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Thursday, 05 August 2010 12:52

Russia Pledges Support for Energy Businsses in Africa

By Kester Kenn Klomegah

MOSCOW, August 5, 2010 (Buziness Africa) – Simon Collings, chief operations officer for Global Village Energy Programme (GVEP), has explained that the Russian government's commitment of $30 million in total to support small and medium size energy businsses in sub-Saharan Africa is being managed by the World Bank (WB) and the GVEP International is designing specific country programmes and will be supporting implementation.


Collings told Buziness Africa magazine that GVEP has recieved $5 million for its role, the rest of the funding would be channeled through relevant government agencies in the different countries including Tanzania, Uganda, Rwanda, Kenya, Mali and Senegal.


He said "because the Russian funds have been provided to support private sector participation in provision of energy services and products, countries have been sellected where there is a policy environment supportive of this approach. The sellected countries also have to have already existing fiducuary agreements in place with the World Bank. All of the countries have low levels of electrification, especially in rural areas."


Collings lamented that lack of access to energy is a huge contributor to poverty.


"In Rwanda, I visited a site where a small hydro-plant will be built with support from the Russian funds. It costs FRw 40 to have 1kg of maize ground by a local miller who uses a disel engine to drive the mill. In a nearby town where there is grid electricity, it costs just FRw10 to have 1 kg of maize milled, " he added. 


"Poor people in rural areas pay over the odds for services because of the lack of power. When the power supply in this community of Mukinga is inaugurated many things - like maize milling - will become a lot cheaper. People will have more money in their pocket and more possibilities to break out of poverty, " he added.


The challenges in terms of poverty eradication are huge - education, health, economic development, international trade, governance, climate change - it's a long list, but there is much that African governments can do, Collings said and suggested further that African governments need to implement effective economic strategies, reduce corruption, invest in the education and health of their people.


Rwanda for example has ambitious plans to increase access to energy and the government takes a very active role in this. Russia could help least developed countries (LDCs) through encouraging maraket based economic development and by supporting international efforts to reduce corruption. Collings concluded.


In June, an official from the Russian Ministry of Finance said that Russia would contribute $10 million in 2010 to reduce global poverty through a G8 program to ensure accelerated access to modern energy services.


According to Andrei Bokaryov from the ministry, "in 2010, $10 million will be transferred to the Global Village Energy Partnership (GVEP), an international nonprofit organization ensuring access to energy resources for the population of the world's poorest countries."


The program was adopted in 2006. Russia made its first contribution of $5 million in 2007. Russia is to contribute a total of $30 million.


"Today the partnership has expanded its outreach to 21 countries," Bokaryov said, adding that its focus was mainly on African countries south of the Sahara.


Within the program's slots online framework, Russian hydroelectricity company RusHydro is considering building small hydroelectric power plants in Latin America.


Valery Sorokin, a member of the GVEP Board of Trustees and consultant of the Expert Administration of the Russian President, said the program could help businesses enter new markets and make Russian companies more competitive, especially in Latin America.


"This humanitarian aid opens access to business partnerships and creates opportunities for doing business; it is up to companies how they use this," he said.


Some experts are critical about foreign aid for economic development of Africa. For instance, Dr Nzori Shaabani, oil and gas specialist based in Moscow thinks that the so-called $10 million allocated by Russia to benefit Africa on energy projects, Russia may be doing it for the sake of charity.


"They will want to spend the money in order to secure huge contracts worth billions of dollars and I highly doubt that that money will find its way to Africa. It will likely be swindled here by Russians in the name of helping Africa. This said, I believe it is worth pondering over what Africa can acquire from Russia, I mean acquire on equally beneficial economic terms, in the energy sector," he assertively told Buziness Africa in an interview.


Dr Shaabani, however, raised praises when he added that "Russians are good in constructing hydro-electric dams, in oil and gas exploration and in nuclear energy. But we also need to have in mind that Russians are one of the most energy-consumption inefficient countries in the world. So, as far as energy efficiency is concerned, we will have to look elsewhere, but we can have Russians to build the basic infrastructure to produce energy."


Unfortunately, Dr Shaabani pointed out further that most, if not all, of African countries, when they approach developed countries for development assistance, they hardly specify terms of cooperation for the best interests of their countries.


"It is high time we change this mentality and start acting responsibly to and for ourselves and retain the honour in negotiating better terms for ourselves," he suggested.    


Africa has abundant untapped energy resources, but Africa also has enormous energy resources which are currently being exploited, albeit not to the best interests of Africa (Nigeria, Angola, Chad, Sudan, Tanzania etc). This needs to be changed drastically.


And also, what and how should Africa do to invest in Russia so as to get economic benefits, have a strong foothold on the Russian economic scene and how this could be done to enable scientific and technology transfer to Africa – this is what Africans are supposed to do and approach the question of practical mutual cooperation with Russia and not remaining in the outmoded way of thinking on how Russia can help Africa, Dr Shaabani concluded in remarks.



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