How can the middle east experience be applied to african power projects – the lawyers chronicle electricity khan academy


Over the last decade, Africa has, for the most part, demonstrated resilient economic performance but by most measures and in most regions, sustainable and affordable energy development has not kept pace with economic growth. With the rising demand for power, Africa could witness a continued infrastructure gap which presents a genuine risk to its growth.

According to the World Bank, 25 of the 54 African countries are in an energy crisis. electricity lesson plans 4th grade In Sub-Saharan Africa, only seven countries have electricity access rates greater than 50 per cent, meaning more than 600 million people (approximately two-thirds of the continent’s population) lack access to electricity. African Governments have responded with conventional and renewable energy investment growth initiatives. Such initiatives include an opening of markets to private investors, the adoption of regulations to enhance transparency and legal certainty, and feed-in-tariff schemes to promote the deployment of renewables.

While many government initiatives have been met with great success, such as South Africa’s Renewable Energy Independent Power Producer Procurement Programme, others have not been as well received. gas and water The experience and lessons of successful Independent Power Projects (IPPs) and Independent Power and Water Projects (IWPPs) in Arabian Gulf countries and the wider Middle East over the last two decades can serve as guidance for Africa. The parallels are important – many parts of Africa have the same opportunities as Middle East countries had when developing their IPP/IWPP programmes, including significant economic growth, increasing consumer demand and an abundance of natural resources against a backdrop of strong interest from the international investor community. electricity magnetism and electromagnetic theory pdf However, Africa faces a number of challenges as the Middle East has faced and overcome, such as scepticism related to political risk and perceptions of inefficiency.

Clearly one model will not fit all and the variety and complexity of economic and political considerations across the African continent cannot be underestimated. gas arkansas Drawing on the Middle Eastern experience can make a vital contribution to the successful development of power projects in Africa. Project participants should feel confident that, with the establishment of a process which follows generally acceptable procurement standards, Africa will continue to represent a significant and exciting opportunity for the power project market.

The Middle East took on the challenge of the infrastructure gap in part by developing IPPs and IWPPs. Both have played a major role in the electricity and water sector in the Middle East providing for significant additional generation and water production capacity in the region. electricity prices by country Abu Dhabi alone has procured one IPP and nine IWPPs, the most recent being the Mirfa IWPP, which closed in October 2014, resulting in an aggregate of approximately $14 billion of finance raised and over 14,500MW of contracted capacity. The Abu Dhabi model has also been successfully adopted, with certain variations, by other countries across the region, including Qatar, Bahrain, Saudi Arabia and, more recently, Kuwait.

It is also important for projects to be well structured and follow a contractual template that delivers bankable projects while not requiring extensive reworking for each new development. In the Middle East, the legal contractual matrix, with the power purchase agreement (PPA) at its heart, has rigidly followed precedent through the IPPs and IWPPs across the region, regardless of changes in commercial terms or market conditions.

In particular, the key to success is ensuring there is a bankable contractual structure. npower electricity power cut The PPA should ensure a source of revenue over a tenor which is sufficient to ensure the repayment of the project finance loan and provide a return to investors. In this respect, the careful selection of creditworthy counterparties is one of a number of critical factors which will determine the bankability of the project. Similarly, the adequacy of the fuel supply arrangements, preferably by way of a fixed price long-term supply agreement, is a key factor in determining bankability.

In Abu Dhabi, the Abu Dhabi Water and Electricity Company (ADWEC) is responsible for the fuel supply as well as being the single off-taker of electricity produced by all the Emirate’s IPPs. No government guarantee is issued in respect of ADWEC’s payment obligations; however, the Abu Dhabi Government guarantees termination payments under the PPA.