The Sahelian state of South Sudan hopes to attract new investors to its upstream oil and gas sector with the announcement in June that it would be launching its first-ever bidding round for local upstream oil developments. Following a protracted period of civil war, coupled with the more recent economic recession caused by Covid-19, the country, which is almost wholly dependent on oil revenues, is anxiously looking to increase its revenue stream and plug fiscal deficits. There is merit to the motions made by the government as South Sudan is still a largely unexplored market. Despite the age of the local industry, barely 30% of the country’s acreage has been surveyed, leaving open the door for exploration and production activity. Whether or not companies will be sufficiently motivated to invest despite the associated risks remains to be seen, but the oil price will likely play a significant contributing factor.
Africa’s Top 10 Stories – July 2021
June has proven to be a key month for infrastructure developments in Africa’s largest country. The lead development for the month involved three of the country’s northern cities – Gemena, Bumba, and Isiro – which will be benefitting from solar hybrid power plants to the tune of US$100 million. This will be made possible by a 22-year concession agreement between the local government and a consortium composed of the UK’s Gridworks and Spain’s AEE Power. At the same time, the Tshisekedi administration has signed a deal with its neighbouring country Uganda on road projects to enhance the interconnectivity of the two economies and assist regional trade. Altogether the road projects will amount to US$334 million and span a cumulative distance of 293km. Informal trade between the two countries stands in the tens of billions each year but travel has been difficult for decades due to a lack of political integration and armed conflict, which still impedes travel to this day.
Contrary to the mainstream rhetoric, some positive developments have taken place in Somaliland in June as authorities celebrated their first successful parliamentary election since 2005. The breakaway region has faced an uphill battle for international recognition since it split from Somalia during the 1991 civil war. The successful conclusion of the parliamentary polls will further its aims to differentiate the region from the comparatively more fragile Somalia, which has recently undergone a constitutional crisis. Somaliland’s claim to political and economic independence has been further underwritten after a parallel announcement that its port at Berbera would receive US$1 billion in upgrades over the next decade. This will be made possible through a partnership with neighbouring Ethiopia, which hopes to secure easier access to vital Red Sea trade routes. These events are likely to intensify the rift between Somaliland and the federal government in Mogadishu, which still wishes to assert full political control over its former territory and which hopes to capitalise on nearby offshore oil reserves.
A couple of notable developments took place in Africa’s sugar manufacturing industry over the last month. In Tanzania, local Said Salem Bakhresa – the flagship company of the Bakhresa Group – announced that it is close to finalising the first phase of a US$300 million sugar plant, which will eventually have a capacity of over 100 000 tonnes. The project is the latest in a series of investments supporting the government’s drive to become self-sufficient in the production of sugar by 2025. This comes hot on the heels of the Illovo Group’s announcement that it is undertaking a US$285 million expansion plan into Tanzania, with further investment by the Kilombero Sugar Company also on the cards. Nearby Ethiopia is making similar strides and has finally launched the Tana Beles Sugar Factory One after an eight-year delay. The country is also moving toward privatising two state sugar manufacturers through support from international auditing firm Ernst & Young.
South African authorities have made progress during June in rolling out the country’s emergency power procurement programme. The City of Johannesburg (CoJ) has announced that it seeks to spend US$268 million on procuring a 150MW solar plant, 50MW of rooftop solar, the refurbishment of a gas-to-energy plant, and the installation of 100MW-worth of battery storage. The CoJ hopes to source 35% of its power from renewables before the decade is out. On a national scale, the government hopes to secure an additional 2,000MW from private power producers by the end of 2022. Some of this will be non-renewable and will include modular offshore power generation services such as those currently supplied by Turkish company Karpowership through its floating diesel generating units. Most of this new power, however, will come in renewable form through solar installations by preferred bidders, such as Scatec, which will be supplying the national grid with 150MW of solar by 2022.
South Africa’s national carrier could soon return to operation as a mostly privatised enterprise. According to reports, the reconstituted South African Airways would be 51% owned by a private consortium made up of Johannesburg-based Global Airlines – owner and operator of the recently launched Lift Airline – and private equity firm Harith General Partners, which has an important stake in infrastructure investments across the continent, including Johannesburg’s Lanseria Airport. The most important outcome of the arrangement for the government is that the new airline will not owe any liabilities to international investors, relieving considerable pressure on the state’s coffers to continue with recurrent debt servicing. This progress has, however, come at the cost of an 80% reduction in staff numbers. Subsidiaries such as low-cost domestic freighter Mango Airlines and the technical services division also remain uncapitalised with their own fate hanging in the balance.
