Energy report

Brighter Africa: the growth potential of the sub-Saharan electricity sector

by Antonio Castellano, Adam Kendall, Mikhail Nikomarov and Tarryn Swemmer, McKinsey

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Sub-Saharan Africa is starved for electricity. The region's power sector is significantly underdeveloped, whether we look at energy access, installed capacity, or overall consumption. The fact that sub-Saharan Africa's residential and industrial sectors suffer electricity shortages means that countries struggle to sustain GDP growth. The stakes are enormous. Indeed, fulfilling the economic and social promise of the region, and Africa in general, depends on the ability of government and investors to develop the continent's huge electricity capacity.

Countries with electrification rates of less than 80% of the population consistently suffer from reduced GDP per capita. The only countries that have electrification rates of less than 80% with GDP per capita greater than US$3500 are those with significant wealth in natural resources, such as Angola, Botswana, and Gabon. But even they fall well short of economic prosperity.

Whether people can obtain electricity (access), and if so, how much they are able to consume (consumption) are the two most important metrics that can indicate the degree to which the power sector is supporting national development. From an electricity-access point of view, sub-Saharan Africa's situation is the world's worst. It has 13% of the world's population, but 48% of the share of the global population without access to electricity. The only other region with a similar imbalance is South Asia, with 23% of the world's population and 34% of the people without access to electricity.

This means that almost 600-million people in sub-Saharan Africa lack access to electricity. Only seven countries - Cameroon, Côte d'Ivoire, Gabon, Ghana, Namibia, Senegal and South Africa - have electricity access rates exceeding 50%. The rest of the region has an average grid access rate of just 20%. Moreover, even when there is access to electricity, there may not be enough to go around

Regarding consumption, Africa's rates are far below other emerging markets. Average electricity consumption in sub-Saharan Africa, excluding South Africa, is only about 150 kWh per capita. This is a fraction of consumption rates in Brazil, India, and South Africa... (more)

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Energy report

From fragile to agile - an Africa oil and gas review

by Uyi Akpata, Chris Bredenhann and Ayesha Bedwei, PwC Africa

  
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Africa's share of global oil production has dropped marginally since last year, moving from 10,1% to 9,6% of the world's total. Untapped proven oil reserves on the continent are estimated to be around 8% of the global total, which is nearly the same as the previous year, and these reserves are projected to increase as appraisal of new discoveries ensues. New discoveries have been fewer as exploration activity globally has slowed due to the reduced oil price environment.
  
From a proven oil reserve totalling 129,2-billion barrels, Africa produced 8,2-million barrels of crude oil per day (bbl/d) in 2014. Over 76% of this production came from Nigeria, Algeria, Egypt and Angola.
  
The fragile political situation in North Africa continues to have an impact on production levels, which saw another year-on-year decline in oil production in the region of 22%. Libya alone, in the throes of civil war, saw production decline by almost 50% Despite continued insurgency in South Sudan, production has increased by just over 60% compared to 2013. At 159 000 bbl/d, this is still a far cry from pre-2013 production levels of 240 000 bbl/d. This is largely due to the damage that has been sustained by the local infrastructure, and analysts expect a full rebound only by 2020.
  
As of the end of 2014, Africa has proven natural gas reserves of just fewer than 500-trillion cubic feet (Tcf) with 90% of the continent's annual natural gas production still coming from Nigeria, Libya, Algeria and Egypt. This is a slight drop in reserves compared to 2013, and production also decreased slightly over the period. Consequently, the continent still has nearly 70 years of natural gas production available given current production rates.
  
The gas reserves indicated in this publication are as of the end of 2014 and do not include the recently upgraded reserves for Mozambique, which are estimated by the US Energy Information Administration (EIA) to be 100 Tcf on their own. By the end of 2015, we are likely to see a significant amount added to the overall proven gas reserves total for the region. Nigeria has plans to quintuple natural gas production by 2020, so the gas economy in Africa could be well-poised for an uptick in activity... (more)

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