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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News. Africa's creaking energy sectors
holding back an industrial revolution.
Speaker 2 (00:13):
Satellite imagery of African cities compared to satellite imagery of
Western cities at night, you can see the darkness versus
the light.
Speaker 1 (00:22):
As public and development funding falls, can Africa build the
energy infrastructure it urgently needs to grow?
Speaker 2 (00:29):
Electricity is a fundamental right?
Speaker 3 (00:31):
Is that that you can't have health, education, anything delivered
a country industrialized using diesel pod generators because it's expensive.
It's a very expensive option with which to operate factories
and it makes you uncompetitive.
Speaker 1 (00:45):
On today's podcast, we'll look at what's holding back the
African energy sector and where the funding might come from.
Speaker 2 (00:51):
To turn it around.
Speaker 1 (00:56):
I'm Jennifer's Abasaga and this is the Next Africa Podcast,
bringing you one story each week from the continent driving
the future of global growth with the context only Bloomberg
can provide. Later on we will hear from doctor Owen Omogafo,
chief executive of Nigeria Energy Investor Transport.
Speaker 2 (01:17):
But first we're going to start with our Bloomberg.
Speaker 1 (01:20):
Energy reporter Paul Burkhart, who is joining us on the podcast. Paul,
Thanks so much for joining us this week. Let's just
start with your piece that is now available on Bloomberg
platforms now, which really takes a look at the extent
of Africa's energy grid and perhaps also what it's lacking.
Can you talk us through some of the numbers that
(01:41):
you found and how much energy Africa actually needs right
now and then when it's actually generating.
Speaker 4 (01:49):
So what we started out with this piece was actually
the question of why isn't Africa industrializing faster? And when
you look at those numbers, it's only eleven percent of
GDP and Africa is manufacturing compared to like twenty two
percent in East Asia. There's also this measure called global
manufacturing added that's actually shrunk on the continent from three
(02:11):
percent to two percent over the last decade. And you
have to keep in mind that Africa is the continent
where that'll make up a quarter of the world's population
by twenty fifty, So big population.
Speaker 2 (02:21):
A lot of jobs needed.
Speaker 4 (02:23):
And the answer to industrialization issue is electricity. And so
the difference between African countries and other nations outside of
Africa is quite stark. So consumption, for example, per capita
in Congo is like one percent of US consumption, and
(02:45):
Nigeria's grid only provides the equivalent of like a very
small European countries have, So that that's the problem. And
if you don't have power, you can't manufacture.
Speaker 1 (02:55):
Right, and especially with the magnitude of the populations that
we see across the continent. Into the success I think
we can call it of Ethiopia's Grand Renaissance Dam, which
we saw switched on earlier this year. But in the
piece you described this as an outlier. Why why has
it been so hard to replicate this model? We know,
(03:16):
we know it took quite a long time for them
to get this up and running, but why an outlier?
Speaker 4 (03:21):
Yeah, I mean that that kind of gets into the
problem that's faced by most countries, and that that is
because you know, the typical usually you would you'd get
your electricity from the state utility, but state utilities are
often broke, they haven't been able to expand, and they
haven't privatized like many have abroad, and so that's the
first stop for supply. Also, financing came up as like
(03:44):
a like a huge obstacle due to risk. Another issue
is like the end user, do you build the power
station on the expectation that there will be enough demand.
So the Grand Ethiopian Renaissance Dam was really championed and
financed by the state and the people, and now they
have to pay that back. But they also found a
(04:05):
major off taker, interestingly with crypto minors, so that takes
up about thirty percent of what the dam produces. So
and that's in that sense it worked out. Of course,
it's like a very charged issue because only like one
in five Ethiopians have power. So again it's kind of
this trade off like do you industrialize first and then
(04:27):
create jobs from that or do you try to connect
people to power first. It's just like not is it
becomes very complex?
Speaker 2 (04:35):
Is that a similar picture?
Speaker 1 (04:37):
Or in what ways are is that similar to what
we're seeing in Nigeria because a population of two hundred
and fifty million and still only a fraction of the
population actually has energy.
Speaker 2 (04:48):
What are we seeing there that stood out to you?
Speaker 4 (04:51):
I think what we see in Nigeria is like a
major workaround that isn't really sustainable. So what's happened is
the grid just like doesn't work that well, so people
rely on generators and some of my colleague Duka or
Geneo visited a garment factory and it's just one of
countless examples where generators are always like starting up when
(05:13):
the grid turns off. Roughly eighty six percent of Nigerian
businesses rely on gasoline diesel generators, so that creates a
huge cost, like between the outages and the fuel that
is between like five and seven percent of GDP, So
it really takes its toll even that workaround. And what
you need is, you know, just a bigger power source
(05:34):
for cheaper and accessible and reliable.
Speaker 1 (05:38):
Power when it comes to solutions, then is there any
cause for optimism? I mean, we also have to point
out that there's still a lot of talk about the
transition right and yet a number of these countries still
need to industrialize. So what would you say, where are
we at right now in sort of solving some of
these issues here?
Speaker 4 (05:58):
Yeah, So again it's bring this argument of like finding
the off taker. That's like a very progressive view on
the spectrum of approaches. So critical minerals could really be
a catalyst and bringing more electricity to a place like
Congo that has some of the richest deposits of cobalt copper.
If they process some of those minerals further by using electricity,
(06:21):
that's jobs and revenue. And so what we're seeing our
minds run on generators like this same example as Nigeria
that require a massive amount of fuel, and we're starting
to see projects that want to connect transmission lines to
hydro projects that are nearby, and the investment in the
critical minerals could drive this expansion of the power system.
(06:45):
So that's very much upright spot. The Renaissance Dam is
a bright spot, and Morocco was also a country that
came up in terms of just being able to draw
a lot of investment in renewables there. So one expert
that we spoke to so Blimbog's was a former World
Bank economist, said that if the Ethiopian dan works out,
(07:06):
and there are a couple more examples like that African
success stories, that momentum will really build from there on
the continent.
Speaker 1 (07:13):
Thanks so much, Paul. After the break, we're going to
dig a bit deeper into Nigeria's energy problems and possible
solutions as well with Transcorp CEO doctor Owen Omogifo.
Speaker 2 (07:25):
We'll be right back. Welcome back. Today.
Speaker 1 (07:33):
We're talking energy and how the continent's creaking energy grid
is holding back an industrial revolution. At Bloomberg's Africa Business
Summit this week, one of the speakers was doctor owen Omogiafo.
She's the Group President and CEO of Nigeria's Transcorp, a
major operator of power plants in the country. Doctor owen Omogiafo,
(07:56):
thank you so much for joining us.
Speaker 2 (07:58):
Maybe we just start here.
Speaker 1 (08:00):
We're just given a pretty shark picture of Nigeria's energy grid.
Can you give us some insight into what's really held
back reliable energy in the country, what's behind a lot
of this.
Speaker 3 (08:14):
Like you said, there's a stock picture a country that
has a need for about forty five to fifty gigawatts
of power and our greed today can only do about
six gigawats of power. But that is not to imply
that the country is in darkness because the greed can
only do so much. But it just shows that you
(08:35):
have people who are generating in their own power independently.
So historically, power system Nigeria was one hundred percent as
a state owned enterprise, meaning that the government managed the generation,
transmission and distribution of power in Nigeria. In twenty thirteen,
a privatization exercise took place whereby the value chain was
(08:58):
broken into three segments, generation, transmission and distribution. Now for
the privatization, the generation site was one hundred percent privatized.
So we in Transcrip we have three power generating plants
that we obtained through the privatization exercise. The distribution company
was privatized as sixty percent private sector new investors and
(09:21):
forty percent still managed by the government, whilst the transmission
on the other hand, one hundred percent stayed on the
federal the federal government. So you see that on the
generation side, naturally the discipline of private sector we run
businesses looking at maximizing efficiency and value. The generational capacity
(09:41):
has increased in the past ten years. If I look
at TransCore as an example, the power plant that we
bought in twenty thirteen, at the time of procurement, the
available capacity was one hundred and sixty megawards. We've taken
it up to about seven hundred megawards. If we look
at our a firm plant from thirty five megawak, but
we've taken out to three hundred and forty eight megawards.
(10:02):
And this story I'm telling cuts across other generation companies
as well, orbeit's not at the same level of performance
for some now when you now look at the transmission
there's been practically no investments at all in the transmission side,
beyond the limpsy system maintenance. Right a country that has
an installed capacity of fourteen thousand megawards of power, your
(10:24):
grid cannot be six thousand megawards? Now, what are the
o our wall challenges? We have the infrastructure issues that
are in there. There is also liquidity. We've had some
conversations with the government. We will owe quite a bit
of money right now. But under the government of President
Bola Medinubu, we are having conversations right now with the
Minister of Power, Ministry of Finance and the Office of
(10:46):
the Special Advisor to the President and Energy where we're
having some discussion on how the historical debt will be paid.
And this is the most we have, most progress we've
made in a long time. The sector is one that
is profitable, is one that creates impact and truly for
us to drive the intoestralization of Nigeria, we must fix
(11:07):
that PAS sector.
Speaker 1 (11:09):
You know, just speaking to that because a lot of
the discussions that I've been having over the past few
days around B twenty is about the private sector becoming
more involved in some of these projects and development across
the continent. When we talk about Transcorp, you're planning a
few new projects, but how quickly do you see them
(11:29):
being able to kickstart and support some of the energy
gaps that we're seeing in Nigeria And I guess maybe
you can speak to how quickly other private producers can
do so at this point or if there are still
a few bottlenecks and red tape that's getting in the way.
Speaker 3 (11:48):
I'm glad that the g twinds heavenliest conversation about the
role that the private sector must play in the developments
of Africa as well as subalances out as well the
rule of governments in create it in an enabling environment
for US private sector players to thrive. And frankly, that
is the principle of Africa capitalism that our group chairman,
mister Tony Limelo talks about, which is simple that private
(12:11):
sector has to lead in the development of Africa and
for Transco, it's called our purpose is to improve lives
and transform Africa in everything that we do, and energy
is at the core of it. Because the more you
get part to your location. You just development will follow
infrastructure challenges. You find that businesses to situate. And when
(12:33):
businesses situate, what do you do. You're creating jobs. You
create jobs, you create economic opportunities, and we're driving these
very very strongly. Nigeria is rich, very rich in oil
and gas. We need investments in that gas space and
this is what other private sector players are also doing.
There's more investment going on in there so that we're
(12:54):
able to generate more power and within the next I mean,
I look forwards when there's Lulu in Nigeria and just
being in South Africa and listening to the minister speak
two days ago about this and that's what I want.
Where every Nigerian can have that access to electricity, you
have that confidence that you know what, I can plan
(13:14):
my business, I can drive my business, I can grow
because electricity is not a problem.
Speaker 1 (13:18):
And that was Transcorps. Doctor owen Omojiafo. Thank you so
much for joining us, and thanks again to Bloomberg's Paul Burkhard,
who you heard from earlier in the podcast. You can
read his report on Bloomberg platforms. Now we'll put a
link to that in the show notes. Here's some of
the other stories we've been following across the region this week.
Speaker 2 (13:40):
The US formally warned.
Speaker 1 (13:42):
South Africa against pushing for a joint statement at this
weekend's Group of twenty summit in Johannesburg that the Trump
administration is boycotting. That's according to a document seen by Bloomberg.
And Chinese companies plan to help Morocco establish a competitive
production base for electric mobility products such as motor scooters,
(14:03):
small tractors and motorbikes. That's according to an interview with
Morocco's Industry and Trade Minister Riad Mazour. Several Chinese manufacturers
quote have the intention to localized manufacturing or the assembly
of their products in partnership with local companies, he told Bloomberg.
And you can follow these stories across Bloomberg, including the
(14:26):
Next African Newsletter. We'll put a link to that in
the show notes. This program was produced by Adrian Bradley
and tiwa Adebayo. Don't forget to follow and review this
show wherever you usually get your podcasts, But for now
I'm Jennifer's Abasaja.
Speaker 2 (14:42):
Thanks as always for listening.