Sub-Saharan’s investment in energy infrastructure to hit $282.88 billion
Ernst & Young said in the report titled: “Q1 2015 Power Transactions and Trends: Africa and Middle East”, released recently, Sub-Saharan Africa energy demand is likely to grow by 80 per cent by 2040.
According to the firm, as utilities, financial investors and equipment players look beyond the world’s mature markets, Africa and the Middle East are fast emerging as increasingly attractive investment destinations.
It stated that the need for rapid infrastructure build, in both traditional and renewable sub-sectors, is driving significant reforms across the region. “Despite political and business risks, a rush of foreign investments and strong competition for vast resources suggest the Mergers and Acquisitions (M&A) market will heat up in the coming months”, it added.
It noted that Nigeria’s successful privatization of distribution assets has prompted several other countries to follow suit and open their energy markets. “Unbundling and retail market competition in Tanzania, privatization of generation assets in Nigeria, and restructuring of power markets in Ghana and Angola are likely to create significant investment opportunities for investors in the short term”, it added.
At the global level, Ernst & Young expects volume of investment in M&A within the Power and Utilities (P&U) sector to reach a four-year high, with total deal value reaching $29.7 billion in first quarter this year.
It stated: “We see Energy Reforms and Unbundling (ERU) emerge as the biggest driver of M&A across the globe as governments look set to open up their energy sectors to competition.
“China recently initiated pilot tariff reforms in Beijing with the objective of breaking the dominance of state-owned monopolies. Japan is already witnessing several new non-conventional entrants into the sector – close to 500 new generation and retailing companies have registered in the last few months.”