RENO, Nevada — While statistics indicate that one in three Africans currently lack electricity, a new report published by the World Bank Group suggests that the solution to the continent’s energy crisis may reside with African mining companies.
The report, published earlier this month, finds that if mining companies resort to large-scale purchases of energy services from electricity utilities or independent power producers, or IPPs, rather than supplying their own energy on site, then economic payoffs could be substantial for all parties involved, including residents of sub-Saharan Africa.
Specifically, if mines establish themselves as key customers for utility companies, then that “anchor demand” would provide greater revenue for the utility companies. If that were done, it would promote greater investment in energy infrastructure projects, which would in turn provide a more abundant and reliable energy supply to a greater number of domestic energy consumers across sub-Saharan Africa.
Meanwhile, the mines would save substantially—perhaps hundreds of millions of dollars or more—by purchasing energy from utility companies rather than self-supplying electricity. These cost-saving measures could further promote industrial growth and development, which could in-turn promote economic prosperity for the continent as a whole.
Overall, the World Bank reports that African countries would benefit from “more exports and tax revenues from mines, more job opportunities in local firms selling goods and services to the mines, and a higher GDP.”
“By choosing grid-based and cleaner power sourcing options, which are typically priced lower than self-supplied electricity from diesel or heavy fuel oil, mining companies will be able to meet their electricity needs while also helping to light up the community,” Anita George, Senior Director of the World Bank’s Energy and Extractives Global Practice, said.
“In turn, countries will benefit from improved competitiveness of the mining companies, greater tax revenues from mines and more job opportunities for local people,” George said.
The report comes at a time when the mining industry is increasing its demand for power in sub-Saharan Africa. The World Bank estimates that if the status quo is maintained, mines will have invested up to $3 billion in self-supply energy sources by 2020.
Although the report’s “cleaner” recommendations are already being implemented in some parts of sub-Saharan Africa, many self-supplying mines continue to supply energy through diesel generators rather than utilize electric grids—often due to “shortcomings in national power systems in the region.”
The report notes that in order for these issues to be rectified and the new proposal to be truly effective, sub-Saharan Africa must continue to invest in power sector reforms and “create an attractive operating environment for IPPs—including renewable energy developers.”
The report estimates that in total, up to six billion dollars in public-private partnership opportunities could be drawn from “clean energy sources”—including natural gas and hydropower—in countries with increased energy demand from the mining sectors, including Guinea, Mauritania, Tanzania and Mozambique.
These impacts could be particularly substantial in Guinea and Mauritania, where the World Bank estimates that 150,000 and 700,000 residents respectively could receive power for the first time.
– Katrina Beedy
Sources: World Bank 1, World Bank 2, Open Knowledge Repository