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Abstract<\/span><\/strong><\/p>\n As the world races to meet the Sustainable Development Goals (SDGs) by 2030, there is a growing recognition of the importance of ongoing initiatives. This blog highlight some of the initiatives taking place in Africa and Asia that is specific to affordable and clean energy. To provide country-specific background on the regulations surrounding the power sector in the two continents, the authors of this blog give an overview of the energy regulations of Ethiopia and India. Thereafter the blog mainly focuses on the impact of the African Continental Free Trade Area (\u201cAfCFTA<\/strong>\u201d) on energy trade in Africa.<\/span><\/p>\n Keywords:<\/strong> \u201cAfCFTA\u201d; \u201cIEX\u201d; \u201cTrade\u201d; \u201cPower\u201d; \u201c<\/span>SDGs\u201d<\/span>.<\/span><\/em><\/span><\/p>\n <\/strong><\/span><\/p>\n Exploring Regulations surrounding the Power Sector in India and Ethiopia \u2013 An Overview<\/strong><\/span>\u00a0<\/p>\n The Indian Energy Sector<\/u><\/em><\/span><\/p>\n The Indian power sector uses a number of fuels. These include traditional sources like coal, oil, and gas, as well as environmentally friendly sources like solar, wind, biomass, industrial waste, and small hydro plants. Electricity is included on the<\/span>concurrent list in India’s Constitution<\/a>. As a result, in India, both the Parliament (Central) and the State Legislatures (State) can legislate on electricity-related issues, subject to the laws made by Parliament, which take precedence over the laws made by the State Legislature. The<\/span>Electricity Act of 2003<\/a> governs electricity generation, transmission, distribution, trading, and use in India. The generation of electricity (except hydro) is a non-licensable activity. Electricity demand in India is expected to rise in tandem with increased electrification and economic growth. The Government of India (in consultation with state governments and the<\/span>Central Electricity Authority (\u201cCEA<\/strong>\u201d)<\/a> publishes the<\/span>National Tariff PoAlicy and the National Electricity Policy<\/a> on a regular basis in order to develop an electricity system based on the most efficient use of resources such as coal, natural gas, nuclear, hydro, and renewable sources of energy.<\/span><\/span><\/p>\n The CEA is a statutory body established by the Electricity Act that advises the Government of India on policy, safety requirements, and technical standards. When the<\/span>Central Electricity Regulatory Commission<\/a> (\u201cCERC<\/strong>\u201d) and the<\/span>State Electricity Regulatory Commissions<\/a> (\u201cSERCs<\/strong>\u201d) make their regulations, the Government of India in consultation with the states and the Central Electricity Authority (\u201c<\/span>CEA<\/strong><\/a>\u201d) establishes policies {such as the<\/span>National Training Policy<\/a> (\u201cNTP<\/strong>\u201d) and<\/span>National Electricity Policy<\/a>} to serve as a guideline for the CERC and the SERCs.<\/span><\/span><\/p>\n In terms of renewable energy promotion, the<\/span>Ministry of New and Renewable Energy<\/a> (\u201cMNRE<\/strong>\u201d) is the Government of India’s designated agency for the following: Solar energy.<\/span><\/span><\/p>\n SECI<\/a>, a government enterprise under MNRE’s control, assists MNRE in the implementation and facilitation of schemes such as the<\/span>Jawaharlal Nehru National Solar Mission<\/a> (\u201cNSM<\/strong>\u201d) and schemes for wind projects and solar-wind hybrid projects.<\/span><\/span><\/p>\n In an effort to boost<\/span>Cross Border Electricity Trade (\u201c<\/span>CBET<\/strong><\/a>\u201d), and to create a premier market for the trade of energy, the<\/span>Indian Energy Exchange (\u201c<\/span>IEX<\/strong>\u201d)<\/span><\/a> was introduced. Currently, it has expanded beyond India to other South Asian regions.<\/span><\/span>\u00a0<\/span><\/p>\n Ethiopian power sector<\/u><\/em><\/span><\/p>\n Ethiopia’s power sector is a regulated market that has been reforming since 2013. Ethiopia, at present, has one of the lowest rates of electrification in Sub-Saharan Africa. The majority of its<\/span>110 million people rely on traditional biomass energy sources<\/a>. Commercial energy sources such as electricity and petroleum are used to make up the gap. The country has an abundance of renewable energy resources and the capacity to generate over 60,000 megawatts (\u201cMW<\/strong>\u201d) of electricity from hydroelectric, wind, solar, and geothermal sources. Renewable energy, specifically hydropower, accounts for 98 percent of Ethiopia’s current installed capacity. At present, there are no coal-fired power plants in the country it does, however, have 300 million tonnes of coal and 253 million tonnes of oil shale reserves that have yet to be exploited. Demand for electricity has been steadily increasing<\/span>as a result of Ethiopia’s rapid GDP growth over the previous decade<\/a>.<\/span><\/span><\/p>\n The Energy Proclamation No.810\/2013<\/a> (as amended) and<\/span>Energy Regulation No. 447\/2019<\/a> regulate the energy sector in Ethiopia. Furthermore, the Ethiopian government has approved a<\/span>10-year Perspective Development Plan for the duration of 2021-2030<\/a>. In relation to the energy sector, the development plan has set out key goals such as the achievement of equitable access to energy, attracting private financing for the expansion of infrastructure, and increasing private sector investment through public-private partnerships.<\/span><\/span><\/p>\n The key regulatory authorities of the energy sector in Ethiopia are the<\/span>Ministry of Water and Energy<\/a> (\u201cMoWE<\/strong>\u201d) and the<\/span>Ethiopian Petroleum and Energy Authorities<\/a> (\u201cEPEA<\/strong>\u201d). MoWE is responsible for ensuring the provision and distribution of power from water, wind, and other renewable energy sources, and EPEA is mainly responsible for licensing and supervising parties who operate within the energy sector of Ethiopia.<\/span><\/span><\/p>\n The generation of electricity is an investment sector that is open to both foreign and domestic investors. However, the transmission and distribution of electricity in the national grid being reserved for domestic investors. Currently, transmission and distribution are carried out by monopoly through the government enterprises the<\/span>Ethiopian Electric Power<\/a> (\u201cEEP<\/strong>\u201d) and the<\/span>Ethiopian Electric Utility<\/a> (\u201cEEU\u201d<\/strong>), respectively.<\/span><\/span><\/p>\n <\/strong><\/span><\/p>\n Introduction to the Energy Market in Africa\u00a0<\/strong>\u00a0<\/em><\/span><\/p>\n The population of Africa is approximately<\/span>16% of the population of the world<\/a>. \u00a0However,<\/span>75% of the world\u2019s population that does not have access to electricity lives in Sub Sahara Africa<\/a>. One initiative that is put in place toward reaching the SDGs for the African continent is to use regional trade integration to intensify the energy sector and existing power pools, as well as to improve the utilisation of the region’s abundant renewable energy resources to meet the region’s vast demand.<\/span><\/span><\/p>\n Economic integration and power pooling are few of the strategies of the African continent<\/span>to strengthen the energy sector<\/a>. There have been several regional economic integration initiatives in Africa aimed at achieving sustainable development in the continent. In this century, a country\u2019s level of electrification is linked to its level of economic development. Regional economic integration efforts in Africa date back to the formation of the Southern African Customs Union and the East<\/span>African Community in 1910 and 1919 respectively<\/a>. In 1991 the African Economic Community Treaty (the Abuja Treaty) was focused on<\/span>continental economic integration<\/a>. Currently, there is<\/span>no African State that is not a signatory to at least one Regional Economic Community (REC) on the continent<\/a>.<\/span><\/span><\/p>\n Before power pooling was implemented,<\/span>energy trade between African states was based on bilateral treaties<\/a>. Among other things, the intention of developing power pools in Africa is to<\/span>increase generation capacity, improve transmission infrastructure and increase energy trade<\/a>. Power pooling<\/span>creates a network<\/a> among the member states and the market for energy. Currently,<\/span>there are five power pools in Africa<\/a>: (i) the<\/span>Southern African Power Pool<\/a> (\u201cSAPP<\/strong>\u201d) (ii) the<\/span>West African Power Pool<\/a> (\u201cWAPP<\/strong>\u201d) (iii) the<\/span>East Africa Power Pool<\/a> (\u201cEAPP<\/strong>\u201d) (iv)<\/span>Central African Power Pool<\/a> (\u201cCAPP<\/strong>\u201d) and (v)<\/span>Maghreb Electricity Committee<\/a> (\u201cCOMELEC<\/strong>\u201d).<\/span><\/span><\/p>\n Nonetheless, power pooling in Africa has not reached its full potential due to multiple challenges. Some of these constraints are:<\/span><\/p>\n a. Lack of sufficient infrastructure \u2013 the countries that take part in the power pooling projects face financial constraints to fully fund infrastructure projects for the required amount of energy. Trade barriers<\/span>further limit the amount of funding<\/a> that can be provided by the private sector for such projects.<\/span><\/span><\/p>\n b. Regulatory and institutional constraints \u2013 the power pools are not supported by well-defined, predictable, and consistent energy policies as well as institutions<\/span>that are efficiently harmonized at a country and at the sub-regional level<\/a>.<\/span><\/span><\/p>\n In response to the challenges that the energy market in the continent, the African Union Development Agency, and the African Development Bank had released a recommendation for a continental electricity master grid and market in 2020.\u00a0<\/span><\/p>\n <\/strong><\/p>\n Introduction to the AfCFTA<\/strong><\/span><\/p>\n The<\/span>AfCFTA<\/a> entered<\/span>into force on 30 May 2019<\/a>. Trading under the AfCFTA<\/span>commenced on 1 January 2021<\/a>. The scope of application of the AfCFTA includes trade in goods, services, investment, competition, and intellectual property<\/span>among member States of the African Union<\/a>. When fully operational, the AfCFTA is expected to eliminate tariffs on<\/span>90% of goods traded in Africa<\/a>. It has the ultimate objective of creating a single market, resolving the overlapping membership problems, integrating Africa economically as per the Pan African Vision, and creating a<\/span>continental customs union at a later stage<\/a>.\u00a0<\/span><\/span><\/p>\n The AfCFTA is governed by principles common to regional trade arrangements such as the Most-Favored-Nation (\u201cMFN<\/strong>\u201d) Treatment, National Treatment, sustainable liberalization, and reciprocity.\u00a0 The AfCFTA also accommodates special or differential treatment.\u00a0 The special treatment afforded to member States includes an additional transition period in the implementation of the AfCFTA.\u00a0<\/span><\/p>\n Although the overlapping membership of States in different<\/span>Regional Economic Communities<\/a> (\u201cRECs<\/strong>\u201d) is seen as one of the challenges of liberalizing trade, the AfCFTA plans to use the existing RECs as building blocks for liberalizing trade on the continent and follows the principle of preservation of the acquis. Furthermore, the AfCFTA is based on best practices among RECs, Member States and international conventions binding the African Union.\u00a0<\/span><\/span><\/p>\n In addition to the removal of trade barriers, the implementation of the AfCFTA also provides an opportunity for the achievement of the<\/span>SDG targets<\/a> such as increasing exports from developing countries and the promotion of a universal trading system, employment creation and industrialization, creation of business opportunities for women and youth, poverty alleviation,\u00a0and environmental sustainability.<\/span><\/span><\/span><\/p>\n <\/u><\/strong><\/p>\n What is the impact of the AfCFTA on the Energy Market in Africa?\u00a0<\/strong><\/span><\/p>\n It is expected that the AfCFTA<\/span>will have a positive impact on the energy market of Africa<\/a> by facilitating the trade of oil, gas, and renewable energy across the continent. Trade barriers such as high import tariffs, among other things, have resulted in the export of natural resources, including oil and gas, beyond the continent and the resell of the processed version of those resources at a<\/span>higher price back into the continent<\/a>. The AfCFTA could increase the trade-in of energy due to the diversity of renewable energy sources available in each member state of the African Union which avails the opportunity<\/span>to diversify the energy mix and promote a green economy<\/a>.<\/span><\/span><\/p>\n The AfCFTA caters to the following issues that are expected to boost the energy market:<\/span><\/p>\n a. Free movement – Less barrier in the flow of goods, people, and investment within the continent is expected to facilitate the<\/span>ease of access to technology, funding, and human capital for the energy sector<\/a>.<\/span><\/span><\/p>\n b. Increase in investment \u2013 Economic integration and reduction of trade barriers are expected to attract private investments as well as development financing. The increase in investment would support the infrastructure projects required for the energy market as well<\/span>as ease the budget constraint of governments to support energy projects<\/a>.<\/span><\/span><\/p>\n\n