African Skillshare on Public Finance, Energy Restructuring ang Climate Change

African Skillshare on Public Finance, Energy Restructuring ang Climate Change
TNI Energy Project/Global Village Cameroon
Maputo, Mozambique, 8-10 January 2003

Background

Public finance is the major fountain from which energy policies and projects in Africa draw their viability. These projects tend to large-scale centralised hydropower, and fossil-fuelled energy, impact negatively on the local environment and global climate. Furthermore, they also preclude equity of access and growth of decentralised renewable energies, such as wind; solar and micro-hydro which are abundant in the continent. And being for the long-term, investments in unsustainable energy technologies lead to "lock-in" which align development on an unsustainable path for a minimum of decades.

With the exception of biomass, renewable energy is a negligible contributor to Africa's energy supply. Despite the potential of renewable resources to meet the burgeoning rural and urban energy needs coupled with its environmentally benign character, it accounted for only 1.4 percent of total World Bank energy sector lending from 1994 to 1997.(1) The African Development Bank (AfDB) on the other hand, has been operating over the years without an energy approved sector policy. AfDB draft energy sector policy borrows heavily from the World Bank policy, which recommends that renewable energy, should be better integrated into the Bank's general policy dialogue with developing countries. The absence of a clear energy policy hasn't stopped AfDB from discriminating against the utilisation of renewable energy technology. Mean while, the energy problems of African countries is diverse and complex. Energy is an essential input to the production process, but most countries face growing problems of rising fuel costs, insecurity of supply and a high percentage of people still don't have access to safe, affordable energy, all of which impact on the type and pace of development.

In addition, energy production, use and ownership is being transfigured in most countries in Africa, as part of a brooder thrust towards economic liberalisation initiated by the International Monetary Fund, WB and AfDB. Crises-ridden electricity utilities are being reformed, in the name of attracting investment, enhancing efficiency and encouraging competition, which are regarded as indispensable for the sector to power economic development. Framed around financial goals, the reforms have provided little or no space for the articulation of public concerns. In 1998, 34% of AfDB lending went into supporting structural adjustment and privatisation programmes in African countries.(2) In acquiescence to the surge of neo-liberalism, African governments are ceding their traditional role as stewards of electricity utilities to private investors. The sector is being unbundled into generation, transmission and distribution and privatised. The commodification of electricity has great implications for sustainable development in Africa.

While few would dispute the necessity for reforms in the energy sector in most African countries, the simplicity of the one-size-fits-all (3) reform model particularly appeals to WB and AfDB wanting to ease their terms of trade across borders. However, independent evidence is mounting that privatisation is no panacea for efficiency, competition or development. On the contrary, the consequences of privatisation for potential and existing electricity users and workers, rural and urban communities, the environment and domestically accountable governance, amount to unsustainable development, and a foreclosure of future options for participatory planning for more accessible and cleaner energy options.

The financial discipline on which reforms are hinged will determine the energy-mix of most African countries. The choice or technology and fuel used to generate electricity have environmental impacts. The electricity sector is a significant consumer of fossil fuels, and generates 38 percent of worldwide Co2 emissions.(4) In most countries reforms have provided incentives for coal and diesel power plants, that generate most of the Co2, a major culprit of climate change. Worst of all, Africa is the continent most vulnerable to the risks of projected climate change, because widespread poverty limits adaptation capabilities. Climate change impacts are likely to compound development problems for the multitude of poor people in Africa, struggling to maintain a livelihood. Although Africa's contribution to the global burden of Co2 emission is disproportionately low compared to that of the United States and other European countries, some impacts of climate change are already visible in the continent. Mozambique in 2000 suffered from a rare flood that displaced 100000 people. Desertification is also spreading. Droughts are rife and cripple power production from large-scale hydropower built with the blessing of the Multilateral Development Banks (MDBs). Despite the ominous situation, the AfDB is still promoting large-scale hydroelectric dams and even financing the Bujagali dam project in Uganda, to the tune of $50 million.(5)

On the other hand, there is a growing momentum to factor a wide range of interests in energy and climate policy. The decision-making process within MDBs remains opaque to the point that it is close to impossible for civil society to discover plans before they are set, let alone register concerns or engage in early-phase planning. Regulations governing access to information themselves often remain undiscovered and many policies are never implemented or monitored.

References

1. Ian Tellam (2000) Fuel For Change: World Bank Energy Policy Rhetoric versus Reality.
2. African Development Bank 1998 Annual Report.
3. Rather than judging the appropriateness of privatisation in the case of each of its client countries, however, privatisation is being advance as a panacea that will improve the technical and managerial performance of energy utilities, encourage more investments in the energy sector, and reduce energy shortages.
4. www.wri.org
5. The project is criticised as a sweetheart deal in which the Ugandan Government will pay $280million more than the real cost.

Why the skillshare?

The Skillshare aims to share knowledge and experience between African and non-African NGOs involved in lobby and advocacy activities related to energy outcomes, including national energy policy, the AfDB energy and policy and information disclosure.

Who are the participants?

The Skillshare will pool a broad spectrum of NGOs from Africa, Europe, Asia, Latin America, and academia, around the theme public finance, energy restructuring and climate change.

What are the expectations of the skillshare?

It is hoped that through the Skillshare participants will gain a better appreciation of:

• The impacts of MDBs policies and climate change;
• The structure, information policy and environmental policy of the World Bank, and the African Development Bank
• The avenues for public participation in development projects of the World Bank and the African Development Bank;
• The experiences of NGOs D with MDB sponsored projects across the globe and possible lessons for Africa;
• The drivers of the privatisation and liberalisation surge in the electricity sector in Africa.

What will the outcome of the skillshare be?

Deeper insight into the workings of MDBs such as AfDB and WB

• Improved knowledge and information on MDBs sponsored energy projects and climate change
• A strategy for joint campaigns, research, and public mobilisation against unsustainable energy projects
• Explored alternatives to privatisation and strategies to rekindle focus on renewable energies
• An advocacy plan for identified activities, focusing on information disclosure standards, energy and climate related policies and projects to reorient energy investments on a trajectory to sustainable livelihood development for Africa
• Established outlets for future collaboration and networking among participants

Why Mozambique?

Mozambique is the venue of the forth coming World Bank Extractive Industry Review (EIR) Consultations for Africa taking place from the 12th to the 17th of January 2003. It will pool representatives from governments, civil society, the oil, gas and mining industry, and the World Bank Group. Since information disclosure standards of MDBs and their impacts on energy and climate change is at the heart of the skillshare, it is hope that the impact of the skillshare will be better felt in EIR consultations.