Côte d’Ivoire’s energy sector has experienced significant growth, driven by the sector’s ability to withstand socio-economic and political instability. According to the World Bank Group, the country holds the third-largest electricity generation system in Africa and has rapidly become one of the leading electricity exporters in West Africa.
The country constitutes 94 percent grid connectivity, allowing it to fully meet domestic demand and export generation surplus to the sub-region. Despite Côte d’Ivoire undergoing a post-electoral crisis in 2011, the country was able to maintain energy sector success, sustaining economic recovery, and alleviating risk through private sector involvement and industry focused policy. Accordingly, the energy sector’s viability was maintained. A US$116M guarantee by the World Bank’s Multilateral Investment Agency helped insure investors against political risk.
The success of Côte d’Ivoire’s energy industry can be accredited to the significant levels of private sector participation, driven by the privatization of the electricity sector, as well as the implementation of regulations that aim to further expand the market and establish market competition.
Private Sector Success
Since 1990, Côte d’Ivoire’s national utility has been managed by a private operator. According to the World Bank Group, private operators in Côte d’Ivoire are currently responsible for 70 percent of energy production and 100 percent of energy distribution. The country’s decision to privatize part of the electricity sector resulted in significant investment which drove production and distribution on a regional basis.
Accordingly, the success of Côte d’Ivoire’s energy sector, and its ability to fulfil domestic and regional demand, is largely due to the reliance on Independent Power Producers (IPP). To date, the country has three active IPPs: Azito Energie, Ciprel and Aggreko. In its 2030 Roadmap, the International Finance Corporation notes that through the utilization of private sector participation, Côte d’Ivoire has made substantial progress in improving the existing transmission and distribution network and restoring the energy sector’s financial viability.
In conjunction with private sector involvement, Côte d’Ivoire’s existing legal framework revolves around the Electricity Code, implemented in 2014, and the newly revised Investment Code, passed in 2018. The implementation of these policies serves as the framework for further investment in the energy sector. The Electricity Code, having replaced the previous 1985 legislation, offers a comprehensive and well-defined framework for the production, distribution, transport, commercialization, import and export of electricity. Government objectives include the increase of power production capacity to 3,500 MW to meet rising demand.
The code serves as a blueprint for the expansion of the energy sector, and Côte d’Ivoire’s role in the West African Power Pool is intended to increase as production grows. By reinforcing the power and competencies of the regulatory authority for the electricity sector and constituting a focus on renewable energy involvement in the energy mix, the new code seeks to revitalize the sector. Since the enactment of the code, Côte d’Ivoire’s electrification access rate reached 64 percent, one of the highest in the sub-region.
Côte d’Ivoire’s regulatory framework additionally constitutes the Investment Code, which aims to promote private investment in the industry through tax-friendly policy. According to the Secretary of State to the Prime Minister – in charge of the Promotion of Private Investment – Essis Esmel, the newly reformed Investment Code aims at a massive mobilization of private investment and the promotion of the priority sectors of the National Development Program. One of the motivations of the Investment Code is optimize tax expenditure. The new code establishes two tax incentive scheme: the declaration and licensing regime. These clauses ensure that priority sectors receive, upon completion of their investment programs, benefits constituting tax credits. Additionally, regarding local employment, an additional two percent tax credit is granted to foreign investors whose number of Ivorian executives and managers represent 80 percent of the total workforce.
The new Investment Code has been successful in attracting further investor interest in Côte d’Ivoire, ensuring increased energy security, and granting investors greater confidence in the sector. The country’s regulatory framework, as well as private sector participation, have established it as a regional leader in power.
Original article on Africa Oil & Power