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Via The Economist, most of sub-Saharan Africa has very little access to electricity, and what power is available is very expensive (if you omit South Africa, the number are even more depressing). The problem appears to be less a matter of energy production than one of distribution. Why you ask? In Tanzania, it’s because the state-owned and state-protected distribution monopoly can’t pay its bills:
Tanesco, which has a monopoly on distributing power in Tanzania, is severely cash-strapped. Its outgoings are inflated by the need to buy expensive emergency backup fuel to keep the lights on when the supply from dams falters. In practice, payments to independent power producers such as Symbion often come last on its list.
On December 2nd SonGas, a private-equity owned firm that runs another gas-powered plant in Dar es Salaam, and which contributes as much as 20% of Tanzania’s grid power, threatened to stop generating electricity unless it is paid money is it owed by Tanesco. SonGas, like other firms investing in power plants across Africa, has a guarantee from Tanzania’s government that it will be paid—something financial backers generally insist on before investing in private power producers. But this does not help its short-term cashflow. Tanesco’s arrears do not mean that SonGas can refuse to pay for the gas it buys.
And why isn’t the Tanzanian government rethinking the monopoly? Well, besides its bad score on corruption indexes, part of the answer seems to be that our government is too busy dangling a pile of money for a gas pipeline over neighboring Kenya than to push for market liberalization to its south.
That’s galling for two reasons. First, as the WSJ notes, it’s absurd for the US to help finance pipelines in Kenya while denying their construction at home. Second, you’d think that we’d have an interest in the matter considering that the company that runs the plant is American and that it’s where President Obama announced his Power Africa initiative.
But it’s really no surprise: to the government cronyist, the only imaginable solutions to any problem — especially one caused by government — is more government.