China takes the lion’s share in electrifying

China takes the lion’s share in electrifying

Chinese companies are playing huge role in bringing electricity to sub-Saharan Africa and can take credit for 30% of new capacity in the region, according to a study published this week by the International Energy Agency (IEA).

While more than 635 million people still live without electricity there, Chinese companies channeling state funds into all different types of power stations will have brought light and power to around 36 million people by 2020.

“African countries have relied heavily on China to support the expansion of their electricity systems, to enable growth and improve living standards,” said Paul Simons, the IEA’s Deputy Executive Director, on the report’s launch.

Mutual benefits

Between 2010 and 2020, a total of 120 million people will have gained access to grid electricity. Thirty-six million of these, or 30%, will have done so thanks to Chinese contractors. China also provides off-grid power with solar energy kits donated in countries like Rwanda and Comoros.

This is why the state plays such a large role. Over 90% of Chinese-built power projects in the region are contracted by Chinese state-owned enterprises (SOEs). Africa is the largest overseas market for some major Chinese energy infrastructure SOEs, which provide integrated services centred on turnkey projects.

Doing it all

China’s approach to development assistance differs from OECD countries. For example, China is not covered by the Arrangements on Officially Supported Export Credits, which guides OECD countries in export credit financing.

In the 2010-15 period, loans, credits and foreign direct investment from China into the sub-Saharan power sector amounted to around $13bn, around one-fifth (20%) of all investments in the sector. Most of this financing comes from the Export-Import Bank of China.

Ever-rising demand

Over 635 million people live without electricity in the region, which severely constrains economic growth. Manufacturing, healthcare and education all rely on reliable sources of electricity. The IEA also believes the lack of power also holds back the region’s agriculture sector, which remains unmodernised and accounts for 20% of regional GDP and 65% of employment.

On the plus side, it says, sub-Saharan Africa has ample primary energy resources to meet this demand: recoverable oil resources will be sufficient for the next 100 years, coal for over 400 years and gas for 600 years, and renewable energy sources (geothermal, hydro, wind and solar) are abundant.

Russian consortium pulls out of $4bn

The government of Lithuania is about to begin the search for a concessionaire to take over the country’s three international airports.

The one at Vilnius (pictured) is in particular need of expansion, but two others have real potential, says the agency in charge.

On the face of it, the prospects look good: the country is handily positioned between Scandinavia and eastern Europe, its airports have reported double-digit growth for the past five years or so, and the Lithuanian economy itself is one of the EU’s success stories.

No shortage of bidders

The tender process is expected to last around 22 months – four to prepare the documents and 18 to conduct the negotiations.

Almantas is confident that European operators will be keen. “I’ve talked with at least five of the biggest operators in Europe and they’ve said ‘yes, we’re interested, we’re going to go for it’,” he said.

Facts on the ground

The three assets on offer are Vilnius, Kaunas and Palanga. Of these, Vilnius is profitable and popular, but its capacity is 3.5 million passengers a year, and last year it dealt with 3.3 million. A programme of capital investment is urgently required here.

He adds that this is “quite a significant” investment project considering the short time of the concession – 25 years.

Most of that money is earmarked for Vilnius, and mostly on the landside. The terminal may be extended, or a second will be built. Not included in the concession deal is a €40m reconstruction of the runway, to start in 2017, which the new concessionaire can benefit from.

Missed connections

The lack of a national carrier for Lithuania may give the concessionaire more room to swing its elbows, but it may also be the reason why Vilnius has lost out to Riga, its bitter rival in neighbouring Latvia, over the past seven years: whereas Riga had 93 routes at the end of 2015, Vilnius only had 50.

To advise them on how to structure the concession deal to maximise the benefits for the country, Lithuanian Airports hired the Dutch consultancy InterVistas.

What do with Kaunas?

Kaunas, Lithuania’s second city, has an airport that is most supplied by low cost carriers. Lithuanian Airports’ plan is to develop it as a complementary facility to Vilnius, which is only about 100km away. So Kaunas would concentrate on cargo and MRO services (maintenance, repair and operation) for the aviation industry.

Korean researchers develop new design

Researchers at the Korea Advanced Institute of Science and Technology (KAIST) have proposed a design of small nuclear reactor that can be mass produced as a single module and operate for 20 years without being refuelled.

The system uses supercritical carbon dioxide rather than water and has uranium nitride as a fuel. It also combines the power generation element into the reactor to make the reactor into a single unit.

As with other SMRs, it is designed to cool itself in the event of a loss of electric power, thereby preventing problems with decay heat of the kind encountered at Fukushima, reported earlier this month.

A number of engineering teams are engaged in a race to bring small modular reactors (SMRs) to market, however none has yet succeeded in producing a design that can be completely modularised.

Tom Mundy, vice-president for programme development at NuScale told the Financial Review: “Assuming the GDA is submitted and takes four years, we’d be looking at approval in 2021. There’s then a 36-month construction time, so it’s plausible to expect that if all things line up, we could have a UK plant built by 2025.”

The other large-scale US development programme is being undertaken by Bechtel and BWX Technologies, which earlier this month renewed their agreement to develop their SMR design.


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