Petroleum Africa
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Friday, June 27, 2014
Release
The annual global power market attractiveness rankings, published today by London analysis firm Precergy, concludes that only four Sub-Saharan nations appear in the world’s top 100 most attractive power markets. In fact only South Africa, ranked 42nd, even appears in the top 50. Furthermore, South Africa’s rating of 55 out of 100 is the only nation in Sub-Saharan Africa with a rating above 50. For comparison, the USA has a global-leading score of 93.
Over the past decade Sub-Saharan Africa has experienced substantial economic growth and development, with annual GDP growth consistently surpassing average global levels. As the developed world continues to struggle to return to pre-recession economic growth rates and many leading emerging economies, such as Brazil and India, struggle to maintain previously strong and sustained growth, Sub-Saharan Africa has emerged as an increasingly attractive regional investment option. However, in light of the significant project investment and execution risks that exist for all power projects around the world, it is worth exploring how attractive Sub-Saharan Africa’s power markets actually are.
Precergy Managing Director, Adrian John commented “Of course there many reasons for the overall low scores for Sub-Saharan African countries, not least the greater levels of political risk and increased difficulty in doing business.” John continued “The impact of such factors are illustrated well when one considers that, based on energy resource potential and policy support alone, 23 Sub-Saharan African nations appear in the world’s top 100 for solar power, 18 for onshore wind and 17 for gas power. Meanwhile just 9, 8 and 5 countries respectively actually appear in the overall attractiveness rankings for these specific technology types.”
So although it’s quite clear that Sub-Saharan Africa’s power industry has huge long-term potential, it should surprise nobody that the region continues to encounter significant difficulties in attracting the levels of foreign direct investment in power projects that is required to ensure that insufficient secure power supplies don’t begin to inhibit continued strong economic growth.
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