African energy stakeholders met at a 2-day workshop in the margins of the Joint Africa-EU Strategy meeting of the “Reference Group on Infrastructure”, to develop cooperation at the continental level, towards the development of a harmonized regulatory framework for energy.

The Stakeholders’ dialogue workshop was co-organized by the African Union Commission (AUC) and the European Union (EU), through its Technical Assistance Facility for the “Sustainable Energy for All (SE4ALL), Eastern and Southern Africa” initiative.

The workshop was attended by the following energy stakeholder representatives: Continental organizations representatives from AUC, NEPAD/NPCA, APUA, AFREC, AFUR, UNECA; Regional Economic Communities (REC) representatives from COMESA, EAC, ECCAS, ECOWAS, SADC; regional organisations and bodies such as RERA, and ERERA; and EU representatives and the team of Technical Experts.

Existing regulations and best practices at national, regional and continental levels were discussed, and a common approach towards harmonization of energy legislations was developed.This is the first in a series of round table discussions, and will be followed by consultations on the technical specifications towards harmonization.

The ambition is to formulate a continental strategy and set up an action plan for the necessary reforms, with the ultimate goal of creating an enabling regulatory environment for electricity market development in Africa.

The initiative is supported by the European Union (EU)whose representative, Mrs. Anna Burylo, Head of Cooperation of the EU Delegation to the African Union, said during the opening session of the workshop: “Policy and regulatory reforms are a prerequisite to facilitate investment from both public and private sources. Policy and regulatory frameworks should ensure stability, transparency and a degree of predictability, while balancing macro-economic and consumer interests.”

Continental and regional integration, in particular through the development of regional infrastructure and markets, is one of the key components in the vision of the African union Commission, of an ‘integrated, prosperous and peaceful Africa, driven by its own citizens and representing a driving force in the global arena’.

The Director of the Department for Infrastructure and Energy of the AUC, Mr. Aboubakari BABA MOUSSA, mentioned at the opening that the “harmonized continental regulatory framework for the energy sector in Africa” is one of the fundamental requirements for creating conducive environment for private sector investment in the energy projects and creation of vibrant energy market. This is one of the flagship projects of the Agenda 2063 of the African Union and is being implemented by the AUC in collaboration with the European Union.

Having a harmonized regulatory framework will go a long way to to support the INGA Project which is another flagship of Agenda 2063 and the extension of transmission lines to the Eastern, Southern Western and Northern Africa regions. This will put the corner stones in establishing regional/continental energy markets, and connecting Africa together. The director highlighted also the importance of sharing energy information and data among the African Countries to accelerate the development of the African Energy Market.

---

Formulation of a continental strategy and action plan of proposals: Stakeholders Dialogue Workshop - Summary

Present situation, gaps, best practices

In order to answer to the objective of harmonization of the regulatory frameworks and promote active cooperation between regulators at regional and continental level, we have followed a bottom up approach for the analysis of the situation.

National level: Many African countries already have institutions, legislations and regulations which allowed interconnection and electricity market. Benchmark national legislation and best practices identified represent good examples for less advanced countries, regarding the different framework conditions, for cooperation and harmonization. The report also reviews the gaps/barriers and weaknesses which will have to be removed through introduction of reforms by a number of other African countries:

The power sector of the Sub-Saharan countries with the exception of South Africa comprise of relatively small systems which are characterized by technical, operational and financial problems. The creation of the regional markets is essential for creating the environment to attract the needed (funds) capital, technology and expertise to help fix the challenges of the electricity deficit.

Many countries underperform in rate and level of electricity access, because of weak means and also due to a lack of policies, poor enabling environment for private sector investments, and institutions for development and roll-out of related programmes, in particular through innovative ways, including REs and mini-grid solutions.

It must be noted that the shortcomings of the African Energy Sector are not due to the challenges posed of the inadequacies of the legislative and regulatory frameworks alone but a combination of factors.

Therefore the assessment must also be viewed in the context of the traditional financial under performance of the existing utilities and their ability to adequately respond to the needs of the sector.

The macro-economic environment and sometimes protracted power shortages undermine the utilization of some of the best formulas (Ghana tariffs example).

Despite a large number of best practices, there are remaining range of barriers hindering the development and access to modern and sustainable energy services on the continent, including: low levels and lack of effective policy, regulatory and institutional frameworks; unattractive energy market to potential investors due to high investment costs and low technical skills and implementation capacity, amongst others.

Regional level: The electricity sectors of most of the African countries have undergone reforms (at various stages) with the assistance of regional organizations. Several regional and continental initiatives are also being implemented for achieving regional and continental goals in energy supply and access. Power Pools represent a real success especially SAPP and WAPP.

The adequacy and efficacy of the legislative and regulatory framework for the electricity market and industry is as important a factor as the commitment and political will to take decisions and implement them towards the scaling up of generation, improvements in governance of the sector operators, development of competitive markets and ensuring success in access programmes.

Existing disparities in the regional development of the legislative and institutional framework for electricity, renewable energy and energy efficiency limits the extent of the comparative analysis. The developments within the SADC/SAPP and ECOWAS/WAPP/ERERA regions are ahead of the rest in the electricity sector. With regard to renewable energy and energy efficiency the RCREEE and ECREEE are more advanced.

Continental level: Presently, the AUC and its other continental agencies relevant to the development of the energy sector and related continental harmonization (including PAP, NPCA, AFREC/AFSEC)do not exercise any legislative power. Same observation is for AFUR which represent less than 50% of African countries. The role of these continental institutions may be limited to information, advice, getting lessons from best practice for dissemination, assistance, model of contracts.

Preliminary conclusions

Considering their mandate and powers, the roles of Continental Institutions would essentially consist of awareness, information, advices, exchange of information and experience, workshops, publication of guidelines and guide books, and for some actions carrying out audits. AFUR represent a good example of continental institution and has published Quality of Service Guidelines and continues to support members in regulatory capacity building while AFSEC has been continuing with a standards (related e.g. to quality of electricity supply and electrical risks) development process. But the guidelines and standards issued by these important sector continental bodies are non-binding on members as they do not have the force of law.

The AUC should take initiatives for the harmonisation of contracts related to energy exchanges, network connection and access, and for the promotion of sustainable solutions for private sector investment in power generation, transmission and distribution. AUC may also have to secure and monitor coordination between regional initiatives and Regional Centres for RE&EE, and benefit from experiences of existing centres.

Regional organizations may have the same information roles and also have an important required role for contracts and tariffs, market rules and grid codes to convince their member countries to adapt their legislation and regulatory framework. They will have to gradually introduce necessary changes in order to remove all barriers to their regional markets. Several standards, as well as some tools and software, are worth being implemented within all regulatory authorities belonging to a same region.Regional inputs are also required for national legislation and power sector organisation, and for RE.

National level: There have been several attempts to jointly develop standards, codes or labels at the level of several countries. Exchange and mutual support between countries within a region is necessary to make progress in regulations and develop new electricity, RE and EE markets