Gold prospectors work at an open-pit mine in Kogelo village, Siaya County, mid this month. Capital investments in the mining and energy sectors are crucial in creating an extractive industry with high returns. [REUTERS]
East Africa is endowed with some of the World’s largest extractable energy reserves. It is hard to imagine that two out of every three people in the sub-Saharan Africa do not have access to electricity. Indeed, 600 million people in sub-Saharan Africa do not have access to electricity.
Africa’s power deficit has become a stark reality for economies, most of which are growing at an average rate of between five and six per cent, to which installed capacity is struggling to keep up with demand. The energy gap in Africa is considerable. The average American uses 10,900 kilowatt hours of electricity a year compared to just 500 kilowatt hours for the average sub-Saharan African. But energy is an essential ingredient for economic growth and social development.
World Bank’s Director Jim Young during a convention in 2014 said it was remarkable that some of the economies in sub–Saharan Africa have been growing at an average of between five to seven per cent with a third of its population not having access to electricity – even outperforming some countries in Eastern Europe that have been growing at 1.5 per cent.
Still, the World Bank estimates that blackouts alone cut the Gross Domestic Product of countries by 2.1 per cent. That is why governments across the region have rolled out pilot projects to generate power from its diverse energy mix – most of which are being developed through private public partnerships and by independent power producers.
Of East Africa’s energy reserves, Kenya has an estimated 10,000 megawatts (MW) of geothermal reserves, 11 metres per second (m/s) of average wind speeds, 600 million barrels of oil proven out of the 3.5 billion barrels and 10 trillion cubic feet of natural gas inferred. Tanzania has the second largest reserves of natural gas that put its proven reserves at 53 trillion cubic feet, 500 million tonnes of coal proven and 1500 tonnes inferred and an Average wind speeds of 7-9m/s. Uganda and Mozambique have the highest hydrocarbon reserves of 6.5 billion barrels of oil and 150 trillion cubic feet of natural gas, respectively. Mozambique also boasts Africa’s largest coal reserves estimated at 20 billion tonnes in Zambezi Delta.
Also, Rwanda’s Lake Kivuwatt has become one of the most remarkable discoveries of the East African power sector. Lake Kivuwatt has a potential to generate 1,000 MW of electricity from its current concentration of dissolved carbon dioxide estimated at 250–300 billion cubic metres that is released from deep below surface of the Lake volcanic vents. Investment opportunities within the regional energy sector exist in electric power production and generation from its diverse energy mix, petroleum products development and natural liquefied gas.
The other incentive to the East African energy and mining sector is the geographic location that places the regions strategically to access the lucrative Asia Pacific markets.
The Asian Development Bank projects that the Asian Pacific countries will need to invest as much as $11.7 trillion (Sh1,170 trillion) in the next 25 years to meet its bloated energy demands, most of that investment will be directed to East Africa. The region has also embarked on various energy and transport infrastructure projects to facilitate growth in the nascent sector. These include the Lamu Port South Sudan Ethiopia corridor (Lapsset) project, two oil refineries – one at Hoima and the other at Lokichar as well as a pipeline connecting them to Lamu Port. This is as Kenya and Uganda eye their first crude export by 2018.
Tanzania and Mozambique are separately planning to build a liquefied natural gas (LNG) export facility using the floating LNG technology. East Africa Community Member States have also obtained $360 million (Sh36 billion) from Africa Development Bank to Construct East Africa Power pool to connect the Nile Equatorial countries of Kenya, Uganda, Rwanda Burundi and Democratic Republic of Congo to a common grid that will ease cross-border power exports.
The East Africa mineral sector is already having a have an economic impact in the region with great market opportunity for the local enterprise and benefits to the local community. Base Titanium’s Kwale Mineral Sands, one of Kenya major mining operations has already had a tremendous impact in its contribution to the economy since its inception in 2011.