World Bank arm is looking at renewable energy projects in region
Private investment in the Middle East and North Africa (Mena) region is falling short of levels needed to ensure growth and employment across the region, according to a senior official at the International Finance Corporation (IFC).
The investment deficit in the Mena region by the private sector amounts to $300bn, said Gulrez Hoda, IFC director of infrastructure and natural resources for Europe, Middle East and North Africa.
“In Mena there is a big deficit for private infrastructure,” he said.
A World Bank subsidiary, the IFC helps finance private sector investment, and provides advisory services for businesses and governments. It places a heavy emphasis on infrastructure development in the second and third world.
Poverty and unemployment, especially amongst the young, was a prime motivator for the political unrest that swept from power entrenched regimes in Tunisia and Egpyt, and has sparked violent conflict in Libya, Syria, Yemen and Bahrain.
“The central issue is employment and poverty, and we are trying to work to mitigate those constraints,” said Hoda of his organisations effort to bring private investment to the region.
In the financial year 2011, ending on 30 June, the corporation invested $18.7 billion in 513 projects in developing countries around the globe. Of that $6.4 billion came from outside investors.
Cooperation with private investors is a central plank of IFC’s strategy. In the first investment of the new financial year, the corporation on 7 July acquired a majority stake in the Central Electricity Generating Company (Cegco), with Acwa Power, a Saudi Arabian utilities company. Cegco is Jordan’s largest power provider with a generation capacity of 1,550MW.
“The idea is to work with private investors like Acwa and get them to invest,” said Hoda.
Cegco is not the only project in the region the IFC is currently working on, and other deals are currently awaiting board approval.
Apart from conventional power generation, the IFC is also looking at renewable energy projects in Jordan.
“Jordan and Morocco the most advanced from our perspective to looking at renewable,” said Hoda, who adds that the IFC is also looking at projects in Egypt.
“We are constantly looking out for renewable and conventional power projects in the region.”
Incorporating renewable into the power mix requires a sound regulatory framework, and a tariff structure incentivising costly alternative energy projects. Most countries utilising renewable energy sources have implemented so-called feed-in tariffs, which pay alternative power providers a rate that enables them to operate profitably.
“For renewable you need very good regulations, so our advisory arm is working with governments to improve the regulations,” said Hoda.