Energy Sectoral Committee

Energy Projects 2022

PROJECT BACKGROUND:

The Utility services industry is characterized by asset-intensive companies with huge sums invested in asset acquisition and installation. Ideally, one would expect that the preoccupation of all Utilities should be to optimize the economic and productive lives of their Assets. However, the evidence in most African countries does not support this assertion. Often the discipline of Asset Management has been assumed to be the sole responsibility of engineers; although even these do not always get the requisite budget allocation to support and maintain these aging assets.

 

Therefore, there is an urgent need to take a holistic approach to optimize these large investments. Infrastructure Asset Management (IAM) Best Practice recognizes Asset Management as an organizational-wide discipline, integrating leadership, planning, finance, engineering, operations, ICT, human resources, and auditing to achieve optimum service and value delivery. There is growing evidence globally indicating that Utilities that have adopted IAM best practices have improved their ability to operate safely with high levels of service reliability, meet strategic and business objectives, and realize significant cost savings over the assets’ life cycle. At AFUR, we have identified this necessity for African Utilities and are creating the Infrastructure Asset Management (IAM) Centre of Excellence (CoE) to bring this integrated discipline and approach to the forefront of Regulators and Utilities in Africa.

Off-grid renewable energy solutions will be key to achieve universal access to electricity in Sub-Saharan Africa. It is estimated that between 60-70% of the future electricity supply will come from off-grid systems (both isolated and mini-grids). Mini-grid development is closely tied to national policy decisions and regulatory frameworks. A revision of the power system framework traditionally based on a centralised model is required to create an enabling policy framework for large scale uptake of the decentralised mini-grid sector.

Governments have an important role to play in facilitating private sector participation in the African mini-grid space. This is because there is a growing interest from the private sector in the development, financing, operation and management of mini-grids to support implementation of universal energy access goals.

A tailored approach to tariff regulation is an effective way to mobilise private sector investment in the sector as mini-grids tariff frameworks have a strong influence on the viability and sustainability of mini-grids, notably by affecting the operators’ ability to set end-user tariffs. Although the expectations vary, tariffs as one of the main revenue streams affect project cash flows, the availability of funds for management, operation and maintenance, and cost recovery.

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