• The Middle East and North Africa (MENA) region has about 57% of the world’s proven oil reserves and 41% of proven natural gas resources. MENA is also endowed with unique solar resources. However, great gaps exist between countries rich in natural resources and countries independent on such resources;
• Many countries have close to 100% access to electricity, but an estimated 28 million people still lack access to electricity, especially in rural areas, and about 8 million people rely on traditional biomass for all their energy needs;
• Population growth, rapid urbanization and economic growth are putting pressure on existing infrastructure and relatively high demand for new investments. Over the next 30 years, the total investment needs in energy in MENA are estimated at over US$ 30 billion per year, or about 3% of the region’s total projected GDP (which is three times higher than the world’s average).
Global Electrification Project has established contacts with public authorities in some Mediterranean countries to launch programs for self-sufficiency to develop energy investments in the MENA region.
- Market risks: MENA economies generally experience wider fluctuations of macroeconomic indicators, making their investment climate harder to forecast for investors. This in turn results in higher borrowing costs, shorter loans, and higher equity requirements for finance.
- Technology/Capacity risks: the limited expertise and experience (of the labour force) can lead to misjudgements, decrease anticipated productivity, and unexpectedly increase costs. Relevant knowledge and capacity is often also limited among relevant public administrations.
- Access to finance: high upfront payment and risks associated with RES projects will typically lead to high premiums required by banks. Cost transparency need to be improved and organisation questions regarding market integration need to be better answered.
In the absence of a real liberalization of the electricity markets it will be necessary to have recourse to an appropriate form of Public-Private Partnership (PPP), among the Sponsors of the project and the public body responsible for the generation and distribution of energy electricity.
The Public-Private Partnership, is an implementation, financing and management of public infrastructure in which revenues from infrastructure management are insufficient to cover operating costs, the repayment of the loan and the return on invested capital. This implies that the financial structure is also required the intervention of the Public Administration through a financial contribution for capital grants or management, or by taking certain project risks, while remaining relevant managerial input from the private.