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ENERGY SECTOR REFORM IN AFRICA:
THE LEGAL AND REGULATORY FRAMEWORK IN AFRICA’S POWER SECTOR

By

DONELLA MUTISO


Background, Rationale and Motivation

The energy sector in Africa is, in institutional terms, relatively embryonic.  In contrast to the well established agriculture, transport and industrial sectors which, many African countries, predates independence the national institutional framework of the energy sector is a relatively new and was, in many cases, created in the wake of the oil crisis in the early 1970s.  Prior to this period, the energy sector was often perceived in a desegregated fashion with the electricity; oil & gas and coal sub-sectors being the essential but separate entities.  It is only after the oil crisis that the energy sector which effectively encompasses both the conventional energy sub-sectors such as electricity, oil & gas and coal as well as non-conventional energy resources such as wind, solar and biomass sectors came into existence.  The institutional bias towards the conventional sub-sectors continues to this day.

The need for the reform of the energy sector arose from firstly the dissatisfaction over the poor performance of the two main conventional energy sub-sectors, namely; the electricity and the oil & gas sub-sectors.  The inability to mobilize sufficient investment capital for conventional energy sector development and expansion was the second important reason for embarking on comprehensive energy sector reform.

The bulk of the energy sector reforms that have, to date, taken place in the African oil & gas sector emphasized the deregulation of petroleum products and the closure of national refineries to reflect the preference for imported refined petroleum products.  Most of the reform in the oil & gas sector has taken place in oil-importing African countries.  Oil exporting countries have been much more reluctant to embark on reform of their national oil and gas sectors which often constitute the most important source of Government revenue and convertible currency inflows.


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