Strategy for the Development of a Harmonised Regulatory Framework for the Electricity Market in Africa

The electricity sector in Africa still faces huge challenges that include low capacity factors and reserve margins, high transmission and distribution system losses, low operating and availability factors and high operating costs, as well as high duration and number of outages and low access rates, amongst others. These challenges have adversely affected the socio-economic development on the continent. With the demand for modern energy consistently on the rise, there is no doubt that huge energy infrastructure is required at the continental, regional and national levels to meet current and future demand. One of the means to overcome these numerous challenges is through the development of a regional and continental energy infrastructure and market.

The EU Technical Assistance Facility - East and South Africa in close cooperation with the African Union Commission/Department of Infrastructure and Energy supports the development of the Continental Harmonization Agenda with the respective Action Plan, along with its validation process. This calls for the harmonisation of policies, legislation, regulatory and institutional frameworks at the regional and continental levels to enhance greater coordination and cooperation, as well as remove barriers to facilitate cross-border energy trade and investments.

Specifically, the harmonization of the electricity regulatory framework is expected to bring about the following benefits, inter alia:
 Ensure long-term stability of the power sector and catalyze investments through commitments at both the regional and continental levels;
 Increase cross-border trading and power pooling, as well as enhance access to electricity;
 Enhance continental initiatives and influence, in terms of network regulation, electricity market
design and coordination;
 Improve learning from ‘best practice’ regulation through pooling of regulatory resources;
 Improve transparency of tariff methodology towards achieving cost reflectivity;
 Enhance quality of service monitoring and enforcement;
 Introduce “workable” competition and determine the minimum requirements, general principles
and rules, for effective operation of the generation, transmission, distribution and sale segments of
the electricity supply industry (ESI)
 Establish rules for non-discriminatory and third-party access to the transmission and distribution
networks;
 Ensure market structure reforms and indicate the rules for legal and functional unbundling of
transmission and distribution systems;
 Provide justification for countries to establish and designate a regulatory authority which meets the
minimum requirements of operational, organizational and financial independence;

It is in the light of the above that this Strategic document has been developed to pave the way for harmonization of the regulatory frameworks for the electricity market in Africa, to achieve a fully integrated, competitive and harmonized electricity market. This is expected to accelerate Africa's development and improve access to electricity vis-à-vis the following six (6) strategic objectives:

 Developing effective Regional and Continental Electricity markets;
 Improving the operational efficiency and performance of the Electricity Supply Industry;
 Creating stable, transparent and predictable environment to attract investment;
 Enhancing electricity markets frameworks to increase access;
 Enhance Renewable Energy Frameworks;
 Establish norms, standards and frameworks for energy efficiency;

One of the key outputs emerging from the Strategic Plan document is the development of an Action Plan for achieving the harmonization process. The proposed Action Plan identifies the main stages and pillars of the harmonization process. This is followed by identification of the following key phases which are required to achieve the harmonization at the National, Regional and Continental levels:
 Initial Phase of Harmonization Process:
 Identification of following Key Areas or Pillars for achieving regulatory harmonization;
- Economic Regulatory Framework;
- Technical Regulatory Framework;
- Enabling market environment;
- Enhancing Renewable Energy Frameworks;
- Establishing the norms, standards and frameworks for energy efficiency.
 Identification of main activities, particularly establishment of key institutions and development of important documents;
 Market Opening Phase:
 The aim of the market opening phase is to implement or operationalize the actions from the initial phase of the harmonization process;
 Identification of activities to achieve market opening at the National, Regional and Continental levels;
 Harmonized Electricity Market and Progress Monitoring.
 Identify the roles of various agencies and institutions;
 Monitor progress of harmonization of regulatory framework towards achieving the set
objectives at the country, regional and continental levels.

Going forward, it is recommended that a detailed action plan which revolves around the three phases of the regulatory harmonization and which is anchored on the five pillars should be developed. The detailed Action Plan should at least cover the following:

 A roadmap for implementing the various activities for each of the pillars of harmonization. The roadmap should describe the horizon for the activities with respect to the short, medium and long terms;
 Detailed action plan should be developed based on three district, time frames: Short -term (3 - 5 years), Medium -term (6 -8 years); and the long -term (9 -15 years)
 Identification of specific activities and actions which must be undertaken during the short, medium and long terms;
 The budgetary requirements or financial implications of each activity. The Plan should also should identify the roles of national government and development partners;
 Identify the implementing agencies for the activities;
 Develop details of a monitoring and evaluation framework at the national, regional and continental levels, to monitor the progress of implementation of activities under each
harmonization pillar;
 Identification of priority activities for implementation as a follow-up to the action plan at the national, regional and continental. These activities should be selected to reflect a good balance of RECs, and subject to financial or budgetary constraints, this should cover each of the five pillars of the harmonization process.