AfDB and World Bank join to report on Africa’s power regs

Results of two key indexes allow comparing African regulation with other developing regions, with aim to promote robust legal and regulatory frameworks, create enabling environments for private sector investment; Uganda top performer with 95% score

A need for more regulatory autonomy, and better specification of tariff methodologies, were among the main findings of two major reports presented at a virtual launch event earlier this month.  

The African Development Bank’s Electricity Regulation Index (ERI), and the World Bank’s new Global Electricity Regulatory Index (GERI) were presented. Some 240 government officials, regulatory entities, development finance institutions and African and international private sector stakeholders attended.

The ERI, published since 2018, has been widely adopted by regulators and other stakeholders across the African continent to benchmark electricity regulatory environments and to guide reforms in the sector.

Among other findings, it highlights that thirty of the forty-three African countries surveyed have either amended their regulatory laws and instruments or have enacted new ones, addressing weaknesses that were identified through the ERI.   

The inaugural edition of GERI, sponsored by the World Bank’s Energy Sector Management Assistance Program (ESMAP) and undertaken in partnership with AfDB, surveys 82 non-OECD countries from across the globe – about half in Sub-Saharan Africa and the rest across Asia, Europe, the Middle East, and Latin America. It forms part of the Bank’s global effort to promote a robust electricity sector regulatory environment.

The average GERI score was 59 percent in 2021, representing an intermediate stage of development of power sector regulations in developing countries, with considerable room for improvement and the need for further action to strengthen regulatory frameworks.

The average scores for the two pillars of GERI stood at 65 percent for Regulatory Governance Index (RGI) and 54 percent for Regulatory Substance Index (RSI).

When it comes to regulatory governance, the most prevalent shortcomings are related to regulatory autonomy, with a global average score of 29 percent on regulatory independence from stakeholders.

As for regulatory substance, the lower score results from the weak performance of countries globally on economic regulation of tariffs with a global average score of 37 percent. This does not indicate an absence of tariff methodologies, but rather the fact that tariff methodologies are often poorly specified.

The reports may be accessed on AfDB’s website.

Energy & Utilities reported last February that AfDB approved the Leveraging Energy Access Finance Framework (LEAF), under which the bank would commit up to $164m to promote decentralised renewable energy projects in six African countries. E&U reported in April that the African Development Fund (ADF), concessional arm of AfDB, approved a $5.5 million grant to begin the flagship Desert to Power scheme in the eastern Sahel region of Djibouti, Eritrea, Ethiopia, and Sudan.