West African power market could save $8bn

3 May 2018

An integrated power market in West Africa could produce cost savings of $5-$8bn per year by enabling countries to import cheaper sources of electricity, said the World Bank.

The bank, which is funding an initiative to create a consolidated market among 14 countries, said access to electricity in West Africa is at 52%, with shortages of up to 80 hours per month.

Yet electricity in the region remains among the most expensive in the world, at $0.25 per kilowatt-hour. This is more than twice the global average.

With low domestic demand West African countries often struggle to attract investments in large projects that benefit from economies of scale, relying instead on small-scale, expensive oil-fired power generation.

Improving electricity access and reliability in West Africa requires close collaboration among neighbouring countries. The bank believes the West Africa Power Pool (WAPP), a partnership of 14 countries, will help provide this cooperation. It has earmarked $750m in funding to support the programme and intends to provide more.

The countries are Benin, Burkina Faso, Cote d’Ivoire, the Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.

“Currently WAPP is completing the physical interconnections to send power across borders,” said the bank. Around 7% of the region’s electricity is already traded among 10 connected countries.

“It is anticipated that by early 2020s the most critical cross-border links will be in place, making it possible for electricity to flow throughout West Africa from countries with cheaper, cleaner and more abundant energy resources to those lacking them,” said the bank.

It believes integration of electricity grids will improve overall reliability and make electricity more affordable simply by allowing all countries to benefit from the least-costly resources available in the region.

It will also make power generation more sustainable by displacing oil-fired power generation with cleaner sources of electricity such as natural gas, solar, and hydropower.

Separately the bank predicts sub-Saharan Africa’s growth will reach 3.1% in 2018 and average 3.6% in 2019–20, providing oil and metals prices remain stable.

Africa’s Pulse, a bi-annual analysis of the state of African economies, added that the growth forecasts also depends on governments in the region implementing reforms to address macroeconomic imbalances and boost investment.

Growth across the continent reflects a gradual pick-up in the three largest economies – Nigeria, Angola and South Africa.

Economic activity will also speed up in some metals exporters, as mining production and investment rise.

Meanwhile some non-resource intensive countries will see solid growth, supported by infrastructure investment. This includes the West African Economic and Monetary Union (WAEMU), led by Côte d’Ivoire and Senegal.

Growth prospects have strengthened in most of East Africa due to improvements in the agriculture sector growth following droughts and a rebound in private sector credit growth.

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