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AsiaElec COMMENTARY AsiaElec
projects, such as the BRI, the Forum on Chi- na-Africa Co-operation and agreements with the African Union, to showcase its o ering of loans and technology with few strings attached.
Figures from the Forum on China-Africa Co-operation show that China pledged $60 bil- lion to Africa in 2018, of which $20 billion was credit lines and $15 million interest-free loans and aid grants.
e biggest recipients of African investment between 2000 and 2017 were Angola with 30%, Ethiopia with 10% and Kenya with 7%.
Kenya’s debt to China now stands at $7.3 billion, with China now accounting for 72% of the country’s bilateral debt, Kenyan government gures showed.
Power exposure
In the power generation sector, a recent study from the International Energy Agency (IEA) forecasts that Chinese construction compa- nies will add 9 GW to African power capacity between 2014 and 2024 – this does not include the Lamu project – of which 4.5 GW are cur- rently still being built. Of this, 5,764 MW will be hydro, 811 MW coal, 988 MW gas and 370 MW oil. Just 1,178 MW will be renewables.
Zambia is using Chinese building contrac- tors to construct the most capacity between 2014 and 2024, followed by Nigeria, Angola, Uganda and Côte d’Ivoire. ese ve make up roughly half of the IEA’s total of 9 GW.
China’s power investment is dominated by hydro, although the picture is more nuanced, with renewables now attracting more cash and all forms of generating fuel being supported.
Flagship hydro projects include Zambia’s 750 MW Kafue Gorge project, set to be completed in 2020.
Elsewhere, the Chinese are building the 2,160-MW Cacula dam in Angola and the
3,048-MW Mambila dam in Nigeria. However, the IEA report shows that total Chinese capacity addition are slowing slightly, from 12 GW between 2010 and 2020 to 9 GW between 2014 and 2024. China’s share of total capacity additions fell from 30% to 20% between
the two timeframes.
The Chinese way of working remains
unchanged, with a focus on turnkey contracts, engineering, procurement and construction (EPC) projects and the use of Chinese manu- facturers, contractors and nancing. A second strategy is to use western technology, such as GE’s turbines at Lamu, and working together with western investors.
Beijing’s strategy
China’s interests in Africa follow a narrative of long-term lending, full-service contracts and the fact that it is not the West.
Western development lending from the likes of the World Bank, the Africa Development Bank (AfDB) and the International Monetary Fund (IMF) come with many conditions con- cerning economic reform and human rights.
China’s lending is far more opaque, and comes without the development conditions associated with the West.
On the other hand, China’s debt exposure to Africa is only about 10-20 years, meaning that Africa’s debts to China are still fall far smaller than its Western debt.
Lamu demonstrates all the elements of the strategy: Chinese funding, Chinese contractors and Chinese technology.
Alongside this is a government-backed PPA that virtually guarantees a return, while expos- ing the African country to risks such as low- er-than-expected power demand because of a lack of economic growth, volatile commodities markets and political risk.™
China’s lending is far more opaque, and comes without the development conditions associated with the West
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w w w . N E W S B A S E . c o m Week 23 13•June•2019