- Government prioritisation of energy offers opportunities for foreign investment and cross-border electricity trade expansion
CAPE TOWN, South Africa, Feb. 10, 2014 /PRNewswire/ -- Power infrastructure in the East African countries of Uganda, Kenya, Tanzania and Rwanda is inherently connected to its economic growth. As urbanisation and industrialisation fuel the need for electricity in cities, government focus on energy development will provide a platform for both private and public sector participants to contribute. Moreover, it is expected that the energy mix in East Africa will diversify from its predominant dependence on hydro, affording additional opportunities for power infrastructure advancement.
New analysis from Frost & Sullivan (http://www.energy.frost.com), Power Infrastructure Tracker in East Africa, finds that the demand for electricity in East Africa is expected to grow at approximately 5.3 percent per year till 2020. To meet these requirements, generation capacity would have to increase by 37.7 percent in Uganda, 96.4 percent in Kenya, 75.3 percent in Tanzania and 115 percent in Rwanda.
Large gas finds have placed East Africa on the map as a major participant in the world gas market. However, limited regulatory and institutional capacity, shortcomings in technical capacity and political risks are slowing down improvements in power infrastructure. The challenge is compounded by the lack of local skills and resources. The need for external contractors and consultants to work on infrastructure projects will also escalate costs. Hence, foreign investments in the East African energy sector will be vital to establish a platform for skills growth and knowledge transfer.
"In light of the significant investments needed over the next eight years, the power infrastructure segment is dependent on the private sector," said Frost & Sullivan Energy and Environmental Research Analyst Joanita Roos. "The government, in conjunction with development partners, must build a more favourable business environment to facilitate growth."
It is crucial for global investors to understand the unique opportunities and challenges of the individual countries in the region; East Africa has the lowest access to electrical power and smallest per capita generation compared to all other sub-regions on the continent. While gas development plans, financing for infrastructure and international partnership is critical for successful development of the power sector, returns will be slow.
"Focus on intraregional energy and trade integration will help reduce costs and ensure greater reliability and sustainability of power supply," noted Roos. "If strong cross-border interconnectors develop to enable consistent power flows across the region, Rwanda, Uganda and Tanzania can make a mark as net exporters of electricity."
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Power Infrastructure Tracker in East Africa is part of the Energy & Power Growth Partnership Service program. Frost & Sullivan's related studies include: Annual State of the South African Electricity Industry, Southeast Asia Transmission and Distribution Substation Market, Global Transformer Market, and Global Data Centre Uninterruptible Power Supplies Market. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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Power Infrastructure Tracker in East Africa
SOURCE Frost & Sullivan