The Southern African Power Pool (SAPP) and investment consultants Climate Fund Managers launched on Tuesday a new target fund of 1.3 billion dollars to build high-voltage transmission lines linking countries in the region.

The Regional Transmission Infrastructure Financing Facility (RTIFF) starts with 20 million dollars in SAPP commitments and aims for a first close of 500 million dollars in 2025, in an attempt to overcome a major obstacle restricting growth in an evolving energy sector.

The funding will be obtained from public and private sector investors, both locally and internationally, according to a joint statement quoted by Reuters.

Despite the abundance of energy sources in Africa, the lack of connections between countries has hampered integration and trade between the 12 SAPP members, which include regional economic heavyweight South Africa and leading copper exporter Zambia.

"RTIFF dismantles this by allowing the private sector to work together with utilities to implement new transmission lines on a large scale," said Victor Mapani, chairman of SAPP's executive committee, quoted in the statement.

The facility, with a fund life of between 20 and 25 years, should reach a final closing of US$ 1.3 billion in two years.

A push for renewable energies, including wind, solar and hydro power, highlighted the shortage of connections across the region, where projects, often in remote areas, are unable to connect to national grids.

As a competitive electricity market with daily trading, SAPP intends to connect Angola, Malawi and Tanzania to the platform and has identified eight priority transmission projects, officials said in a press release.

"Since Malawi is already connected to Mozambique and Tanzania is connected to Zambia, the next key project is connecting Angola to Namibia," Stephen Dihwa, SAPP's executive director, told Reuters.

The Angola-Namibia interconnection is estimated to cost 356 million dollars, he said, about a tenth of the total investment needed for transmission lines by 2040 to improve regional integration.

South Africa's indebted power utility Eskom, which needs about 350 billion rand (18.41 billion dollars) over the next decade to upgrade its transmission network, is courting the private sector for investment to overcome the country's worst electricity shortage on record.

"The lack of investment in grid infrastructure is one of the reasons for the continuous blackouts in many parts of southern Africa," said Amit Mohan, head of private credit at CFM.

Source: Reuters