Kenya can leverage on clean power to become continent’s top exporter

Tuesday August 7 2018

Akinwumi Adesina

Akinwumi Adesina, president of the African Development Bank. PHOTO | DIAN ANGILA | NATION 

By ALLAN OLINGO
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The president of the African Development Bank Akinwumi Adesina spoke to Allan Olingo about how the institution is supporting the continent’s energy and infrastructure sectors.

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You toured the Olkaria and Menengai Geothermal Plants, both partly financed by the AfDB. What is your take on the impact they have had so far in Kenya’s power generation sector?

I was very impressed. Kenya has led the way on renewable energy in Africa, especially on the use of geothermal power.

We announced that we will provide the $40 million to Quantum Power, one of the three independent power producers contracted by Kenya to build the 105MW Menengai geothermal power plant.

I look forward to a time when IPPs will embrace renewable energy projects. This is the future of energy.

Kenya is a leader in geothermal power and the country can use it to become of the continent’s leading exporter of clean power.

We have supported the government in this sector, extending more than $120 million in loans that were used to buy three drilling rigs, drilling materials and for training.

We also helped Kenya acquire a geothermal drilling simulator, the only one of its kind in Africa. We are open to doing this in the region.

Where does renewable energy sit in the energy portfolio of the AfDB?

Renewable energy is the way to go. Three years ago, we were funding only 12 per cent of renewable projects within our energy portfolio. This grew to 74 per cent in 2016, and last year, all the projects we funded aimed to provide renewable energy from solar, wind to geothermal. This is something we are proud of championing.

Last year we started the $12 billion facility to fund renewable energy projects under the Africa Renewable Energy Initiative.

We hope this fund will help African countries speed up industrialisation. The objective is to see these countries unlock their huge energy potential, including the renewable and non-renewable energy, so that we can deliver 10GW of electricity by 2020 and 300GW by 2030.

We are planning to spend this money over the next three years under the African Renewable Energy Initiative of the Africa Union to empower countries to scale up harnessing of their renewable energy potential. Through this, the continent should be able to reposition itself to implement the Paris Climate Change Agreement.

Many energy projects in the region have failed to attract private investors. Why is this the case?

It is true that we are seeing an infrastructure deficit not only in energy but other sectors, where the private sector could have stepped in and helped governments achieve their goals. This is due to poor laws, policies and unpredictability of African governments.

Currently public private partnership (PPP) laws and regulations are not strong in many countries. This needs to be revisited. We also do not have any PPP hubs on the continent, making availability of investment and partnership information and opportunities quite difficult.

There is also the case of unpredictability in government policies, something that is unattractive to investors. For example, in energy, pricing of tariffs is important for investors and when you do not have policies, you will not attract any investment in this sector.

Electricity distribution is an important element of effective power provision. Are African countries taking this element seriously as opposed to generation?

You cannot generate what you can’t distribute. It is true that the distribution element is important but has been lacking, not just in the region but the continent as a whole, is still seeing continuous improvements by governments.

During my Kenyan visit, I had the pleasure of seeing one of the continent’s largest connectivity projects, the last mile connectivity.

This has had the greatest impact by connecting 3.3 million people to power over the past four years. This is a big boost to investor confidence across the country. It is the reason we shall be investing through a loan of a further $150 million for the second phase.

This shows our confidence in the work done by Kenya in enhancing connectivity for its citizens from the funds we have advanced to the country.

One of the objectives of the $6 billion Japan-Africa Energy Initiative to support the New Deal on Energy for Africa partnership is capacity building.

The partnership has the grant element which supports electricity distribution agencies to become more efficient.

For example, at the Lake Turkana wind power project in Kenya, which we supported, capacity to transmit the energy has been constrained but we have worked it out and it should soon feed the national grid.