Financial Viability of Electricity Sectors in Sub-Saharan Africa : Quasi-Fiscal Deficits and Hidden Costs
This paper studies the financial viability of electricity sectors in 39 countries in Sub-Saharan Africa using an approach similar to that in an earlier study, the Africa Infrastructure Country Diagnostic. The quasi-fiscal deficit in each country is...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/08/26676470/ http://hdl.handle.net/10986/24869 |
| Summary: | This paper studies the financial
viability of electricity sectors in 39 countries in
Sub-Saharan Africa using an approach similar to that in an
earlier study, the Africa Infrastructure Country Diagnostic.
The quasi-fiscal deficit in each country is calculated under
two scenarios: existing utility performance and benchmark
utility performance. In the first scenario, only two
countries have a financially viable electricity sector (the
Seychelles and Uganda). Only 19 countries cover operating
expenditures, while several countries lose in excess of
US$0.25 per kilowatt-hour sold. Quasi-fiscal deficits
average 1.5 percent of gross domestic product, and exceed 5
percent of gross domestic product in several countries. In
this context, it will be difficult for utilities to maintain
existing assets let alone facilitate the expansion needed to
reach universal access goals. The number of countries with a
quasi-fiscal deficit below zero increases to 13 under the
second scenario, and to 21 when oil price impacts are
considered, indicating tariff increases may not be needed at
benchmark performance in these cases. Combined network and
collection losses on average represent a larger hidden cost
and are less politically sensitive to address than
underpricing, so could be a smart area for policy focus to
reduce quasi-fiscal deficits. Underpricing remains an issue
to address over the medium term, as service quality
improves. With no changes in power mix, tariffs would need
to increase by a median value of US$0.04 per kilowatt-hour
sold at benchmark performance, representing a 24 percent
increase on existing tariffs. Most countries have improved
or maintained performance, and relatively few countries have
had declining financial viability. |
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