The need for new power provision in Africa is enormous. Although installed grid-based generation capacity has been steadily increasing across the continent in recent years – reaching 158 GW in 2012 – more than 620 million Africans live without access to electricity, according to the International Energy Agency.
Finding the finance to build this new power capacity will be a major challenge. Consultants McKinsey & Co. estimate it will cost $835 billion to connect all of Africa's population to electricity by 2030. As governments cannot support this spending – especially after the oil price crash has weakened many state balance sheets – major private sector and commercial funding will need to be mobilised.
Global foreign direct investment in African infrastructure has steadily increased over the past decade, although the recent commodity price drop has slowed these developments. International financial institutions (IFIs) have had to increase their lending to African power projects to help plug this gap, but the energy challenges Africa faces cannot be addressed using IFIs and donor funding alone.
In this Interfax Natural Gas Daily special report, we look at how governments are financing new gas-fired power capacity and the instruments states can use to mobilise the private sector funding needed to meet Africa's energy challenge.
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