Changing Dynamics of the Sub Sahara Africa Power Sector - Increasing Investments by Foreign Players to Drive Growth in the Region
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Changing Dynamics of the Sub Sahara Africa Power Sector - Increasing Investments by Foreign Players to Drive Growth in the Region
Summary
GlobalData's "Changing Dynamics of the Sub Sahara Africa Power Sector - Increasing Investments by Foreign Players to Drive Growth in the Region" gives detailed information on the Africa power market and provides an overview of the key factors driving investment in the sector. The research analyzes investment trends in the regions power sector and also detailed analysis of the leading countries in this region. This, coupled with funding analysis, power finance structures provides a comprehensive understanding of the market's scenario.
Africa continues to suffer from perceptions of being a high-risk and difficult market even though it has enormous prospects for future growth in the energy sector. Its wealth of natural resources is spread across 54 independent states, which hold a combined population of 700 million. Historically, FDI inflows in Africa have been much smaller compared to the other developing regions. However, the economic growth and political stability witnessed by this region has greatly increased Africa's ability to attract more FDI over the last decade. On the economic front, the growth in the economy at 5% per annum since 2001 coupled with high prices and strong global demand for commodities attracted strong investments in the region. Additionally, governments are actively introducing policies, fiscal measures and reforms and creating improved business environments to actively court foreign investor groups. Growing political stability in the region, with over 20 countries embarking on democratic transitions in the continent and a rapid decline in civil wars, has also helped in creating an optimum environment for FDI.
Scope
The scope of the report includes -
- Data on the investment trends in Sub Sahara Africa and for the leading countries of the region
- Power finance structure within the power industry in Sub Sahara Africa
- Funding analysis for power sector in Sub Sahara Africa
- Country analysis for Asian sponsored energy projects
- Data sourced from proprietary databases and primary interviews with key participants across the value chain.
- The study covers Sub Sahara Africa along with the data and analysis for the region.
Reasons to buy
The report will enhance your decision making capability in a more rapid and time sensitive manner. It will allow you to -
- Facilitate decision-making based on strong historic and forecast data for IPP investments in Sub Sahara Africa.
- Develop strategies based on the latest regulatory events
- Position yourself to gain the maximum advantage of the industry's growth potential
- Identify key partners and business development avenues
- Respond to your competitors' business structure, strategy and prospects
Table of Contents
1 Table of contents
1 Table of contents 2
1.1 List of Tables 4
1.2 List of Figures 5
2 Introduction 6
2.1 GlobalData Report Guidance 6
3 Sub Saharan Africa Power Market Overview 7
4 Crisis in the Power Sector – Understanding the Situation 8
4.1 Inadequate Financial Adequacy of State Utilities 9
4.2 Abundant Natural Resources but Limited Power Generation 10
4.3 High Electricity Costs Acts as Impediment to Power Market Development 11
5 Major investments needed, but from where? 12
6 IPP Investments in Sub Saharan Africa – On a Growth Trajectory 14
6.1 2008 – 2009 Witnessed a Decline in FDI flows due to the Contraction of Global Demand and a fall in Commodity Prices 17
6.2 Regional Analysis of IPP Investments in Africa - Northern and Southern Africa Attracts the Largest Investment due to Abundant Natural Resources 19
6.3 IPP Market in Sub Saharan Africa – The Road Ahead is Dotted with Challenges 21
6.3.1 Need for Reform Legislation and Sector Restructuring to Pick Up Pace 21
6.3.2 Incentives and Increased Electricity Tariffs Must for IPP Growth 21
6.3.3 Strong Local Knowledge and Strategic Relationships with Host Governments Key to Success of IPPs in Sub Saharan Africa 22
6.3.4 Secure Source of Low-cost Feedstock and Expertise in New Power Technology Must for Sustainable Development of IPP 22
6.3.5 Mutually Beneficial PPAs Critical to Development of IPP's 22
7 Key To Sustainable Development of the Sub Saharan African Power Sector 23
7.1 Negative Perceptions of IPPs need to be addressed to create a Conducive Environment for IPP Investment 23
7.2 Unfavorable Power Purchase Agreements (PPAs) and Perceived High Investment Risks Inhibit Development of IPP's 23
7.3 Corruption, Poor Infrastructure Development and Shortage of Skilled Identified as Key Detriments to IPP Development 23
7.4 Regulatory and Fiscal Environment 24
7.4.1 Legislation 24
7.5 Licensing Procedures 24
7.6 Power Purchase Agreements (PPA) 24
8 Investment Analysis in Sub-Saharan Power Generation Sector 25
8.1 Regional Funding Analysis – Asian Involvement in the Sub-Saharan African Electricity Market to Grow 25
8.2 Asian Involvement in Sub-Saharan Africa Power Sector – Investment Trends 27
8.3 Investment Value per Project Financier in Sub Saharan Africa Power Sector, 2010 30
8.4 Project Value per Country in Sub-Saharan Africa Power Sector, 2010 32
8.5 European Union to Continue to Play an Important Role in Sub Saharan Africa 34
8.6 China leading the new wave of FDI in Sub Saharan Africa 35
8.7 Criticism Regarding China's Investment in Sub Saharan Africa 37
8.7.1 Angola Mode of Operation 37
8.7.2 Complicated Terms of Contracts 37
8.8 Chinese Model of Success – Key to Differentiated Propositioning 38
8.8.1 Chinese Government Support 38
8.8.2 Expertise in Hydropower 38
8.8.3 Strategic Relationship with Host Governments 39
8.8.4 Low-cost Equipment 39
8.9 Key IPP Sponsored Energy Projects in Sub-Saharan Africa 39
8.10 Country Analysis for Sponsored Power Projects 39
8.10.1 Angola 39
8.10.2 Botswana 41
8.10.3 Ethiopia 42
8.10.4 Gabon 43
8.10.5 Ghana 45
8.10.6 Kenya 47
8.10.7 Mozambique 49
8.10.8 Nigeria 50
8.10.9 Sudan 52
8.10.10 Zambia 52
8.11 Conclusion 54
9 Financing Power Projects in Sub Saharan Africa 55
9.1 Private Sector Funding 55
9.2 Public Sector Funding 55
9.3 Growing Contractual Savings Industry 55
9.4 Project Financing 56
9.4.1 Project Finance – How it Works 56
9.5 Selecting a Finance Provider 56
9.6 Project Selection for DFIs 58
9.6.1 Project Selection for Commercial Banks 58
9.7 Role of Carbon Finance 59
9.7.1 Carbon Finance Challenges 59
9.8 Case Study of Key Financing Projects and Structures 60
9.8.1 Case Study: DBSA Hydropower Project 60
9.8.2 Case Study: DBSA Wind Power Project 61
9.9 Involvement of Asian Financial Institutions is Expected to Remain Strong in the Foreseeable Future 62
10 Market Attractiveness for IPP is Sub-Saharan Africa, 2010 63
10.1 Kenya and Uganda 63
10.2 Tanzania 63
10.3 Ethiopia 63
10.4 Other Regional Countries 63
10.5 Nigeria 64
10.6 Ghana 64
10.7 Ivory Coast 64
10.8 Cameroon and Senegal 64
10.9 Others 64
11 Conclusions and Future Market Predictions 65
11.1 Public Private Partnership to Evolve Driving Investments in Sub-Saharan Africa Power Sector 65
11.2 Emerging Trend of Asian-based Project Developers to be seen in the Future 65
11.3 Growing Export Market to Augur Well for IPP's in Sub Saharan Africa 66
12 Appendix 67
12.1 Abbreviations 67
12.2 Methodology 67
12.2.1 Coverage 67
12.2.2 Secondary Research 68
12.2.3 Primary Research 68
12.3 Contact Us 68
12.4 Disclaimer 69
List of Tables
1.1 List of Tables
Table 1: Electricity Consumption, Regional Analysis (TWh), 2000 – 2009 9
Table 2: Electricity Potential Versus Utilization, Key Countries, Sub-Saharan Africa 10
Table 3: Financing Gap, Sub-Saharan Africa, 2009 12
Table 4: Foreign Direct Investments, Africa ($m), 2003 – 2008 14
Table 5: IPP Investments in Sub Saharan Africa, Top 10 Countries by Investments, 2000 – 2010 15
Table 6: Investment Commitments to Energy Projects with Private Participation in Sub-Saharan Africa, by Sub-sector ($ billion), 1990–2009 18
Table 7: FDI Inflows by Region as a Percentage of Gross Fixed Capital Formation, 2000–2009 20
Table 8: Annual Commitments by Countries to Infrastructure Projects in Sub-Saharan Africa, 2006 – 2009 26
Table 9: Investment Value Per Country (%) in Sub-Sahara Africa Power Sector, 2010 27
Table 10: Absolute Investment Value in Sub-Saharan Africa Power Sector, 2010 29
Table 11: Investment Value Per Project Financier in Sub-Saharan Africa Power Sector, 2010 30
Table 12: China Exim Bank Investments in Sub-Saharan Africa Power Sector, Top 5 Countries, 2010 31
Table 13: Project Value Per Country in Sub-Saharan Africa Power Sector, 2010 33
Table 14: China's Annual Commitments, Power Sector, Sub Saharan Africa ($m), 2001 – 2009 36
Table 15: Sponsored Power Projects, Angola, 2000 – 2010 40
Table 16: Sponsored Power Projects, Botswana, 2000 – 2010 41
Table 17: Sponsored Power Projects, Ethiopia, 2000 – 2010 42
Table 18: Sponsored Power Projects, Gabon, 2000 – 2010 43
Table 19: Sponsored Power Projects, Ghana, 2000 – 2010 45
Table 20: Sponsored Power Projects By PPI Type, Ghana, 2000 – 2010 46
Table 21: Sponsored Power Projects, Kenya, 2000 – 2010 47
Table 22: Sponsored Power Projects By PPI Type, Kenya, 2000 – 2010 48
Table 23: Sponsored Power Projects, Mozambique, 2000 – 2010 49
Table 24: Sponsored Power Projects, Nigeria, 2000 – 2010 50
Table 25: Sponsored Power Projects By PPI Type, Nigeria, 2000 – 2010 51
Table 26: Sponsored Power Projects, Zambia, 2000 – 2010 53
Table 27: Sponsored Power Projects By PPI Type, Zambia, 2000 – 2010 53
Table 28: Abbreviations 67
List of Figures
1.2 List of Figures
Figure 1: Electricity Consumption, Regional Analysis (TWh), 2000 – 2009 8
Figure 2: Installed Capacity as a Percentage of Estimated Potential (%), 2010 10
Figure 3: Financing Gap, Sub-Saharan Africa, 2009 12
Figure 4: Regional Market Life Cycle Analysis, Sub-Saharan Africa 13
Figure 5: Foreign Direct Investments, Africa ($m), 2003 – 2008 14
Figure 6: IPP Investments in Sub Saharan Africa, Top 10 Countries by Investments, 2000 – 2010 15
Figure 7: Investment Commitments to Energy Projects with Private Participation in Sub-Saharan Africa, by Sub-sector ($ billion), 1990–2009 17
Figure 8: FDI Inflows by Region as a Percentage of Gross Fixed Capital Formation, 2000–2009 19
Figure 9: Annual Commitments by Countries to Infrastructure Projects in Sub-Saharan Africa, 2006 - 2009 25
Figure 10: Investment Value Per Country (%) in Sub-Sahara Africa Power Sector, 2010 27
Figure 11: Absolute Investment Value in Sub-Saharan Africa Power Sector, 2010 28
Figure 12: Investment Value Per Project Financier in Sub-Saharan Africa Power Sector, 2010 30
Figure 13: China Exim Bank Investments in Sub-Saharan Africa Power Sector, Top 5 Countries, 2010 31
Figure 14: Project Value Per Country in Sub-Saharan Africa Power Sector, 2010 32
Figure 15: China's Annual Commitments, Power Sector, Sub Saharan Africa ($m), 2001 – 2009 35
Figure 16: China's Angola Mode of Operation 37
Figure 17: Sponsored Power Projects By PPI Type, Angola, 2000 – 2010 40
Figure 18: Sponsored Power Projects By PPI Type, Botswana, 2000 – 2010 42
Figure 19: Sponsored Power Projects By PPI Type, Gabon, 2000 – 2010 44
Figure 20: Sponsored Power Projects By PPI Type, Ghana, 2000 – 2010 46
Figure 21: Sponsored Power Projects By PPI Type, Kenya, 2000 – 2010 48
Figure 22: Sponsored Power Projects By PPI Type, Nigeria, 2000 – 2010 51
Figure 23: Sponsored Power Projects By PPI Type, Zambia, 2000 – 2010 53
Figure 24: Key Factors Impact Project Financing in Sub Saharan Africa 55
Figure 25: KPA for Selecting a Project Financier in Sub Saharan Africa 57
Figure 26: Case Study for DBSA Hydropower Project 60
Figure 27: Case Study for DBSA Wind Power Project 61
Companies Mentioned
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