December 15, 2017

Public-Private Partnerships essential for Power Transmission – World Bank

Public-Private Partnerships essential for Power Transmission – World Bank

THE World Bank report, yesterday reiterated the need for improved infrastructure in the Transmission Company, TCN, calling it a vital ingredient for power development in Nigeria and other African countries.

The report added that the Transmission infrastructure is a crucial middle part of the electricity value chain.

Recall that operators, stakeholders at the power chain, had over time lamented huge infrastructure decay at the transmission line, referring to it as the ‘weakest link in the value chain.’

To this end, the World Bank also called for increased private sector investment to support the infrastructure deficit currently at play at the Transmission chain.

According to the report tagged, ‘Linking up: Public-Private Partnerships in Power Transmission in Africa’, “The private sector has participated successfully in transmission networks in many countries in Latin America and Asia, and this approach could be replicated.

Senior Director and Head of Energy and Extractives Industries at the World Bank, Riccardo Puliti, said, “Alongside Generation, GENCOs and Distribution, DISCOs, improving and increasing transmission infrastructure is key to closing the access gap. So far, transmission in Africa has been financed from public sources and new models of financing involving the private sector have received insufficient attention from policymakers or financiers.”

The report which examines private sector-led investments in transmission globally and how this approach is applicable in sub-Saharan Africa, explained that “Private finance has supported the expansion of electricity transmission infrastructure in many regions of the world and the same can happen in Africa.

It added that, “To attract private sector investment, however, governments need to adopt policies supportive of this strategy and establish the right business, regulatory and legal environment to sustain investor interest.”

However, he puts an estimated investment of $ 3.2 billion and $4.3 billion needed annually to expand the transmission network in 25 years (between 2015 and 2040), maintaining “these investments are critical to delivering cost-effective power to households and industries.”

Meanwhile, the report examined independent power transmission projects (IPTs) in five countries (Brazil, Chile, India, Peru and the Philippines) where major power sector reforms were undertaken to privatize the sector.

“For example, the use of privately financed transmission lines in Brazil, Chile, Peru and India collectively raised over $24.5 billion of private investment between 1998 and 2015. This resulted in close to 100,000 km of new transmission lines.

“The study provides a set of recommendations for countries to adapt to specific local conditions and lists 10 steps to get there, including the right legal and regulatory framework, new models for concessional lending, competitive tender processes, adequate revenue flow and credit enhancement for projects, or tailored IPT projects to attract international investors, to name a few.”

It further added that, “Africa lags the rest of the world when it comes to electricity, with just 35 percent of the population with access to power and a generation capacity of only 100 GW. Those who do have power typically consume relatively little, face frequent outages and pay high prices.”

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