Power sector reform in Africa has come a long way even though, the reforms could hardly reform the economy for good. The inculcation has been very slow in majority of the African nations and in some the reforms were so short lived that they had no impact at all on the economy.
In the following article, we would come across some essential features of the power sector reform in Africa. Power sector reform in Africa has been executed in the nation quite unevenly.
Power sector reform in Africa is characterized by the undermentioned:
Reforms pertaining to the power sector were targeted at removing the monopoly of the government. As the government was the sole controller of the power sector, this particular sector was deprived from competing with any other sector. As there was no competition, efficiency could not be ascertained and evaluated.
So, few suggested that as part of the power sector reform in Africa, the role of the government in the power sector ought to be minimized. However, every power sector reform in Africa was introduced as an Electricity Act. The power sector reform in Africa was disproportionately applied in different countries of Africa.
Privatization did not impact greatly:
It was expected that privatization would to a great extent overcome the lacunae, which existed prior to the power sector reform in Africa. However, the same has been proved wrong. Studies suggest that between the period 1990 to 2001, investment pertaining to the power sector was approximately 13% of USD$23 billion, that was invested by the private sector in the country.
Effect of power sector reform in Africa on tariffs of various African nations:
In majority of the cases, there was an increase in tariffs. In the following lines, we get to see examples of a few countries and their tariffs pertaining to the power sector in Africa. Even though the power sector reform in Africa was unevenly channelized yet the government put in all efforts to provide subsidy as far as possible.
Tariffs were raised in Tanzania in order to highlight LRMC or long run marginal cost.
In Uganda, there was an increase in tariff by approximately 30%. The increase caused immense hue and cry among the people in the country. As a result of agitation, the government in Uganda had to take up the matter.
In Cameroon too, despite the implementation of reforms in the power sector, there has been a steady rise in tariffs.
We may conclude that the power sector reform in Africa has failed to deliver the results desired. The power sector reform in Africa was propounded so that the government was relieved of the burden of responsibilities pertaining to finances. On the contrary, it was discovered that whereas the reforms were introduced to appeal to foreign investors and since it failed to do so, the government still shells out the investment bulk of the country.
Last Updated on : 26th June 2013