African nations look to diversify from hydropower

Power infrastructure in the East African countries of Uganda, Kenya, Tanzania and Rwanda is inherently connected to its economic growth. As urbanization and industrialization fuel the need for electricity in cities, government focus on energy development will provide a platform for both private and public sector participants to contribute.

Moreover, it is expected that the energy mix in East Africa will diversify from its predominant dependence on hydropower, affording additional opportunities for power infrastructure advancement.

New analysis from Frost & Sullivan finds that the demand for electricity in East Africa is expected to grow at about 5.3 percent per year till 2020. To meet these requirements, power generation capacity would have to increase by 37.7 percent in Uganda, 96.4 percent in Kenya, 75.3 percent in Tanzania and 115 percent in Rwanda.

Large gas finds have placed East Africa on the map as a major participant in the world gas market. However, limited regulatory and institutional capacity, shortcomings in technical capacity and political risks are slowing down improvements in power infrastructure.

The challenge is compounded by the lack of local skills and resources. The need for external contractors and consultants to work on infrastructure projects will also escalate costs. Hence, foreign investments in the East African energy sector will be vital to establish a platform for skills growth and knowledge transfer.

It is crucial for global investors to understand the unique opportunities and challenges of the individual countries in the region; East Africa has the lowest access to electrical power and smallest per capita generation compared to all other sub-regions on the continent. While gas development plans, financing for infrastructure and international partnership is critical for successful development of the power sector, returns will be slow.

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