Energy experts call for better policies

June 10, 2009

, NAIROBI, Kenya, June 10 – Practitioners and Energy experts in the East African Region have blamed low investments in the sector as the major cause of insufficient power supply in the region.

The practitioners made this observation at a Regional Energy meeting in Tanzania, whose recommendations will inform part of the East African Business Council’s lobby process on behalf of the private sector, asking governments to address policy gaps that have often held back the private sector from investing energy projects.

“There is need to establish standard procedures for development of private sector energy projects,” read part of participant recommendations at the meeting.

A report compiled by the group, on the third and last day of the meeting observed that most of the current energy policies in the East African Community Partner States offer little or no incentive to attract private sector investment in energy; notwithstanding that investments in energy are still dominated by the Public Sector that often struggles to meet increasing demand.

“It is difficult to attract Foreign Direct Investment in the current investment climate,” the report further noted.

The meeting thus suggested that governments develop model Power Purchase Agreements for small projects to reduce time spent negotiating with regulators and policy makers, in an effort to sell power to national grids.

“Governments should establish standard procedures for development of private sector energy projects in order to reduce transaction time and costs,” the meeting recommended.

The conference strongly vouched for Public Private Sector partnerships premised on good return for the private sector.

“A stable policy framework on Public-Private Sector Partnerships that sets out consistent guidelines for access with transparent dispute resolution mechanisms is necessary for attracting the private sector,” participants noted in the report.

The meeting further observed that bureaucracies still exist in obtaining tax waivers even those already granted by law, making the sector unattractive for investment.

“Appropriate tax regimes are necessary for attracting private sector energy efficiency awareness needs and where possible give appropriate incentives such as reward system,” the meeting noted.

“In most cases tax authorities require investors to first pay their duty and then claim refunds.”

The energy practitioners noted that there was a large regional market for solar and other renewable energy technologies, given the low levels of access to electricity in the region.

They observed that this is one area that provides the private sector with a niche for investment, while noting that government incentives into the energy sector are still limited.

The meeting therefore requested governments to provide incentives for renewable energy to compete with conventional energy sources.

“For renewable energy to compete with conventional energy there may be need for subsidy or support from government,” the meeting noted.

The meeting proposed the establishment of an East African Energy Forum with a mandate to spur investments in the sector.

The conference, which had been organised by the East African Business Council and East African Community Secretariat, brought together more than 100 participants from the energy sector for a three-day meeting to discuss policy gaps and identify investment opportunities in the sector.

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