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Public Private Partnerships in the African Energy SectorPublic Private Partnerships in the African Energy SectorThe advent of power sector reforms has sparked much debate on the involvement of the private sector in the provision of energy services. Whilst a lot of African countries have shied away from privatising their utilities and investors have avoided purely private ventures in energy services provision, an option that is slowly catching up is that of private public partnerships (PPP). PPPs as the name implies generally refer to partnerships between the state and private investors, for the provision of goods and services traditionally provided by public entities. These include telecommunication services, energy services and water and sanitation delivery among others. PPPs are especially seen as advantageous in African countries due to a number of reasons which include; overstretched resources such as finances and technical capacity, decreasing donor support, unstable or unfavourable micro-economic and political environments that have made purely private ventures a high risk and unattractive legal and regulatory frameworks governing public infrastructure and services sectors and other relevent sectors (e.g the finance sector). Furthermore, in the energy sector, the commercialisation of energy services is a relatively new concept and so most countries do not have a track record that can give investors confidence and hence PPPs allows for the sharing of risks between private and public entities. PPPs therefore seem to have a potential in increasing the much needed investment in the energy sector. Whilst the concept of PPPs has some potential for increasing investments in the energy sector at a time when most African government are experiencing problems in mobilising adequate financing for the required investments, a number of barriers exist. One such barrier has been that due to the efficiency concerns of private entities, analysts have raised concerns over increased job losses, an issue that has serious political connotations for most governments. This is especially crucial at a time when most Southern African countries are reeling under the effects of Structural Adjustment Programs (SAPs) which have been blame for increased joblessness in the region. Other concerns include increased corruption (through regulatory capture and other venues) due to the revenue potential of the energy sector, impact of PPPs on service quality as providers strive to keep costs down, impact of private participation on service costs and the poor track record of African governmentsÂ’ respect of rule of law. The arguments against PPPs as well as purely private ventures are however also often true for public ventures. In fact, poor services delivery and government interference have been some of the arguments that sparked the debate and (slow) growth of private investment in the energy sector in Africa and elsewhere. A more important question however may be "How can the success rate of PPPs in energy services provision in Africa be increased?" In this case, success of PPPs would include improve services delivery, inclusive services delivery (i.e providing services to all including the poor, especially the rural poor who are often sidelined) and keeping costs of energy services at affordable levels, just to name a few. In order to achieve this, a number of pre-conditions need to exist. One major condition crucial for the success of PPPs in the energy sector in Africa is political will. This then should result in governments clearly defining their own objectives, roles and responsibilities in promoting PPPs as well as defining the desirable roles and responsibilities of potential private partners. The legal and regulatory framework governing the energu sector as well as the investment climate in African countries should create favourable market conditions and provide adequate incetives for investors through sensible and fair rewards. Policymakers should however be careful in creating these incetives and must provide for disincentives for "fly-by-night" investors and should ensure fair burden apportioning so that governments do not attract investors at a high cost with respect to the governments' development goals. Another issue is that of the processes regarding partner selection and consessions. Legal instruments must be available, that provide for fair and transparent partner selection processes as well as fair and transparent dispute resolution. With these meachanisms an their support infrastructure in place, governments should set out to set new and impressive track records in all service sectors to make them attractive to potential partners. Continuous communication and learning among stakeholders should also be encouraged to ensure that the African energy sector is competitive and attractive in an increasingly competitive global environment. In addition to legal and regulatory frameworks, there is need for the development of good infrastructure and functioning public services that can provide balanced and meaningful partnership to private entities. User:Margaret Matinga | |
Page created:
30 July 2004; Last edited:
30 July 2004; Version: 0 | |
Pagename: PublicPrivatePartnerships @HEDON: TJBA | |
