Action Plan for Harmonised Regulatory Framework for the Electricity Market in Africa

The significance of an integrated energy market has been highlighted by the World Energy Council (2005), which indicated that the traditional approach of limiting energy planning and service provision to the national level, has contributed negatively to enhancing energy accessibility in Africa. The development of regionally integrated energy markets particularly for electricity, will improve the quality and security of supply at both the national and regional levels, while helping to mobilize private investments. Electricity market interconnections will also create export opportunities for countries which possess comparative advantage with respect to energy resource or energy supply. This is expected to lead to sharing of operational reserves and installed capacity, thus reducing the level of domestic investment in capacity needed to achieve the minimum reserve margin, for system stability and security.

One of the means to achieving regional electricity market integration is through the development of a regional and continental energy infrastructure and market. This calls for harmonization of policies, legislation, regulatory and institutional frameworks at the regional and continental levels. It is in this regard that summary document on “Strategy for the Development of a Harmonized Regulatory Framework”, was developed to pave the way for harmonization of the regulatory frameworks for the electricity market in Africa, with the view to achieving a fully integrated, competitive and harmonized electricity market. The regulatory harmonization is expected to accelerate Africa's development and improve access to electricity based on 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;

The Strategic Document also identified the following five pillars, around which the regulatory harmonization process can revolve, at the national, regional and continental levels:
 Creating a robust Economic Regulatory Framework;
 Establishing a solid Technical Regulatory Framework;
 Creating an Enabling Electricity Market;
 Enhancing Renewable Energy Framework;
 Establishing the norms, standards and frameworks for energy efficiency;

In order to realize the continental regulatory harmonization agenda, this detailed Action Plan has been developed to identity the actions, as well as the key actors required at the national, regional and continental levels, to achieve the continental regulatory harmonization. The Action Plan has been structured into Short term (3-5 years: 2017-2021), Medium term (6-8 years: 2022-2024) and Long term (9-14 years: 2025-2030). The objective is to enable the Actions to be implemented as a set of phase activities, starting from the short to the long-term. It must however be noted that despite this general presentation, the ultimate actions to be implemented will be dictated by individual needs and regional situations, as well as progress made in each of the five pillars of regulatory harmonization. The Action Plan further identifies the required resources and recommends some key programmes for implementation as “pilot” projects.

For effective and efficient implementation of the Action Plan, and in lieu of a diagnostic needs assessment study (or mapping exercise) of power pools and the countries in each REC, a top-down approach has been recommended in the report. This implies that Guidelines which are developed at the Continental level during the implementation phase, can be adapted to meet the specific needs of each power pool and each state. The Action Plan has also been designed to accommodate the evolving market structure and regulatory frameworks, by ensuring that the Guidelines and Regulations are reviewed at the end of the short, medium and long terms.

In developing the detailed Action Plan, it was important to first identify the gaps and barriers to be addressed by the proposed Actions for each of the harmonization pillars, at the national, regional and continental levels. The results of the gap analysis are summarized below.

As part of the monitoring and evaluation framework, the Action Plan has also recommended a Governance and Monitoring structure which takes cognizance of the mandates of each of the key implementing actors identified in the implementation of the short, medium and long term programmes. The monitoring and evaluation framework has been designed as a two tier structure. Tier 1 involves a close collaboration and regular consultative meeting between AUC’s coordinating unit, the key Pan – African institutions and the donor partners. The second tier (i.e. Tier 2) which is the “Technical Level”, will monitor the progress of the various actions plans. The tier 2 level comprises sub-committees to deal with issues relating to the main pillars of the continental harmonization process. The Monitoring and Evaluation (M&E) framework is thus expected to bring about transparent communication of progress, ensure accountability, and serve as a platform for providing an adaptive feedback process.

In developing the Action Plan, it was important to match the roles and mandates of the different regional and continental institutions vis-à-vis the main actions. The results of this analysis have been attached as Appendix 1 to this report.