M a r k e t N e w s

Africa To Get U.S.$12 Billion Energy Package From AFDB

Posted on : Thursday, 2nd June 2016

Lusaka — Africa was presented with its largest energy deal ever - a $12 billion package from the Africa Development Bank - as some leaders fought off pressure from environmentalists concerned about the threat of an impending construction boom of power dams, reiterating their position that the continent was simply tired of being in the dark.

 
Under the new deal, which was announced during the ADB's annual meeting in Lusaka last week, which ran under the theme Energy and Climate Change, the bank will spend $12 billion over five years. In addition, the bank will leverage at least $40 billion from other private sector players, such as sovereign wealth funds, private equity funds and pension funds, to invest in the energy sector as it tries to meet one of the key components in its High Five development agenda.
 
The High Five agenda includes: Light up Africa, Feed Africa, Industrialise Africa, Integrate Africa, and Improve the quality of life. But with the threat of drastic weather changes such as droughts and floods, some conservationists say the construction of power dams will add to a problem that is already getting out of hand, inflicting devastating impact on Africa's poor.
 
Mary Robinson, the former president of Ireland, and an ardent environmentalist, cautioned African governments to think of the poor and how they bare the deepest impact of climate change. She said the development of sources of energy in Africa that are not clean, such as coal, will go further to increase the problem of climate change.
 
Some African leaders did not fall for this vibe.
 
"I am an environmentalist," Olusegun Obasanjo, the former president of Nigeria, said at a panel of discussion over the new energy deal, before adding: "But I will not keep the environment clean at the expense of keeping poverty in Africa."
 
Idriss Deby, the president of Chad and the current chairperson of the African Union, said it was unfair for Africa, which accounts for roughly two per cent of global trade, to pay a price for the impact of carbon emissions on the environment, where rampant droughts and famine have hurt lives and businesses.
 
BALANCING ACT
 
"You cannot get us to bear a responsibility that is not ours. We need to develop ourselves without making [such environmental] calculations" he said, urging the Western world "to assist us [in dealing with our environmental issues] without making any conditions."
 
The war of words between the conservationists and African leaders perhaps offered the strongest indication of the balancing act that the continent will have to deal with when it hosts the world's top climate change conference later this year in the Moroccan town of Marrakesh. The conference in Morocco will discuss ways to implement the agreements signed during the previous conference in Paris in December, where countries agreed to cut carbon emissions by a half by 2050.
 
In November last year, the Africa Development Bank approved Uganda's investment plan to boost the country's renewable energy. Through the ADB's Climate Investment Funds, Uganda received $50 million to promote different forms of clean power generation.
 
The CIF announced recently that through its Scaling Up Renewable Energy in Low-Income Countries Program (SREP), it would support the growth of geothermal exploration, solar PV off-grid rural electrification and grid net metering, and wind measurement for development of pilot wind power in Uganda.
 
Some of the expected results from the projects under Uganda's investment plan include: a minimum direct contribution of 151MW of installed capacity of renewable technologies (non-hydro) in the country's energy mix; an increase in the annual energy output of 125.4 GWh per year; a total investment of at least $455 million in the power sector associated with SREP; development of two nascent generation technologies in the country, geothermal and wind, with high transformational impact.
 
However, some African leaders said while some of the renewable energies such as wind and solar power cannot industrialise Africa. Nigeria's Vice President Yemi Osinbajo said Africa needed to go for the large power plants if the continent is to develop faster.
 
"I don't think we have the options that the developed countries have. We simply don't have power," he said.
 
"Our immediate need is for base load," he pointed out."We need to develop our hydro, coal to power, fossil fuels as we deal with climate change."
 
The issue of coal, which is dirty, has environmentalists worried. But Akinwumi Adesina, the president of the African Development Bank, said: "there is an elephant in the room, and that is coal. We have to discuss that. Today, there is clean coal technology. Africa does not need pity; it needs technology and innovation."deal, which was announced during the ADB's annual meeting in Lusaka last week, which ran under the theme Energy and Climate Change, the bank will spend $12 billion over five years. In addition, the bank will leverage at least $40 billion from other private sector players, such as sovereign wealth funds, private equity funds and pension funds, to invest in the energy sector as it tries to meet one of the key components in its High Five development agenda.
 
CATCH-22
 
The catch-22 situation between a country's desire to produce more energy while protecting the environment is something that Uganda knows all too well. In March, the World Bank raised questions over the impact of the 183MW Isimba hydropower project on the Kalagala offset, a programme that remains crucial towards the protection of the Mabira ecosystem, which holds Uganda's largest forest.
 
A team of World Bank officials toured the Isimba hydropower project sometime between March 7 and 11 to "gain a better understanding of how the project is progressing relative to the impact on the Kalagala Offset Area," according to a statement from the bank.
 
The bank, however, added that it "remains deeply concerned about the potential impact of the Isimba Hydropower Project on the Kalagala Falls Site, and we have shared our concern with the Government of Uganda on a number of occasions."
 
China Water and Electric Corporation are the contractors for the Isimba project. The Isimba project is just 40 kilometres downstream from the 250MW Bujagali hydropower project.
 
One of the issues within the indemnity agreement was that government would commit not to develop power generation that could adversely affect the ability to maintain the Kalagala falls.
 
The indemnity agreement already recognised that the Bujagali project, in which the World Bank has made investments, would lead to negative environment effects on the Kalagala area. The 2010 sustainable plan was designed to stop any further hydropower generation from impacting the area.
 
The World Bank statement noted that the full impacts of the Isimba Dam on the Kalagala Offset Area will be determined after the completion of the Environmental and Social Impact Assessment Addendum expected before the end of 2016. However, Adesina said the West needed to concentrate more on saving the environment from their side.
 
"Imagine there are two people; one is fat and the other one is thin. The fat person needs to lose weight, while the thin person needs to gain some weight," he said, using the analogy of the differences between Africa and the developed world.
 
Adesina said they are set to hire a vice president for Power and Green Growth, who will drive the bank's plan on power generation and the environment. The numbers tell a bleak outlook for Africa. Kofi Annan, the former secretary general to the United Nations, said two to four per cent of Africa's Gross Domestic Product is lost as a result of poor energy shortage.
 
"This situation should not be tolerated," he said.
 
Africa accounts for just 16 per cent of the world's population. However, 53 per cent of the world's population without power is also in Africa

Source : allafrica.com
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