Interview: Izak Elyashiv
What are the major challenges of financing power generation infrastructure in Africa?
IZAK ELYASHIV: There are many types of financing solutions and public-private partnerships (PPPs). For example, infrastructure projects generally lend themselves very well to PPPs, particularly via build-ownoperate (BOO) and build-operate-transfer (BOT) schemes. However, within BOT frameworks, governments and international financial institutions can sometimes be slightly too stringent, whereas BOO schemes give more flexibility to investors, project developers and the private sector in general.
For instance, developers can make quicker decisions on technical issues, without consulting the government beforehand. Indeed, governments do not usually have the right technical skills or the manpower to provide added-value insights into a power generation project. In the case of Côte d'Ivoire, many power projects have suffered from the post-election crisis, but the country is now back on track.
To what extent is there scope for further upgrades and improvements in the electricity sector?
ELYASHIV: Among the most important priorities is the development of a gas pipeline, and making sure it is well connected. The next step will be to build high tension lines and sub-stations. There are currently high losses because the power lines are fully loaded, but if better quality lines and sub-stations are built to add capacity, losses will decrease dramatically. Côte d'Ivoire has many opportunities to export electricity to neighbouring countries, and it is already exporting some to Burkina Faso. However, at the same time, exporting energy should not be done at the cost of a local supply shortage.
In the context of thermal power, how can Côte d’Ivoire capitalise on its natural gas production?
ELYASHIV: Unfortunately, the country has barely invested in the gas sector. Although it has produced some natural gas, the current supply is not in line with the requirements of local thermal power plants. At some point, therefore, liquefied natural gas (LNG) will be needed. Indeed, LNG will be emphasised in the short term because of the shortage of natural gas. However, the price of LNG remains very high compared to natural gas – more than double, in fact.
The problem is that the current producers of natural gas are currently making a lot of money without really investing in their offshore blocks. They have high margins and so are not incentivised to invest more. If more power stations would be built, companies in possession of the blocks would be more incentivised to develop their natural gas activities, with an immediate effect on prices. All over the world, the proportion of fuel costs in electricity prices is around 60-65%. Therefore, if the cost of fuel is high, the final price for consumers will also be high. If one were to reduce the fuel price or use a cheaper fuel, the cost of electricity would decrease.
Within the African context, how would you rate Côte d'Ivoire on the ease of doing business?
ELYASHIV: As a private investor that has been willing to work towards increasing the country’s total capacity for power generation, we have not been able to locate many business opportunities in Côte d'Ivoire. While the highest level of the government does hold a welcoming attitude towards the private sector, there are many issues with the message emanating from smaller-sized government offices.
The reality is that Côte d'Ivoire can be a challenging market to enter. That said, once all these outstanding issues have been addressed, investment has the potential to be highly profitable. For example, it took Telemenia and the government four years to write our contract and its annexes. This kind of time period is fairly normal in Africa. Elsewhere, however, the infrastructure would already have been built by then, which has not been our experience here.
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