The United States recently announced it was spending nearly $500 million to modernize Ghana’s electrical grid and reform the country’s struggling energy sector, adding to the billions already pledged by President Obama to increase electricity access in sub-Saharan Africa.
Obama’s Power Africa program has already pledged $7 billion in government funds and leveraged loans to electrify the continent through 2018. During the White House’s Africa Summit, which drew delegates from more than 50 African nations, the program saw increased funding commitments from the World Bank and private companies.
Politico reports that: “World Bank President Jim Yong Kim announced $5 billion in financing guarantees for the project. The private equity firm Blackstone Group and business conglomerate Dangote Industries also vowed to invest $5 billion into African energy projects over the next five years.”
Obama also announced an increase in its annual commitment to the Power Africa program to $300 million and Sweden pledged to spend $1 billion on the program — bringing to total commitments to bring power to Africa to $12 billion.
The more immediate goal of Obama’s power plan is to install 10,000 megawatts of new energy capacity by 2018 and connect 20 million people to the grid. Ultimately, Obama wants to bring electricity access to 600 million people in sub-Saharan Africa — where 70 percent of the population lacks access to reliable electricity.
Secretary of State John Kerry and Ghanian President John Dramani Mahama signed the Ghana Power Compact on Tuesday, which is “the largest U.S. government-funded transaction of the Obama administration’s Power Africa program,” reports Reuters.
“Reliable and affordable power is essential for Africa to continue to grow rapidly,” said General Electric CEO Jeff Immelt. “MCC’s partnership with the Government of Ghana to transform its power sector and create an environment for investors to develop gas for power generation is a great example of how the U.S. Government can support countries to drive growth, open up opportunities for entrepreneurs and investors and improve the lives of Ghanaians.”
The White House hopes the agreement will draw $4 billion in energy investments from the private sector. But if past Obama administration electrification efforts on the continent are any indication, expanding energy access will be tricky.
The Power Africa program has been around for a little more than a year and already its projects are running into huge hurdles, as Americans deal with archaic regulatory regimes and corruption in African countries.
The Wall Street Journal reports that “Americans have nudged Ethiopia into allowing its first private power project—a geothermal plant—but that took embedding an adviser inside the Ethiopian government. In Tanzania, a number of small solar projects have come online, but required regulatory overhauls for how power is bought and sold are coming slowly. In Nigeria, a massive privatization of power plants is exposing just how dilapidated the structures and the grid have become.”
Kenya was supposed to be one of the easiest targets… But the Kinangop wind farm, which was scheduled to supply enough power for 150,000 homes by the middle of 2015, is proving politically nettlesome,” the Journal added.
Ghana currently has 2,719 megawatts of installed electrical generating capacity which is not enough to supply reliable power to its burgeoning population of 25 million people. But the Ghanaian government hopes foreign investments will change that and will be spending $37.4 million of its own money to aid the power deal.
“This new compact with the MCC demonstrates the growing cooperation between Ghana and the United States. It will benefit millions of our people and contribute immensely to the achievement of my ‘Energy For All’ objective,” said President Mahama.