Statement by Mr. Shem Simuyemba, African Development Bank
Manager, NEPAD Infrastructure Project Preparation Facility (NEPAD-IPPF)
At the 30th West African Power Pool (WAPP), Donor Coordination Meeting Held on 1st November, 2017 at Alisa Swiss Spirit Hotel, Northridge, Accra, Ghana
Theme: Regional Electricity Market – Ensuring West African Integration
The Board Chairman of the West Africa Power Pool (WAPP), Mr Mohammed Usman Gur;
The Secretary General of WAPP, Mr. Siengui A. Ki;
The Directors General of Power Utilities in West Africa;
Fellow Cooperating Partners;
1. On behalf of the African Development Bank (AfDB), it is an honour for us to participate in the 30th WAPP Donor Coordination Meeting being held alongside the 12th WAPP General Assembly under the Theme, “Regional Electricity Market: Ensuring West African Integration” in Accra, Ghana, from 30th October to 3rd November, 2017.
2. Let me take the opportunity to commend and congratulate WAPP, the Utilities and ECOWAS, for this structured engagement because it is through such consultations that practical results can be achieved through coordinated dialogue. Let me also take the opportunity to thank the Government and People of Ghana for welcoming us so warmly in this beautiful and historic City of Accra.
3. I wish to focus my intervention on three areas.
4. The first is to assure you of the AfDB’s (Bank’s) continued support both at the national and the regional level as the AfDB has been a development partner for African Member Countries, who are the owners of the for the past 50 years and will continue to do so.
5. The AfDB President, Dr. Akinwumi Adesina, has positioned Energy as one of the Bank’s top priorities under the Bank’s High 5’s which are, Light up and Power Africa; Integrate Africa; Industrialize Africa; Feed Africa; and Improve the Quality of Lives of Africans. Within Light Up and Power Africa is the “New Deal on Energy for Africa” the Bank’s Flagship Energy Initiative which has a focus on three main pillars, catalyzing a quantum leap in energy generation and supply across the energy mix; developing and deepening regional energy power markets; and supporting reforms to make both the Utilities and electricity markets more competitive. The importance of energy in the Bank’s new structure is that, whilst in the past the Energy was handled by a Department, it has now been elevated to a Complex led by a Vice President.
6. Additionally, the Bank has undergone fundamental restructuring so as to promote accelerated delivery of its programmes and to be closer to the client. In this regard, the Bank has established five Regional Hubs corresponding to the five regions of Africa in additional to over 40 Country Offices across Africa.
7. The second is the need to take concerted efforts to increase the stock of bankable, investment-ready infrastructure projects which can attract financing for implementation. In this regard, it must be noted that the infrastructure landscape across Africa including energy has changed. With Governments embracing liberalization, there is increased involvement of the private sector across the “Energy Value Chain” with the emergence of Independent Power Producers (IPPs) and as more Governments embracing Public-Private Partnerships (PPPs).
8. To bridge the investment gap in energy in West Africa whereby investment needs are estimated at US$26.4 billion against realized investments of US$8. 3 billion requires concerted efforts to accelerate investment flows into the Energy Sector across the “Energy Mix”. A key to achieving this is to commit more resources to project preparation and development so as to have bankable projects which can attract financing for investment given the growing international interest in infrastructure in Africa particularly in energy both at the national and regional level.
9. However, it must be recognized that the changing infrastructure landscape also means that traditional approaches to project preparation and development are no longer sustainable. In the past, project preparation institutions such as the NEPAD-Infrastructure Project Preparation facility (NEPAD-IPPF), a Multi-donor Special Fund hosted by the AfDB, not only depended solely on donor contributions, but also provided grant funding. However, this model is no longer sustainable as Facilities such as NEPAD-IPPF can no longer continue to subsidize PPP type and private sector projects.
10. New innovative approaches are therefore, required to mobilize and commit more resources to project preparation and development as there is a major and acute gap in this critical area, particularly for regional public projects such as power transmission lines which are critical to the proper functioning of integrated regional power markets. In this regard, new approaches are required and these include, enhanced domestic resource mobilization to accompany donor funding; increased co-financing for project development; and increased cos-sharing with Project Developers. Additionally, there should also be mechanisms for cost-recovery so as to promote revolving funds which is a sustainable approach to supporting project preparation as funds can be re-cycled to support new preparation needs which are likely to grow particularly with global interest in renewables.
11. Such a “Business Model” will ensure that Project Preparation Facilities such as NEPADIPPF which have been traditional supporters of WAPP, can be re-positioned and strengthened to continue to give such support to unlock major power generation and transmission projects in West Africa such as Sambangalou, North-Core, Nigeria-Benin and other projects whose preparation NEPAD-IPPF has financed alongside other Donors.
12. It is also clear that well-prepared projects attract financing as evidenced by funding mobilized for example for the North-Core Power Transmission Line. For the information of the meeting, the AfDB Board is in the process of approving the following projects for implementation financing before the end of 2017: North-Core; Guinea-Mali; ChadCameroun; as well country specific support to strengthen distribution networks in Sierra Leone and Liberia.
13. The third is a specific recommendation for WAPP under the leadership of the WAPP Chairman, to set up a “Working Group on Scaling-up Resource Mobilization to Accelerate Preparation of Bankable, Investment-ready Projects”. The AfDB is prepared to take the lead on this working with other Cooperating Partners. The aim of the Working Group would be to adopt a coordinated and concerted approach to mobilizing resources for project preparation. It would also take stock of available capacities within the region in terms of skills and competences so as to create a pool of specialist experts who can be deployed for project preparation work.
14. Scaling-up resources for project preparation will ensure that there is a stock of wellprepared, bankable, investment-ready projects which will provide a “Menu of Financing Options” for potential investors as the projects can be packaged for financing as, “Public”, “PPP” and “Private”. This will also ensure leverage and synergies with AfDB supported financing vehicles such as Africa50 whose primary focus in on PPP type and private sector sponsored projects.
15. In terms of specific pledges to the projects presented by WAPP for possible financing by Cooperating Partners, the Bank through NEPAD-IPPF, expresses its interest in the following two projects; Feasibility Studies for the 330 kV Nigeria-Benin-Togo-Ghana Double Circuit Median Interconnection Project with estimated preparation cost of US$4.7 million; and the 200 MW, WAPP Wind Farm in Senegal and the Gambia with estimated preparation costs of US$0.41 million. This is dependent on the normal due diligence and approval processes with the expectation that other Cooperating Partners would also be involved on a co-financing basis.
16. Once again, I commend you on a successful dialogue session and we look forward to continued collaboration with WAPP and the Utilities in West Africa as well as other Cooperating Partners and wish you a productive and successful 12th WAPP General Assembly!
Thank You for Your Kind Attention.