Telephonic Media Briefing on Power Africa with USAID Assistant Administrator for Africa Earl Gast

MODERATOR: Greetings to everyone from the U.S. Department of State’s Africa Regional Media Hub. We apologize for the delay in getting started today. I would like to welcome our callers who have dialed in from across Africa. Today, we are joined by Mr. Earl Gast, USAID Assistant Administrator for Africa. Mr. Gast is speaking to us from Johannesburg. We will begin with remarks from Mr. Gast and then we will open it up to your questions. For those of you listening to the call in English, you may press *1 on your phone to join the question queue at any time. If you are using a speakerphone, you may need to pick up the handset before entering *1. For those of you listening to the call in French, you will need to submit your questions in English via email to afmediahub@state.gov. Today’s call is on the record and will last approximately 45 minutes. And with that, I’ll turn it over to Mr. Gast.

MR. GAST: Thank you Camille, and my apologies for being late. Unfortunately we got caught up in a number of meetings that we’ve had in South Africa. I am really pleased to be here. It’s been a really exciting trip. We met with some partners who are just super excited about Power Africa. And so really the purpose of my business has been to follow up on the commitments that President Obama made when he was in South Africa last year on Power Africa, and I am really excited to report that we have made substantial progress in working with partners on the continent and internationally, and identifying a critical number of projects that eventually will lead up to 10,000 megawatts of new power and increasing access for more than 20 million Africans on the continent by2020. It is an ambitious goal, with the catalytic support from other development partners and governments, the six countries that have been identified as Power Africa countries, as well as the private sector. I think we are well on our way. In fact, we have already identified about 80% of the 10,000 megawatts. And also, some 25% of the overall amount of 10,000 megawatt, 25% of that has been secured in financial closure on projects. So it really is exciting. Also, the President made a commitment on the Young African Leaders initiative which he launched in South Africa where the capstone of that initiative includes many things, but the capstone is the Washington Fellows program. This year, some 500 selectees from around the continent will be going back to the U.S. on a fellowship for several months. There will be an opportunity to meet President Obama, and then equally important is the support that they will get as they return to their countries. There has been overwhelming interest on the part of Africans throughout the continent, and in fact nearly 50,000 applications have been received. So the challenge for us will be not only to work with Washington Fellows, those who have been selected, but also those who have expressed interest in leadership development programs on the continent, and also opportunities to work with USAID on leadership issues. So with that Camille with those opening remarks, I am pleased to take questions from around the continent.

MODERATOR: Ok. Thank you very much. We will go to our first question from the U.S. Embassy in Ghana. Operator if you could please open their line.

MEDIA: I want to find out how connected is Power Africa to the Millennium Challenge Corporation. Can you update on the Corporation’s progress so far in Accra.  Do you also [UNCLEAR] half a billion in the compact so far? Thank you.

MR. GAST: Yes, I am sorry, we are having some problems here, but if I understood the question, it is how integrated is this MCC effort in Power Africa? Power Africa is not just an AID effort. In fact, it is led by the White House with AID heavily involved in providing a catalytic role on the continent due to our presence around the continent. But it also includes the leadership of the Department of State, and the leadership of the Millennium Challenge Corporation, TDA, Ex-Im, OPIC. All the tools of the U.S. government are being applied and together the commitments amount to 7 billion dollars which President Obama pledged. But to answer the caller’s question, absolutely, the MCC Compact that has been negotiated with Ghana is definitely part of Power Africa, and we are trying to support that Compact through our AID mission and our technical assistance efforts in Ghana.

MODERATOR: Thank you. Our next question is one that was submitted in advance to the moderator. The question comes from Radio Victoire FM in Togo. Is Togo part of the project? If yes, how will the U.S. Contour Global Power Plant contribute?

MR GAST: So Togo has not been identified yet as a priority country.   The six initial Power Africa countries are Tanzania, Kenya, Ethiopia, Nigeria, Liberia and Ghana. We are also working with the power pools around the continent — the East African Power Pool, Central African Power Pool, the Southern African Power Pool and of course the West African Power Pool, where we have a lot of experience in building up capacity. The countries of West Africa are very small, and so least cost options of generation are critically important to these small countries, to include Togo. So we see those countries benefiting from Power Africa through the power pools, which can distribute power that is being produced in other countries to some of the smaller countries.

MODERATOR: Thank you. Our next question will be from the U.S. Embassy in Tanzania. I ask that the questioners please state their name and affiliation, and please limit yourselves to one question only. Please open the line for Tanzania.

MEDIA: I wanted to know that, Tanzania currently is experiencing high electricity tariffs. So after the implementation of Power Africa, are Tanzanians going to start experiencing lower tariffs or electricity rates?

MR. GAST: I am sorry, Camille, would you mind relaying that question to us?

MODERATOR: Yes, I am sorry. If the questioner could please repeat because the beginning of your question was cut off.

MEDIA: Ok. Apparently Tanzania is experiencing high tariffs on electricity rates. So we are trying to see if Tanzanians are going to start, after the implementation of Power Africa in Tanzania, are the Tanzanians going to experience low tariff rates on electricity?

MR. GAST: Tanzania is experiencing high tariff rates because they are relying on emergency power production. And we are working closely with the government and with other donors on options for Tanzania to expand its power grid as well as increasing its generation capacity using low cost gas that is being produced in Tanzania. Right now Tanzania is relying on very expensive diesel fuel for its emergency power. So absolutely, what we are trying to do is make sure that our projects are commercially viable because the private sector needed to come up with capital, but also make sure that the costs are reasonable for the public to purchase power.

MODERATOR: Thank you. The next question was a previously submitted question. This comes from Voice of America. The question is: As an African, I have no doubt that Power Africa is a great initiative with a number of players, both private and public. How affordable is the cost of electricity produced under this initiative going to be for ordinary rural Africans who long to have power in their houses and what mechanisms are in place to insure those really in need are not priced out of the energy market, therefore remaining in the dark, when power grids stand tall outside their houses?

MR. GAST: Excellent question and it also gets to the other side of the equation of Power Africa. Not only are we looking at increasing the amount of power on grids, we are also looking at increasing access. We want to increase access through several means.  Getting to first addressing the point of affordable power–that is absolutely the goal of Power Africa. And so there are indigenous resources in Africa, if they are harnessed and tapped into, would provide very cheap affordable power. So, one example is the geothermal potential in the Rift Valley. Some 15,000 to 20,000 megawatts of power that can be produced cheaply and is also very good for the environment. So we are working on a project with the government of Ethiopia and with the developers in Ethiopia that could provide a significant amount of power and a price that is significantly lower than other on grid solutions. Also, we are looking at ways of going beyond the grid because in rural communities where the grid doesn’t appear, where transmission lines aren’t in place,it might be prohibitively expensive, certainly on a commercial basis to build a grid out. So we are looking at the idea of mini grids and small energy projects that are commercially viable, yet affordable, and which don’t require a lot of capital.

MODERATOR: Thank you. Our next question goes to the U.S. Embassy in Ethiopia.

MEDIA: [UNCLEAR] My question is: These days, both Ethiopia and Egypt have a [UNCLEAR] situation when it comes to a dam project under construction in Ethiopia. What would this project mean in terms of Power Africa initiative and the other is that half of the benefitting countries are from the Nile Basin. How is the money going to be distributed in these countries? There are six countries that you have selected, and on what basis is the money going to be distributed among these countries? Thank you, sir.

MR. GAST: To answer your question about the dam, AID and Power Africa is not supporting the dam project, but we do know that Ethiopia through the construction of a dam and through other projects will have a surplus of power. And as I mentioned to the caller from Togo, we are supporting power pools. And the East African Power Pool is going to be essential in terms of delivering power to countries that really don’t have affordable power sources like Burundi, and Rwanda. And so through developing a functional power pool, we can see opportunities for Ethiopia to export that power to countries that are in need. With regards to your question about how resources are being allocated to the countries in Power Africa, this is a different model of development. It is a different model because we are not going in necessarily to build capacity for investments to come in, we are looking at what investment opportunities exist; whether it is interest on the part of the government to reform their regulatory environment. And where the private sector is interested in projects, we are applying technical assistance to get that transaction through. We can then see where there are capacity gaps along the way, and then we apply our technical assistance and other technical assistance to make improvements in institutions. The theory [UNCLEAR] is that by doing that, one has established a systematic approach to having more commercially viable private sector-led projects implemented in the countries.

MODERATOR: Thank you. Our next question is a previously submitted question. This comes from This Day newspaper in Tanzania. The new discovery of oil and gas among sub-Saharan African countries gives them hope of having reliable sources of energy. But it has been a tradition that most of the natural resources turn to be a curse, instead of a blessing. How will the Power Africa initiative reverse this tradition?

MR. GAST: That’s a very good question, and what we are focusing on in Power Africa, and certainly there are other resources that are out there, in the Department of State, that help countries on the management and preservation of their natural resources. So what we are looking at, in terms of Power Africa, is how we can mobilize domestic resources, and that would be natural gas for example, and help the private sector come in, help the government establish their regulatory framework so that there is investment being made by the private sector in developing gas into power, so that that power can be disseminated and dispatched throughout the grids and reach the people of the country. So we see certainly the lack of power across the continent is an inhibitor to growth and by capitalizing on some of the gas reserves in countries and converting that into power, it then becomes an engine of growth for those countries.

MODERATOR: Our next question is from the U.S. Embassy in Nairobi, Kenya. Please open the line for Nairobi.

MEDIA: Ok. My name is Immaculate. I would like to know: The government of Kenya has a plan to add 10,000 megawatts of electricity in national grids in the next 40 months from last year. How does Power Africa come in into this plan?

MR. GAST: We are working very closely with the Government of Kenya through a number of organizations. One is the Geothermal Development Corporation. We are also working with KTLT. I mentioned earlier that not only on grid projects are the important projects to Power Africa, but off grid projects are as well. And we believe that the off grid projects will really allow us to expand access to people who would normally not get power. So maybe what I can do is talk about one such project, that’s an off grid small scale project that we feel has high replicability within Kenya and also other countries within Africa. We have a partnership with Cummins Power and they are working in Baringo County in Kenya, and they are working with some of the communities and trying to come up with a plan on capturing the invasive species, what we call mesquite in the US. And I cannot remember the name that they use in Kenya. That is a very valuable source of fuel. Right now, that tree, which is an invasive species, is negatively affecting the cattle herders in the community. But it is also a good source of fuel and so there is a biomass project that we just kicked off in Baringo County where the communities, and we are hoping to mobilize the communities, will go out and collect the mesquite, then bring it to the power producers and, then those people in the community then receive money for the fuel wood. So we are trying to establish a reliable source of fuel. Cummins Power has a power purchasing agreement with KPLC, the power and light commission company of Kenya and we helped to negotiate that power purchasing agreement and they will then be producing power at a commercial cost that will go on grid as well as benefit some of the communities off grid. So this is something that we are very excited about. It is a commercially viable deal and it also offers so much potential on the downstream side as well as the upstream side. With regards to the first organization I mentioned in Kenya which is the Geothermal Development Corporation, we have a partnership with them. There are a number of fields that we are working with them on helping develop. There is a lot of commercial interest in geothermal, as a clean source of power, and we are excited about the possibilities of getting a lot of investments and produced power. We know that 5,000 megawatts is a very ambitious goal, and I think the utility companies such as GDC, are feeling the pressure. But there is a commitment on the part of USAID as long as the government helps realize that goal.

MODERATOR: Thank you. For our French translator on the line, could we please ask that you speak more loudly. Those on the French line are having a little trouble hearing you. Our next question will go to the U.S. Embassy in Ethiopia. Please open the line for Ethiopia.

MEDIA: Thank you very much. My question is: Ethiopia has a project to produce clean energy and export to several African countries, there are agreements with Kenya, Sudan and Djibouti, and plans to export to other countries. In that case, does this Power Africa program fit into that initiative? Because this initiative in Ethiopia uses regional corporations so does this Power Africa program has a component to finance some of Ethiopia’s power generation projects such as the Great Ethiopian Renaissance Dam? Thank you.

MR. GAST: Let me check with you to see if I understand the question correctly. Ethiopia has export power agreements, power purchasing agreements with Djibouti, Kenya, and Tanzania. And the question is: Are we supporting the Ethiopian government and other institutions in helping realize the power projects? Did I get the question correct?

MODERATOR: That was my understanding

MEDIA: And also financially…

MODERATOR: Go ahead please. To the questioner, go ahead.

MEDIA: And also does the Power Africa program fit into that Ethiopian initiative and finance some of the construction of the dams in Ethiopia? Because the Great Ethiopian Renaissance Dam is a 6000 megawatt project that would be, much of the power generated, would be exported, so would Power Africa initiative finance such initiative?

MR. GAST: Let me talk about… Ethiopia has great potential, as I mentioned earlier, great potential in generating renewable power and we also see Ethiopia as an exporter of power. In fact, it is doing so already, to Djibouti, as the caller mentioned, and to Kenya and eventually to Tanzania. So strengthening the power pool will help provide more opportunities for Ethiopia which will be a surplus producer of power in the coming years. It should be a source of export earnings for the country. So we see that as being a very valuable resource and line of business if you will for Ethiopia. Let me talk about one of the projects that we are supporting, which is the Corbetti Geothermal. I mentioned geothermal earlier because there is so much potential in the Rift Valley, in Djibouti and in Kenya certainly, and in Ethiopia as well as other countries, to harness the potential of geothermal, which is a clean energy source.  So the Corbetti project is one that has brought a lot of interest. There is an American investor that is negotiating a power purchasing agreement with the government of Ethiopia. This is good for the government of Ethiopia and I think it also is important to the government because it sends a signal to investors around the world that Ethiopia is opening for business, for commercial investments. And what we have done is, we provided some workshops for the government so that they understand how PPAs work, how power production agreements work, how the deals can be structured. And then we also want to support Ethiopia through an independent means, the African Legal Support Fund, of the African Development Bank so that they have an independent source of legal support to help them negotiate the deal with the American company. So that’s just an example of how we are supporting Ethiopia, but we see tremendous potential in Ethiopia.

MODERATOR: Thank you. Our next question was submitted in advance. The question is President Obama… Excuse me, and the question was submitted by Voice of America. The question is: President Obama’s emphasis has mainly been on green energy. What percentage of the money budgeted for in Power Africa is going to go towards the development of sustainable energy? Also, what is your view of the continued mining and use of coal on the African continent for power production?

MR. GAST: Power Africa is all about greener power. That means looking at geothermal, looking at solar, looking at wind, and in fact we have a number of wind projects that have reached financial closure in Kenya. And we are also looking at opportunities of using gas, for example, that is flared now and harming the environment in Nigeria and harnessing that gasand putting it into productive means of producing energy. So Power Africa is all about greener energy and that is what we are supporting throughout the continent. With regard to coal power, we understand that countries in Africa require power and also that there is a heavy reliance in the country that I am in now, in South Africa, on coal. So what we want to do is try and look into other opportunities, other than coal, that would provide a cleaner source, and a sustainable source, of power.

MODERATOR: Our next question goes to Charles Wachira of Bloomberg News. Please open up the line for Bloomberg.

MEDIA: Hello, my name is Charles Wachira from Bloomberg in Nairobi. My question is: Since this initiative began, what kind of challenges have you faced and what would you attribute to the gap that exists currently between the people on the ground bearing in mind that Africa has a lot of immense resources? Thank you.

MR GAST: I am sorry Camille, would you mind repeating the question?

MEDIA: What I asked is since the initiative began in June 2014, what kind of challenges have you faced, and also Africa with all its immense economic potential, what has made it lag behind, compared to say nations in Asia, for example?

MR GAST: Let me tackle the first part of your question and then I will get to the second part. Let me talk to some of the obstacles that we are seeing or some of the challenges, I guess. One is that structuring a deal, and then reaching financial closure, is difficult because it involves so many partners.  It involves policy reforms that need to be implemented or measures that have been agreed to by the government on improving the legal environment, regulatory environment, to facilitate the private sector investments taking place.  Second of all, it is helping private sector companies to start financing and that’s no sure deal. Often multiple parties are involved. And then the third challenge for us is basically sequencing the support that is coming in from USAID, from other U.S. government agencies, from other development agencies in a way that leads at times to project execution. So we have seen for example, getting an environmental clearance in a country for a project can often delay, or even derail the project. So really what we have seen that works in some countries is where there is a commitment on the part of the government to create a cross-governmental structure, to make sure that there is coordination and harmonization among the agencies to get the project through. And I think that is a similar approach that we are trying to take among the donor community to make sure that we have effective partnership, with the African Development Bank, with the World Bank to make sure that our assistance is coming in when the assistance is needed. So that’s a big challenge. In regard to the question about why is Africa is lagging… so clarify the second part of your question… Lagging in comparison with Asia. Lagging in what? Economic growth and attracting private capital?

MEDIA: No, the gap between the people who are on the ground. You know, like in rural areas. In Africa, we find a lot of people that are off the grid, therefore they use other things like kerosene, etc. But these areas are very well endowed with minerals.

MR. GAST: I’m sorry Camille, would you mind relaying that question?

CAMILLE: Yes, I am sorry I am also having a little bit of a problem hearing the question. What I understood is: Why is there a gap between the people on the ground in Africa as compared to those in Asia for example, when the people in some of these areas are from resource rich areas. So why is the energy that they need not coming through to them? Is that correct, Charles? Have we relayed that correctly?

MEDIA: Minerals. You find many countries, Congo for example, has a lot of minerals. And you find that the gap between those who have the power gridand the ones who don’t have it is very big. And I would like to find one single reason that the governments in Africa have failed to link the population to this need [UNCLEAR]?

MR. GAST: Charles, you are referring to minerals in Congo and it is really outside of Power Africa. But I can tell you that we recognize that illegal mining is taking place in these countries. We have established consortium of private sector countries, along with the State Department and AID, to help come up with a regulated way of certifying that the minerals that are extracted, and  exported are being done in accordance with good practices, fair legal practices, meeting the legal and regulatory standards of the International community.

MODERATOR: Our next question goes to the U.S. Embassy in Ghana. Please open the line for Ghana.

MEDIA: Yes, my name is Evans, I report for GDC Ghana Broadcasting Corporation [UNCLEAR]. I want to ask Mr. Gast, concerning the $7 billion coming to Africa I would like to know how much of the percentage is coming to Ghana, and also in terms of investments within the six countries that we have now, is it going to be based on economic dominance, or population? Looking at Nigeria’s population, is it going to be considered amongst these two things.

MR. GAST: I am sorry Camille, we are really having problems with our line and speaker here. Would you mind being a conduit?

CAMILLE: Sure, let me ask the questioner to repeat the question. Operator, could you please open the line again for Ghana.

MEDIA: Yes, I wanted to ask Mr. Gast about the amount, the $7 billion coming for the Power Africa project. I would like to find out how much is going to be distributed in each country. Is it going to be based on economic dominance or population? I would like to know. Look at Nigeria’s population, is it going to be on that level?

MODERATOR: Assistant Administrator. Gast, were you able to hear the question this time?

MR. GAST: I think he is asking the question of how the $7 billion would be allocated to Power Africa countries. You know, this is a very different paradigm that we are using. The paradigm is we are looking at projects that are commercially viable, and so trying to leverage private sector investments going into those projects. So the answer to the question is: We haven’t on the Power Africa side pre-designated how much resources will be going to each country. What we are doing is applying the resources that are needed to get deals approved and executed. So for example, I use the example of Corbetti, we have helped facilitate the discussions between the government of Ethiopia and the private sector developer Reykjavik Geothermal. Now we are resources as needed. Right now, the resources are needed to help the government engage in legal services to negotiate the PPA with the private sector company. We also anticipate that there will be a need to help improve the reliability, viability of the energy company. So we are developing technical assistance packages to support capacity building. I guess the answer to the question is: There is no pre-designated amount

CAMILLE: I am sorry Assistant Administrator Gast, we lost your sound there just at the end of your statement. Would you mind repeating it? You said “There is no pre-designated…” and then we lost you.

Mr. GAST: …amount of resources going into each of the Power Africa countries.

CAMILLE: Ok.

Mr. GAST: Essentially there is pool of funds that will be applied to those countries to help transactions move through the process.

MODERATOR: Ok, thank you. Our next question was submitted in advance from Tanzania. Can you speak a bit about the U.S. based Symbion Power Company’s arrears challenges with the government of Tanzania?

Mr. GAST: I thank the caller for that question because for us we see that as a very, very serious issue and it is something that we have engaged on at a political level. The whole construct, the viability of Power Africa is for each of the partners to meet its commitments. That means for the government to meet its commitment to improve the regulatory environment. It means for the donors to come up with the resources necessary to build capacity and improved systems within the countries. And it’s also the private sector are meeting its’ commitments to make timely investments for power generation. So what we are seeing in Tanzania in the commitment is the failure of the government and TANESCO specifically to meet its commitment to pay for the power that Symbion has produced as contained in the agreement. And I am really concerned because not only does it affect the financial viability of a company, because the arrears are somewhere in the neighborhood of $40 million, not insignificant at all, but it also could affect the viability of the model of Power Africa in Tanzania. So thank you caller for that question. Camille, we will do one more question.

MODERATOR: Ok, we have one final question. This was submitted in advance from Voice of America. Is there a timeline as to when the initiative could be rolled out to more African countries, as it is currently anchored in 6 to 8 nations?

MR. GAST: That’s a very good question. We feel that $7 billion dollars that the President committed to Power Africa is sufficient for the six countries that we are working in. We are exploring whether or not there are opportunities to expand in other countries. That is a question that we are discussing within the U.S. government. So we have no clear answer yet. But we hope to in several months’ time. So Camille, thank you so much for hosting me. It has been a great experience being in South Africa and meeting with all the partners, our Power Africa partners, which we have done in the past couple of days. And I really want to thank the callers for their very good questions about Power Africa and I hope that we will have more of these exchanges because it opens our eyes to the real needs of the people on the continent as well as the Power Africa countries. Thank you.

MODERATOR: Thank you. And that concludes today’s call. I want to thank USAID Assistant Administrator Earl Gast for joining us and thank all of our callers for participating. If you have any questions about today’s call, please contact the Africa Regional Media Hub at afmediahub@state.gov. Thank you.