Bankers weigh in on PPPs for African energy projects

Africans will increasingly need to find alternative funding sources for their planned energy projects. That’s according to experts and insiders attending a major energy conference in South Africa.

Most African governments are looking at public-private partnerships to get major energy projects in the pipeline off the ground. But some participants at the Africa Energy Indaba conference in Johannesburg are urging these countries to seek out other funding sources.

“We’ve got to stop kidding ourselves that PPP is the answer,” Anthony Sykes of Japan-based Sumitomo Mitsui bank said, according to Agence France-Presse. “Lenders are going to be extremely unwilling to lend long-term to projects.”

Another banker, Frederic Mariette of France-based Natixis, added that the public-private partnership model “works for the construction phase but not the overall life of the project.”

The bankers suggested two alternative financing schemes. First is to fund the construction phase of the energy projects through PPPs and then tap pension funds for the facilities’ upkeep. The second suggestion is to adopt China’s approach of building the facilities and turning them over to local governments upon completion. Both approaches are not without their own share of criticisms, as AFP notes.

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About the author

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    Ivy Mungcal

    As senior staff writer, Ivy Mungcal contributes to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.