Obama-Africa energy

Power to the people

open | 03 July, 2013

The US government is kicking off an initiative to help sub-Sahara Africa deliver electric power to more people.

A few billion dollars of US taxpayers’ money is meant to give another 20 million households and companies access to power. A key component of the US campaign, without making it too explicit, is to break the continent’s oil curse.

The US initiative is called Power Africa and one of its goals is to ensure that “the path forward on oil and gas development maximizes the benefits to the people of Africa,” says a statement from the White House. The program is a major change in US energy policy towards the continent. In the 1990s, when the US was dependent upon African oil and wanted US companies to develop fields in specially Angola and Nigeria, Washington cared little about the African people.

Nearly 20 years later, the US can be more supportive of the continent as its dependence on African oil is waning, and fast. Thanks to rising production of domestic oil, the US is importing less oil from Africa – less from Nigeria in particular, but also less from Angola, Algeria and Libya, the established larger producers on the continent.

Quite soon, the US will import no more oil from Africa, down from more than 2 million b/d just a few years ago. As a result, African producers are looking for new markets and the impacts are visible: Angola, for example, is host to hundreds of thousands of Chinese workers building roads and houses. Their work is paid for by loans backed by oil.

Instead of ignoring Africa, the Obama Administration is applying lessons learned over the years. Now that new countries are making their way to market as oil and gas producers, they should not be making the mistakes made in the past. Power Africa wants to sensure that new energy projects proceed “in a timely, financially sound, inclusive, transparent and environmentally sustainable manner.”

Power Africa supports three East African and three West African countries that want to grow their electric power generation and use this development as base for wider economic reform and growth. Tanzania, Kenya and Ethiopia, and Ghana, Liberia and Nigeria will receive the most attention. In Uganda and Mozambique, Power Africa wants to help with “responsible oil and gas resources management.”

In recent years, these countries have discovered vast oil and especialially natural gas reserves. This gas, in particular, could be used for power generation. But the US also wants to support alteratives, such as wind and solar, and hydro and geothermal. This would allow for access in remote areas, off the power grid.

The US initiative, announced during Obama’s visit to the continent late June 2013, is not all about refound US altruism. For one, a host of US companies stand to benefit from the power contracts.

General Electric alone is slated to build 5,000 MW of capacity in Tanzania and Ghana.

Also, the development of oil and gas reserves in Africa will – apart from giving countries another economic boost -- help near-term global energy security, the White House says.

More oil and gas in the market will help keep energy prices affordable, a key US goal.

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