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Dec 31, 2015

Electrify Africa Act of 2015

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On February 8, 2016, President Obama signed into law the Electrify Africa Act of 2015 (H.R. 2847/S. 2152), capping an almost two-year effort to pass the legislation. The legislation, which had overwhelming bipartisan support in both houses of Congress, is intended to build on the success of the Power Africa initiative introduced by President Obama on June 30, 2013. This initiative is aimed at bringing together and leveraging relationships between technical and legal experts, the private sector and governments from around the world to provide access to electricity for 50 million people in sub-Saharan Africa by 2020. The Electrify Africa Act is designed to transform and improve some of the Power Africa initiatives by providing a framework for US government agencies to invest in and promote energy solutions in sub-Saharan Africa.

The Power Africa Initiative

 More than two-thirds of the population of sub-Saharan Africa is without electricity, and more than 85% of those living in rural areas lack access to electricity. According to the International Energy Agency, sub-Saharan Africa will require more than $300 billion in investments to achieve universal electricity access by 2030. According to the US Agency for International Aid (USAID), by combining the expertise of 12 US government agencies and private investors, and with the cooperation of governments in the region, the Power Africa initiative is intended to unlock the substantial wind, solar, hydro, natural gas, biomass and geothermal resources available in the region, with overall goals of enhancing energy security, promoting economic growth and reducing poverty.

The White House, through a press statement issued at the inception of the Power Africa initiative, confirmed that the US had committed more than $7 billion over five years to support the Power Africa initiative, with additional support and financial commitments provided by USAID, Overseas Private Investment Corporation (OPIC), US Export-Import Bank (Ex-Im), The Millennium Challenge Corporation (MCC), the US Trade and Development Agency (USTDA) and US African Development Foundation (USADF). Now in its third year, this initial $7 billion commitment has leveraged nearly $43 billion in additional commitments from the public and private sectors, including more than $31 billion in commitments from various private sector partners, according to recent figures published by USAID. Other public sector partners, including the African Development Bank (AfDB), the World Bank Group and the European Union, have collectively committed nearly $12 billion to support the Power Africa initiative and promote sustainable energy activities across the sub-Saharan African region. To date, USAID is tracking 239 transactions across 24 countries in the region which, if successful, would yield more than 26,000 Megawatts (MW) of electricity.

The Electrify Africa Act

The purpose of the Electrify Africa Act is to improve access to affordable and reliable electricity in sub-Saharan Africa through streamlined, coordinated action by US state and governmental agencies under a unified administrative strategy plan. The law’s statement of purpose indicates that the US, in partnership with sub-Saharan countries, will support efforts to promote first-time electricity and power services for at least 50 million people in sub-Saharan Africa by 2020 and will encourage installation of at least 20,000 additional MW of electricity. It also encourages necessary in-country reforms and promotes an energy development strategy for sub-Saharan Africa that includes the use of oil, natural gas, coal, hydroelectric, wind, solar, geothermal power and other sources of energy.

The Electrify Africa Act requires the President to establish and submit to Congress a comprehensive multi-year strategy, consistent with the law’s policy goals, to encourage countries in sub-Saharan Africa to implement national power strategies and develop an appropriate mix of power solutions. Its focus is to provide access to sufficient, reliable, affordable and sustainable power in order to reduce poverty and drive economic growth and job creation in the region. This strategy must address ways to attract private investment in the power sector in the region, both on and off the grid, assess the financial viability of power utilities and their current and potential capabilities, and be sufficiently flexible to allow for technological innovation in the sector. The President may also establish an interagency working group to coordinate executive branch agencies involved in implementing the strategy and to facilitate partnerships among executive agencies, the private sector and other development agencies to ensure effective implementation.

The statute also directs the Administrator of USAID, the Director of USTDA, OPIC and the leadership of the MCC to appropriate, prioritize and expedite institutional efforts and assistance to promote the development of power projects and markets consistent with the goals, policies and strategy of the Electrify Africa Act. US representatives at certain international bodies, including the World Bank Group and the AfDB, are further directed to use the influence of the United States, consistent with its broad development goals, to (a) encourage those institutions to significantly increase efforts in sub-Saharan electrification projects; (b) commit to significantly increase efforts to promote investment in power and electrification projects in sub-Saharan Africa; (c) enhance coordination with the private sector; and (d) provide technical assistance to regulatory authorities to remove legal, political and economic barriers to investment in otherwise commercially viable energy projects in the region.

The President is required within three years to submit a strategy progress report to Congress. This report must include information regarding US programs supporting policy and legislative changes that lead to increased power generation and access in sub-Saharan Africa, and power projects receiving US government support in the region.

Conclusion

The Power Africa initiative was instrumental in directing governmental, institutional and public and private support for promoting investment in the power sector and enhancing access to electricity in sub-Saharan Africa. By spearheading this initiative, and through the enactment of the Electrify Africa Act, President Obama has cemented his legacy in developing a multi-stakeholder partnership among governments and public and private actors to tackle the energy infrastructure void that currently exists in sub-Saharan Africa. Through enactment of the Electrify Africa Act, the Obama administration has also been able to establish the pursuit of such goals as official US government policy for the region.

Authors and Contributors

Devin S. Lei

Counsel

Project Development & Finance

+1 202 508 8048

+1 202 508 8048

Washington DC

Industries

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