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African Energy - Issue 418 - 25/06/2020

Last chance for compromise as Gerd deadline approaches

The breakdown of talks on the Grand Ethiopian Renaissance Dam (Gerd) on 18 June – after nine days of discussions held remotely over video because of Covid-19 restrictions – left both Ethiopia and Egypt holding on firmly to mutually incompatible maximalist positions. On 19 June, Ethiopian foreign minister Gedu Andargachew told Associated Press that filling the dam would advance whatever happened. “For us it is not mandatory to reach an agreement before starting filling the dam, hence we will commence the filling process in the coming rainy season,” he said. “We are working hard to reach a deal, but still we will go ahead with our schedule whatever the outcome is. If we have to wait for others’ blessing, then the dam may remain idle for years, which we won’t allow to happen.”

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African Energy - Issue 417 - 11/06/2020

Zambia government’s power grab signals further trouble ahead

Energy minister Matthew Nkhuwa on 1 June declared transmission and distribution assets owned by the publicly listed Copperbelt Energy Corporation (CEC) as common carrier. This is intended to allow Zesco to use CEC lines to supply power to the government-controlled Konkola Copper Mines (KCM), with which it has signed a term sheet for power supply. The regulator imposed a hastily approved wheeling fee, which CEC says is equivalent to only 30% of its current network tariff.

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African Energy - Issue 416 - 28/05/2020

Upstream success traps Egypt in commercial dilemma

While Egypt has laboured successfully over several years to re-establish export capabilities, the global crisis caused by the Covid-19 pandemic has destroyed the international LNG market for the time being. With the budget under severe strain, the authorities can ill afford to continue paying premium prices to IOCs for offshore gas and are pushing these partners to rein in production as much as they can. The incomplete deregulation of the domestic market is likely to remain frozen while the government leans on international multilateral support to ride out the crisis.

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African Energy - Issue 415 - 14/05/2020

Nigeria faces multiple crises as daunting fiscal, social challenges unfold

Senior officials have kept their counsel during a difficult period when coronavirus and the oil price slump have laid low the Nigerian economy, but there are signs that reformists in Abuja are trying to use the crisis to their advantage – reflected in action to end fuel subsidies and accelerate power sector reforms. But despite some potentially important steps forward, the outlook is extremely difficult in a humanitarian crisis where social distancing is all but impossible for the majority of the population.

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African Energy - Issue 414 - 30/04/2020

Latest African Energy figures show decade of patchy progress

The African Energy Live Data 2019 update shows that 9.6GW of net new capacity was added on the continent during the year. The figure includes off-grid and embedded plants in the public domain, as well as on-grid facilities. This is just over half of the capacity added in 2018 and significantly less than the five-year 2014-18 average of 13.2GW . The slowdown was widespread. In sub-Saharan Africa (SSA) excluding South Africa, 2.8GW was added, the lowest amount since 2014 and also significantly lower than the 2014-18 average of 3.8GW .

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African Energy - Issue 413 - 16/04/2020

South Africa’s crisis could finally force tough energy reforms

President Cyril Ramaphosa’s administration has frequently been criticised for the slow pace of reform, particularly as national utility Eskom has slipped deeper into crisis. However, the coronavirus pandemic has so far been widely seen as strengthening his political position, while dampening the impact of Moody’s downgrade of the sovereign debt rating to below investment grade. This could provide an opportunity for pushing through reforms and seeking more international support. A $1bn loan from the New Development Bank has already been secured, while ministers have mooted support from the World Bank Group and International Monetary Fund (IMF).

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African Energy - Issue 412 - 26/03/2020

Coronavirus impact on Africa’s power sector is limited, so far

The coronavirus pandemic has so far been characterised by the dramatic speed of infection and a rapid escalation of policy responses by governments. While Africa has so far been less affected than Europe, South Africa’s President Cyril Ramaphosa on 23 March announced a 21-day lockdown to begin on 26 March, and it is likely that many more countries will follow. The continent has had at least 2,000 recorded cases, mostly among people travelling from Europe, and almost certainly many more in reality.

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African Energy - Issue 411 - 12/03/2020

Price shock hits African producers already struggling with low demand

The fallout from Saudi Arabia’s 6 March decision to pull the plug on negotiations with Russia to extend and deepen Opec and non-Opec crude production cuts risks dragging Africa’s leading oil exporters into prolonged recession if oil prices do not recover quickly from their new levels of around $35/barrel.

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African Energy - Issue 410 - 27/02/2020

West African oil exports hit by coronavirus effect as Chinese demand falls

West Africa oil exporters are scrambling to deal with a sharp drop in Chinese import demand caused by the coronavirus. China imported around 1.3m b/d of West African crude before the economic jolt caused by the virus. Imports fell to 1.1m b/d in February, causing major disruption to the key market for many sub-Saharan African oil exporters, according to tanker data and crude-loading programmes.

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African Energy - Issue 409 - 13/02/2020

Nigerian electricity regulator acts to rein in distribution chaos

A tumultuous few months in Nigerian electricity distribution that included the Nigerian Electricity Regulatory Commission (NERC) threatening to withdraw the licences of eight of the country’s 11 distribution companies (discos) in October has forced progress on some of the many intractable problems preventing investment in the sector. A clearer and more balanced regulatory framework has been put in place and, with a regulatory order on electricity distribution franchising expected later this month, discos have some options for attracting investment and improving service quality (AE 367/6, 363/7).

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African Energy Gulf States Newsletter