Introduction
Recent increases in construction and financing costs are directly affecting the development of energy projects across Africa . Captive power projects ( CPPs ) offer the possibility of mitigating this challenging landscape for both the developers themselves and those funding them . For those unfamiliar with the concept , CPPs are a type of power plant which provide a localised source of power to the end consumer . They are typically used in power-intensive industries for which a continual and consistent energy supply is paramount . In West Africa , CPPs are of particular interest to mining companies looking for reliable sources of energy . However , the successful development of CPPs in the region will be largely determined by the level of liberalisation in the country ’ s energy sector , and the right of non-state entities to develop , construct , operate and maintain these projects .
The energy sector across Western Africa has traditionally been restricted to a public monopoly closely associated with the sovereignty of a country , designed to protect the national utility company . When this type of regulatory framework prohibits or inhibits the production , transport and supply of electricity , two structures are usually considered :
1 where the development , construction , operation , and maintenance of a CPP serves the company ’ s own needs and this is permitted by the state ’ s regulation , the project falls under the self-production model ( SPM ) and the company can , as is often the case , subcontract with energy companies to ensure the supply of energy ; or
2 where the relevant regulation permits development , construction , operation , and maintenance of a CPP for the purpose of supplying electricity to a separate private company , the project falls under the independent producer model ( IPM ) and can supply energy via off-grid infrastructure .
Bracewell has prepared a table of the applicable regulations for the two models outlined above which covers the following eleven countries : Benin , Burkina Faso , Cameroon , Chad , Côte d ’ Ivoire , Democratic Republic of Congo , Guinea ( Conakry ), Mali , Mauritania , Sénégal and Togo .
This report provides a high-level overview of existing and proposed regulation based on available sources . It is not a substitute for bespoke legal advice from lawyers in the jurisdictions concerned . Due to the nature of the region , the relatively recent development of the CPP landscape , and the inherent uncertainty in the interpretation of these regulations , we recommend a thorough technical and legal analysis of projects which should consider specific location and bankability issues prior to committing to a CPP project .
As the table illustrates , the energy sector of several countries – such as Burkina Faso , Mali and Togo – remains largely monopolised by the national electricity company , even where the company ’ s monopoly has been officially terminated by new legislation . In other counties – such as the Republic of Guinea – the legislation remains under development , so while the current framework gives limited guidance , there are no prohibitions laid down either . In contrast , many regions in West Africa have renovated the structure and essence of their energy legislation , demonstrating an intentional and welcome movement away from state-governed monopolies . Countries including Mauritania , Benin , Cameroon and Côte d ’ Ivoire have all implemented ( to varying degrees ) a legal framework or , as often called , electricity or energy codes , that allow freedom of energy production . These enable the development of CPPs via either of the two models outlined above . However , it is worth noting that the transmission ( rather than production ) of the electricity is often still state-regulated . In some countries , such as Chad , while the transmission is under state monopoly , the distribution and construction of CPPs can be carried out by private actors .
In several regions , the relevant authorisations , concessions and / or licences for off-grid production in relation to IPMs are dependent on power purchase agreements being entered into with entities that constitute “ Eligible Clients ,” a term usually defined in the relevant energy code which shows a maintained , albeit reduced , level of control on the part of the state . The authorisation of SPMs is largely dependent on the installed capacity of the CPP , where sale of surplus is authorised , but the amount
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