Southern African nations seek ways to fund energy project

The Southern African Development Community or SADC member states have agreed to enhance their cooperation to address policy challenges affecting funding for regional energy infrastructure projects and to find innovative ways to unlock projects from a funding and compliance point. This was reached at during a virtual workshop held by the SADC Secretariat on Wednesday.

The workshop was held in collaboration with the Southern African Power Pool which runs the Accelerating Regional Energy Projects program for the SADC. The program aims to establish a sustainable framework of designing, preparing and financing regional generation and transmission infrastructure projects in SADC member states that would increase the number of projects undergoing the construction phase with clear targeted commissioning dates.

While delivering the opening remarks, Mapolao Mokoena, the director for infrastructure at the SADC Secretariat, noted that the gaps, risks and challenges facing SADC member states revolved around member states' commitment to regional transnational projects, intergovernmental memoranda of understanding, tax and value-added tax issues on donor funds, and access and limitation to project development funding.

"Changes in priority of member states with respect to domestic and regional interconnected projects could be addressed through intervention from the SADC Secretariat at a ministerial level and designation of projects as Presidential Critical Infrastructure Project (PCIP) so that there is continuity," Mokoena said.

"Under the PCIP, officials would be responsible for coordinating the various ministries. Ministers responsible for finance and investment could also engage at regional level to agree on currency, funding and sovereign guarantees to address these gaps and risks," she added.

During the workshop, SADC member states were encouraged to find other sources of funding besides direct foreign investment and prepare their own projects because interests of member states in some instances are not aligned with requirements of foreign investors.

The Southern Africa region still faces significant challenges in energy development and usage. The Regional Infrastructure Development Master Plan Assessment Report of 2019 indicates that only 32 percent of rural areas in the region have access to electricity.

In addition, coal supplies 62 percent of power generation in Southern Africa, but is considered a contributing factor to global warming. Pricing and infrastructure hurdles such as grid connections, manufacturing and quality testing impede development of the region's renewable energy potential.

At the workshop, member states agreed to work together on, among other things, identifying new sources of development and project funding that needed to be secured to ensure longevity of the projects through their life cycle and greater consideration to be given to member states self-funding feasibility studies in the event of Independent Connection Providers pulling out of projects.