Power sector reform in Africa : the paradox of hybrid markets

Malgas, Isaac

Power sector reform in Africa : the paradox of hybrid markets

Doctoral Thesis

2009

Publisher

University of Cape Town

Department

GSB: Faculty

Faculty

Faculty of Commerce

Abstract

For many countries in Africa, power sectors in are characterised by insufficient generation capacity. Due to poor financial and operational performances, many state-owned utilities have had inadequate financial reserves to invest in additional generation capacity. Governments, too, have experienced difficulty in financing generation expansions as a result of the reduction in loans from traditional financiers of infrastructure. Reforms to address poor performances in the 1990s, in part, focused on introducing private sector participation to the power sector at the generation level through independent power projects. It was anticipated that independent power producers would provide benchmarks for state-owned utilities and enable longer term power sector efficiency. Reform in this sector followed a prescribed evolution towards power markets that would allow wholesale competition amongst generators and so lead towards efficiency improvements. Despite reforms being embarked on in many African states, competitive power markets have not been established in Africa; rather, the result has been the emergence of hybrid markets where state-owned generators and IPPs operate devoid of competition; and although IPPs have emerged in a number of African power sectors, many countries still do not have sufficient generation to meet their electricity demands. This thesis investigates the development of private generation power projects in Africa by analysing data collected from both primary and secondary sources in four case studies of power sectors in Ghana, Cote d'lvoire, Morocco and Tunisia. The thesis identities and describes the factors that have contributed to a lack of investment and shortages in generation capacity in hybrid markets exploring how policy, regulatory and institutional frameworks have contributed to this situation. It also investigates how planning and procurement challenges have led to difficulties in adding sufficient generation capacity in a timely manner, exacerbating the problem of insufficient generation capacity in Africa. Finally, the dissertation provides suggestions as to how these frameworks could respond more effectively to the capacity challenges faced by hybrid electricity generation markets, and how broader power sector reforms should be guided to reflect the challenges of hybrid markets better.

Description

Includes bibliographical references (p. 241-276).

Keywords

Management Studies

Reference:

Collections

PhD / Doctoral

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