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African Power Utility Sector Outlook Shines Bright – PwC Report

African power utility companies are optimistic about the future of the continent’s electricity capacity as private capital supplements government efforts in building new electricity generating plants, the latest PricewaterhouseCoopers (PwC) survey has shown.

The survey asked 51 senior power and utility sector executives from 15 African countries, including Nigeria, South Africa, Zambia, Kenya, Mozambique and Botswana, about the outlook of the sector over the next 10 years.

Almost all of them (96 percent) said there is a medium or high probability that load shedding will be the exception rather than the norm by 2025, and technological changes were expected to transform the prospects of rural electrifications.

Although the investment required to achieve these was immense, with the continent requiring about $450 billion over the next a quarter a decade to electrify all urban areas, the executives were hopeful that private sector involvement in the sector would help improve power production.

“In Africa, the challenges of financing infrastructure are compounded by limited institutional capacity, fragmented regulatory systems and often underdeveloped banking and capital markets outside of the larger economies of South Africa and Nigeria,” PwC said in the report.

Two thirds (67 percent) of those interviewed indicated that ageing or badly maintained infrastructure was a very big concern, but they felt this situation would improve in the medium to long term.

They however cited regulatory change, especially when it involves tariffs, as a key risk to the sector and said they hoped governments on the continent will take advantage of cost reductions through green energy generation to keep tariffs stable.

“There is much to be optimistic about and the results point the way to improvements ahead,” Angeli Hoekstra, Africa Power & Utility Leader at PwC, said in a statement.

“But security of electricity supply and cost reflective tariffs continue to be the number one challenges. Until they are resolved, power systems will remain stretched, as investments in the power sector will be limited. Addressing cost reflective tariffs while ensuring social equity is a key challenge.”