Players in Africa’s energy sector are urging governments to regulate electricity tariffs to reflect the cost of power generation as a key step in tackling the continent’s energy sector debts.
Several countries across Africa, including Ghana and Nigeria continue to grapple with debt distress that limits their ability to invest in renewable energy.
Ghana is faced with an energy sector debt of GH¢80 billion, approximately $6.6billion, with the country’s power generation company, the Electricity Company of Ghana (ECG) alone accounting for more than half of the debt.
Nigeria also recently approved a phased plan to refinance 4 trillion naira ($2.61 billion) in electricity sector debt to help stabilize the nation’s ailing power industry and improve supply.
“The challenges in the energy sector across Africa arise from the revenue side, tariffs charged by utility companies are not reflective of the cost of generating the power,” Africa Head for Infrastructure, Capital projects and Economic Advisory at Deloitte, Yaw Appiah lartey told The Africa Dispatch.
“What we have advised governments to do is to ensure that tariffs are increased to reflect the cost of generating power,” he added.
The International Energy Agency says the continent requires at least $200billion to finance its energy and climate related goals by 2030.
For Executive Director of the Africa Center for Energy Policy, Ben Boakye, governments commitment is key in addressing the energy sector crisis.
“One of the problems we see is the scale of energy poverty across the continent. Over 600 million of our population live without access to energy. Within the context of the energy transition, we can quickly accelerate energy access in the most affordable manner.”
Access to capital for energy projects remains increasingly difficult due to perceived risks associated with financing Africa’s energy sector.
To tackle this, stakeholders like Boakye want governments across the continent to “raise financing within their own context to be able to provide access to energy for our people.”
This includes upward adjustments of tariffs to enable individuals and businesses to contribute to the cost of power production.
