we've funded the Ocaria project in Kenya, doubling its capacity to wind, where we're working not only in Kenya on some of the very large wind projects there, but also in West Africa where we're working on some wind projects there. Solar, I was just yesterday at Boschoff visiting the Sun edits and facility near Kimberley. But also off-grid, we're doing quite a lot in off-grid solar because we know that's the way much of the rural population is going to get its power. And then I should mention gas because you mentioned it earlier. A good portion of our portfolio is now in the gas sector and we're proud to be participating in the Azora IPP in Nigeria, but looking at a number of other natural gas deals across the continent because we do agree that base load power is going to be necessary. That being said, what gets me excited is when you look at Africa being an elite position in terms of renewable energy build out throughout the world, maybe coming from a low base, but in 2014 Africa added more renewable energy than in the previous 14 years, which is a rate that no other continent can claim. So we're excited about that. With respect to the challenges though, I see a few that investors bring to us and that we see in trying to execute these transactions throughout the continent. First, there was an interesting survey that was done recently about what investors see as the number one hindrance. And actually, regulatory frameworks was the lowest of their concerns. But the highest concern cited by investors in these surveys was political will, execution capability, and a sense of urgency on the part of the ministries. And we see that as well. And so actually power Africa I think is addressing this in some small part, but we definitely see this as a problem as well. Now it's true that there's some countries that have a bad recollection of some unfair transactions that were poorly structured that left a bad taste in their mouth. But we do see that execution capability as being a number one hindrance. The second capability of the hindrance of course as much of as we've discussed often is the credit worthiness of the off takers. It's interesting, just 10 or so years ago you all would know better than I, two thirds of the power being financed on the continent was for export. And that made it much easier to finance whereas now it's two thirds for domestic consumption and that makes it more complicated because you're relying on the credit worthiness of the off taker. And I think you mentioned earlier how do you share risk between the off taker and the developer and the financier. What about the political wheel? Why would that be a problem when it looks like this is a crisis and the politician would want this issue to be resolved? I think what we're seeing is that ministries don't often have a deep enough bench within the ministry to undertake a complex new structured financing transaction. That's what we've seen in country after country. President Obama's announced the Power Africa initiative just a year and a half almost two years ago now and one of the dimensions of that which has been very, very useful has been the coordination of transaction specific technical inputs at the ministry level and the transaction advisors housed in ministries throughout the continent that we've seen at least have had a material effect on speeding along the process of transactions as well as bringing resources to bear to provide for example international legal counsel to governments throughout the continent. Can I mention just the third challenge? I mentioned the execution capability I mentioned the credit worthiness of the off taker the third one frankly is the persistence of fossil fuel subsidies something I think we don't talk about enough but that the market distortions sorry is that me? I do think that the persistence of fossil fuel subsidies creates such market poor signaling for the market that it's actually a real hindrance to the development of renewable energy across the continent. So I fervently hope that with fossil fuel prices being where they are today it's a great opportunity to move ahead with addressing the persistence of fossil fuel subsidies. Fantastic. At this particular moment I would want to ask to entertain questions from people in the room if anybody has a question or a contribution right now this would be the right moment to do that. Introduce yourself and then briefly ask a question. Thank you very much I'm Khalid Shatfa the Minister of Finance of Namibia. If I'm allowed two or three comments and then one question Shall we make them too? A question in the comments so that we give everybody an opportunity a question in the comment. Can I ask a question at the end because it's all back up with my It's alright Minister. First of all I think what was quite correctly mentioned is the question of how we can make financing of these very necessary infrastructure projects feasible and I think there was some reflection of what was the hindrance and was called political will. Now let me share with you what our problem in Namibia was when we tried to negotiate power purchase agreements the financiers insisted on a guarantee of price not production cost they insisted on no taxes at all and a complete policy freeze and that was it. The basic framework that the government was confronted with to say if we don't give that if you don't guarantee that we cannot finance the risk is too high. We consulted with the World Bank and we found that that is not according to international best practices that is too greedy if I may say so because if you have in sovereign guarantee which Namibia has you don't need to guarantee this the guarantee for cost production cost is a reasonable one so there must be a toning down of ambition on the side of the of the financiers if we want to have these agreements there is no lack on political will on the side of the necessity to have them and the necessity to have a good mix of sources of energy so those are the comments my question is we are talking about cost of infrastructure we are talking about the necessity to have electricity and we benchmark everything against that cost what we feel is left out of the equation is the tariff policy and the affordability of that power. We see what happens in South Africa and Namibia we have got extremely steep increases in tariffs we have that in spite of a very skew economy where the majority is relatively poor and we do that while we are trying to industrialize and be competitive with our finished goods that we so produce of which power is an important input. Now the question is is tariff not an important consideration shouldn't we do focus on that as well? Tariffs and then lastly our model is we produce power through utilities like Ascom, like Nampower and we have not yet managed in my opinion enough to leverage private sector appetite to venture into the sector. Wouldn't that be a possibility? Right, panellists not those questions any other question? Can I please ask if you're going to ask if you'll be brief no questions? Shall we deal with that who's going to respond? I'd like to respond I'll go through your three points that you raised the change in law the issue there for investors is when there's a change of law that will affect the returns of a project adversely it makes it difficult to invest in that project because you're loaning money to finance these projects first of all the other issue there was some of the loans were being done in dollar denomination and I think there was an issue with the currency risk as well. The second point in terms of your tariffs if you look at the South African model in terms of renewables what we did right here was the competitive bidding we didn't do a traditional feed in tariff so if you look at the which is the South African wind association study today wind power has come in 40% cheaper than new coal build so renewables are bringing tariffs down it's cheaper electricity and putting on the grid and I think it's a model that can be followed thirdly I think your point was about utilities again it goes back to encouraging investment people want to come into Namibia we definitely want to play at the rest of the continent I think if we just start having generally not greedy just stable environment for investors there's really no need why we wouldn't come in I would definitely like to chat to you afterwards If I may just add one small comment and I apologize for having my back to you but that's the nature of the beast in this room I think sorry I would fully agree with what you said we're seeing in just one set of solar investments the price of the power having dropped in the last two years from 30 cents down to 7 cents and that's clearly competitive with most of the base load yet thermal power that's being produced but with respect to the power purchase agreements we too found that a lot of time was being lost between the governments and the developers and the financiers negotiating and losing time on basic terms with our fellow development finance institutions and US government agencies a consensus document on one piece of paper that has the 10 elements of a bankable power purchase agreement so we thought that would be helpful guidance and less is more so just 10 pieces of paper 10 elements on one piece of paper just talk about the basic elements that most financial institutions development institutions or banks finance it if anybody would like a copy of that one page document you are welcome to send me an email at e-littlefield at opic.gov and I'm happy to send you over that paper interesting minister I want to get back to you sorry to put you on the spot this particular transaction that you're looking at what time frame do you have do you have time frame on your side or is it going to drag along for as long as possible I think for me it raises the issue of the political will the agency in terms of ensuring that you get rid of whatever blockages that you have and we implement the project you're right there is a sense of urgency because we are in a squeeze we are in a similar situation like the rest of us in the Sadeq power pool there is a deficit in the short term in the longer term that will stable out and we will have enough generation power to satisfy our needs so the political will to reach self-sufficiency in the total pool is there the question is and mind you you are talking to the minister of finance yes sir that urgency will be satisfied but not at any cost and I think I'm very happy to hear that there are best practices by the way it is that that sheet that we used together with the World Bank to negotiate with these power purchase agreement partners thank you very much I know you have issues that you want to comment on but before you get on there I want to ask you about the importance of regional cooperation because one would have thought that clearly with these huge deficits and the realization that we need to come together the numbers are huge what is stopping us from actually deepening regional cooperation as far as power generation and supply is concerned I think the issue of regional cooperation is very important because the location of primary energy sources and demand is not always in the same place so Mozambique has got huge gas reserves they don't necessarily have the demand that matches or justifies the construction of large power stations that demand will probably be in the South-Southern African power pool or beyond and in deciding where you locate your power station the number of factors that you take into account you either locate it closest to the primary energy source and then you transport power through the wires there's obviously losses in the grid etc or you locate it closer to the demand that from a country perspective I spoke about national security where you want to have that within your borders so for you to be confident that you'll have a plant in Mozambique that you depend on and there is historical precedence to this Kawarabasa etc when Mozambique was unstable politically supplying South Africa had implications collaboration and stability within the region is important for regional cooperation added to that there's a need for standardization so that everyone is able to feed into a similar grid with particular standards and an efficient functioning market that enables payment and also how you control the grid because it's very important from a technical perspective to control the stability of the grid sadly and Linda mentioned to me that from a solar perspective there's a storage technology that's coming through but sadly when you generate power typically you can't store it and you need to be able to hide it off to somewhere else and you need to manage a stable grid and my experience within the South Africa power pool from its early inception in my power generation days was really designed to do that and control it between the different countries so I cannot overemphasize the importance of regional cooperation Fantastic I'm going to come to you in terms of the issue that has been raised by the minister which we dealing with in South Africa which is price not at any cost he says the quandary of not building plants at the end of the day you have expensive power and not having power you have not planned properly or you haven't priced the power properly and at the end of the day you actually don't have power it's a very difficult situation to sit on are you comfortable with the pricing a place where you're sitting it right now well we brought in huge smelters you know iron ore steel industries aluminum smelters because we are the cheapest price for electricity for a very long time that was our comparative advantage as a country but quite clearly with our plants aging we cannot keep up that rate of excellence we have spoken about an increase in the tariff to make it a cost reflective tariff but we know that it's politically not really doable so we have engaged what we call business productivity program and we have saved 70 billion rent in the past six months so with efficiencies you can actually probably delay the cost, the rising tariffs and so on it's a matter of being able to control wastage and technology can do that we in fact will be cooperating with the WEF on this type of information and access to such technologies so there's a lot that can be done to put back the inflation in the energy sector but ultimately of course we have to build new power stations tell me, sorry you want to come in I think on this issue of tariffs and high cost what I find sometimes is that we usually don't look at total life cycle implications always very focused usually on the front end and I'll give you just two issues as examples for example in Nigeria the vast majority of people then who don't get access to the electricity then go into private generation where they spend five to six times more to generate their own electricity whereas if you had been to pay higher tariffs you would get the electricity much cheaper and I think when you look downstream in the implications of what power can bring to a country to people in terms of jobs industries and all of that frankly a lot of time being wasted on the front end in terms of trying to get down to the last dollar I think is not as valuable so that's one thing I would say on that but secondly on the regional cooperation do you think that the politicians are overplaying the price sensitive issue it sounds to me like we don't recognize the crisis because if the crisis is well recognized I think it's not the time to try to be looking for will they invest or make money or not make too much money we spend so much time on is it making 50% 60% the least of the problem because people are going to pay 5-6 times more if you don't solve that problem you're missing out on industries you're missing out on jobs you're missing out on so many things in the equation and so I think it's back to the political will question again so very focused on what I think is not where the bigger issues really really are I was also going to comment on the regional cooperation with the example in West Africa of course there's the West African gas project between Nigeria, Ghana, Togo and Benin I'm not sure if anyone is from Ghana, Togo and Benin but it hasn't worked well because while the pipeline has been built I think it goes back to the question that the comment I think you know said made earlier Ghana, Togo, Benin rely on Nigeria what you find most times is Nigeria will first sort out its own problems before they will meet those commitments which means that in the last few years only half of what has been committed has been met and this is one of the big challenges I think we have in regional cooperation is that the primary suppliers will need to again have the political will to honor their commitments irrespective of you know the implication because if you don't do that then regional cooperation in itself will stand very little chance of working back again into the issue the issue of regional cooperation you spoke about the southern Africa power pool the what does it that will require to get to a point where the southern African power pool works to you know efficiently meet the expectations of the region I've said using centers of excellence like SCOM for the region you know bringing in young people to our training centers will greatly facilitate the development of electricity you know production in our neighboring countries because we have the expertise the expertise is can be extended given enough participation for instance by DFIs that's one thing but also of course part of the program of integration within SATEC so far we have concentrated more on trade than on energy lifting this up to a new level will facilitate this and as I mentioned Grand Inga offers a new opportunity Mamaboula would have done the same thing in Botswana if it had progressed I'm hoping that we can progress that because then it will add a huge amount of energy for the region tell me about Inga I've been talking about it now since before I was born where are we with that are you hopeful that during our lifetime this thing is going to happen I was talking to Mr. Gordon Brown the former Prime Minister he's very much involved in that project with the WF very keen to go and I think it's going to be realizable not just in our lifetime okay that's good to hear at this moment I would love to take entertained questions from around the room there's a hand at the back there again introduce yourself and be as succinct as possible please thank you my name is Wadi Ahimi I work with the company Sahara Group in Nigeria I hear a lot of the things you say in terms of part generation what we need to hear is what exactly are we looking at in terms of the full value chain because we're going to generate power and the people who are really going to pay for this power at the end of the day at the end users so I can't hear anything in terms of what investments are we putting into distribution transmission to ensure that all that we're building in terms of generation whether you have the gas, you have the thermal power is actually going to be at the end of the day thank you very much for that question Linda you want to deal with that so you're shaking your hand in agreement yes and I have to trade carefully because Eskam is on this panel one of the challenges we you're my protector you'll be okay one of the challenges as a developer we face like you rightfully said is you produce power and it's about getting it on to the grid so development of the grid infrastructure across Africa in South Africa is not immune to that we have all these power generators and there's an issue sometimes in connecting them Eskam has done well however I think they also do admit having engaged with the grid access units that there is an upgrade that is urgently required in order to facilitate all of the electricity that's going to be produced one from renewables coal and gas so to give an example one of the challenges we faced with our project is you get a cost estimate letter at X so you put in a bid and you come in low in your tariff etc post bid we get a budget quote that's two times or three times that cost because the infrastructure or the grid infrastructure hasn't been accounted for and there's also a delay in how when we connect which obviously affects our EPC pricing which can't hold longer than that in our construction so grid infrastructure is a huge issue across I know Nigeria faces the same problem I think I'm not sure it's billions of dollars that are required for your grid infrastructure so it's a continental problem that also requires the private sector to play I don't think we can rest everything on you know state-owned entities doorstep I think this is a place where it would be nice to get as some collaborating as well with the private sector in assisting with those challenges they may bring you in here in a center because the political issue keeps coming up but there does seem to be space for the private sector to come in in your view what is required for us to get there to ensure that the private sector both a generation of transmission plays a role that is at the end of the day profitable but also commensurate with the social needs of any society so on that subject I recall the Minister of Finance asked a question as to why we think in terms of utilities in terms of building out this infrastructure and to the point of the last question the issue of transmission and distribution is an integral part of the infrastructure we're talking about billion dollars that you spoke about so we're not necessarily ignoring that if you look at I'm not saying necessarily the best example to follow and will not follow them will probably leapfrog some of the developments the privatization of the electricity industry in Europe and the UK in the late 80s was on the back of massive investment by utilities to build the infrastructure so the private sector got involved when the infrastructure was already built if they had come in at the beginning they might not have invested in some of the infrastructure that is marginal in terms of its return and in terms of its functioning so if in South Africa way probably the infrastructure has been invested by the state for a long time and it's in place you can talk about allowing access to private sector and building them out in areas where you do not have the base availability private sector will come in and will invest in areas where they have a good return and a lot of those are not necessarily delivering the development that's required it's a bit of an ideological statement but that's the reality so it has to be the solution has to be maybe a collaboration a public private partnership where the state's objectives are also taken into account in the design and construction of some of these projects fantastic you want to come in there just one quick comment on the question that was asked I think we must not forget about the opportunities for distributed power across the continent yes for strengthening the grid but frankly off grid, distributed power is not an investable asset they've now in many cases proven their commercial viability and so I think they can shift from the donor funded focus that they've had in the past to being genuine commercial prospects and ones that are going to be critical to reaching some rural populations throughout the continent so any conversation that addresses that question and the social good question that you're talking about needs to take into consideration what's your still understand the minister's view about greedy investors sorry what was the question greedy investors yes I've met some and you want to come in somewhere I was going to say let us take steps in a normal milestone development you see in a child at the moment let's focus on the independent power producers in the renewables because that's where the biggest contribution is going to come from we've got vast kilometers and miles of infrastructure in terms of transmission in South Africa a lot of it needs to be renewed so essentially built into that is market fail to expect the private sector to come and find that I don't think it's going to be winnable okay there's a hand to the back there thank you Mr. Gowena for that yes ma'am thank you for the opportunity I'm Lourdes Fernandes from Angola and my question is really related with this PPP so we have here the overseas private investment corporation from United States and I believe that if the government is having problems even if the government wants to have the responsibility to do the infrastructure as Mr. Dutry emphasized I think has opportunity for the private because the point is we have to resolve this problem it's a long time that we are really tired to hear Inga and all other projects and nothing is working so I would like to put the specific question to the OPIC what the private sector I know African investors are willing to do investment on powering energy what should they do thank you for that question Elizabeth you want to come in as I indicated before everything that OPIC and our sister development agencies development finance institutions do every single thing we do is with the private sector so the billion and a half dollars renewable energy financing in Africa last year is all being done with the private sector so and I couldn't agree with you more this is a challenge that we need to bring public and private together but I think we've crossed that bridge and there's a lot of investor demand and I think it's a matter of creating the right welcome mat and the right enabling environment and bringing those two together the capital is definitely there and growing but if you think about it right now only one percent of United States foreign direct investment comes to Africa one percent so you know that needs to double and triple but it can only be done so if Africa continues the tremendous positive work it's done on creating a friendly investment climate here Elizabeth what's your pipeline like without betraying any confidentialities what's your pipeline like and where do you see the demand coming within the continent in terms of regions so right now our pipeline is probably another billion and a half for 2015 increasingly we're doing a lot more in gas than we used to be doing I keep looking at you when I mentioned the word gas but it's pretty evenly spread across geothermal solar wind probably a little bit more in wind than before and the gas sector more in West Africa than we were before although US investor interest in West Africa has been slower for both linguistic and historical reasons but yeah so it's a very healthy pipeline and I have to say again I mentioned the President Obama's Power Africa initiative which made it involved a $7 billion commitment of US government agencies to finance power across the continent and doubling access if we could easily achieve the commitments that were made because it actually has stimulated new investor interest we've seen as a result of the high profile of this power Africa announcements we've seen developers coming to the table that weren't even thinking about Africa a year or so ago and they're now looking at investments across the continent so I think the investor demand is there and coming it just needs to be structured in a way that works to the best I'm going to call for the last round of questions from the floor anybody with a question Minister if you could make it brief I'm being somebody is looking at me with a red eye at the end there time is running out so quickly please yeah sure I just want to go back to the question of whether there should be private sector involvement in power generation and how we should structure that and I just want to come back to the panelists who said it's possibly not possible because of the low returns that conventional power generation has shown it had my take is that technology has changed and with that technological change the landscape and the possibilities of private sector involvement is not anymore quite comparable to the 90s when the European utilities were privatized or outsourced and I think there are good possibilities where there are PPPs possible and where even individuals can put their little solar plant on the roof and feed into the grid by the way with the price increase of 20% year in year out that's a good investment and we should not be blinded by a history that has a different landscape rather be innovative and see how we can leverage technology and how we can pool resources from the private and the public sector to bridge the real gap and that is the power generation or the lack of power a quick response from you and then I'm going to ask the panelists to share with us your final thoughts on this as innocent Minister I'm clearly aware of the technological developments but if I go back to my definition of baseload and picking capacity we cannot run away from the fact that outside of South Africa where there hasn't been sufficient investment in baseload infrastructure the traditional capacity sources of baseload still remain if you look at the cost of solar energy and the conversion rate which I'm proving by the way less than 20 years ago there were probably 2% they're sitting at like 15 or 16% it's very difficult to scale them up into the kind of quantities that are required to power industrialization yes at an individual level you can self-generate I do self-generate it at my own house but there's certain things like driving industries and street slides are not working I expect the utilities to be delivering that and we cannot run away from that fantastic Mr Nguwan is starting with you your summing thoughts well in terms of regional cooperation a lot of work is going on right now within SADAC what we need to do is extend it into the AU conferences heads of state conferences but within the region we are really moving forward renewable we are not going for peaking but this state still has a responsibility for baseload fantastic taps I think the situation is a crisis as I think was said at the beginning I don't think both from the political and the business side that has been reflected as such and I think we clearly need to indeed understand all the opportunities that we have in Africa there's just so much opportunity and renewable and gas so much opportunities and I think we're just letting our people down fantastic Linda, your last words the private sector wants to invest and also I want to say in terms of regional integration we'd like to also get involved right now SEP has been utility to utility we want to get more IPPs involved in that process as well I think we have a role to play in solving this crisis Elizabeth, your final thoughts yes, I met someone who runs a mine in northern Malawi that gets his power by trucking 23 trucks a day from Dar es Salaam 300 kilometers to his mine the mine is no longer viable as a result of that so I think when we talk about the price of power we need to remember that when the alternative sometimes diesel fuel being flown in on prop planes or trucks it can be as high as $30 a kilowatt hour so I think looking ahead we need to realize the technology costs and everything else have driven prices down so low that we need every possible solution it's a crisis we need renewables, we need gas we need public, we need private because the alternatives are great and if Africa's enormous growth story is really going to be inclusive and lift up the lives of Africans across the continent we need every possible power source to be brought to bear fantastic, innocent, your closing remarks I think a number of points greater cross-country collaboration is important when we match primary energy sources and demand we need to enable that we need to standardize the grid and the wires to make sure that there is inter-connectivity tariff regimes, I know Dr. Gubane spoke about us being a low cost producer I think the tariff must include a reasonable return for the investors capital expenditure for the future and operating expenses and I think it's an argument that at some point we might have put aside enough for future development and therefore the graph that you would follow in terms of increases would be less steep than we're faced with now a policy framework that would enable IPPs to feed into the grid and in the short term and if you're focusing on industrialization temporary power might be the solution there are some companies without plugging them like a Greco et cetera who have made a virtue out of supplying temporary power certainly some African countries are now looking at temporary power as permanent power fantastic let me thank the panelist I must say though that what I find I'm very optimistic about Africa I'm optimistic about the continent I do worry about our power deficit and listening to all of us talk I do get the sense sometimes that the agency isn't there and here is what I worry about choices of saying going back to the minister's comments power at any cost should we not get to a point where power is available and the price of the power is a way of disciplining us to use our resources in a much better and efficient way cheap power encourages us to be wasteful and that is what is currently happening but I think for me at the bottom line of agency that I don't see I travel across the continent you're right Dr. Gubane thank you for making sure that power was available in Cape Town it's such an irritating thing but one that reminds us all the time there's something wrong with our continent but there are so many opportunities if only we could have a sense of agents around ensuring that we've got power to create jobs to grow and I think at the end of the day to ensure that the political issues that we're scared of don't come and visit us because when people have jobs because there is power the rise that we're scared of because power is expensive is not going to happen but anyway I could go on and on about this thing I love this continent if only we could fix the power thank you so much everybody thank you