The Executive Secretary of the Africa Refiners and Distributors Association, Anibor Kragha has intimated that, for Africa to harness the potential of clean energy, regulations in the energy sector has to be urgently harmonized.
“Although renewable energy will grow, oil products will remain a vital source of energy in future. In both absolute and percentage terms, oil product consumption is growing but per capita consumption is still very low in some places.
“To truly harness the potential of clean energy in Africa, there is an urgent need to harmonize regulations.”Anibor Kragha
Speaking on harmonizing the downstream regulation in the era of AfCFTA, he said this is because Africa lacks harmonization in key regulatory areas like specification, pricing, tariffs, subsidies, taxation and enforcement. And as a result, the lack of harmonization has resulted in smuggling, fuel adulteration and pollution.
He also averred that, the lack of harmonization has also resulted in a stunted investment environment, and segregated supply chains that is higher price to end-consumers. This, he said, is hampering the growth to enable Africa go after the market that we have.
Touching on fuel specifications in the downstream sector, he said, there is an uneven progress in adopting harmonized fuel specifications.
Mr. Kragha said although many countries have tightened specifications over the past decade, there has been little coordination between countries. He mentioned that, East African Countries are the only ones with a more uniformed specification.
Key Enablers of Harmonizing regulations
Touching on key enablers to ensure the harmonization of the regulations, he averred that, AfCFTA must enable standardisation of external tariffs. He stated that, in so doing the AfCFTA must harmonize taxes, and subsidies and also prevent under taxation on the downstream sector.
Additionally, he indicated that, the pricing structure of petroleum products must be abolished. He said because if pricing is not uniform or equal it results in the smuggling of these petroleum products.
“We need to ensure we do not have different types of pricing in the AfCTA trade area. Otherwise we are going to have the issues that exist today. If there is variation in pump prices, invariably you are going to have the issue of smuggling.”Anibor Kragha
He also suggested that to ensure the harmonization, the use of a single currency must also be adopted.
“There was a heated debate on the importance of currency. We need to ensure that we address this as well to fully enable AfCFTA to take place properly.”Anibor Kragha
Enforcement of Regulations and the way forward
Moreover, he posited that, aside harmonizing these regulations to enable Africa harness clean energy potential, the regulations must be enforced. He added that there must also be focus and coordinated regulations.
“We need independent regulatory oversight. We need to ensure that our regulators fully decouple from the government and are free to enforce regulations significantly. And also to ensure that they focus on licensing specification and all the other fuel marketing prices. This is to ensure that, investors are aware of the marketing regulations of the fuels that they are going to invest to make the right decisions.”Anibor Kragha
Touching on the way forward on how to harmonize the downstream sector and harnessing the potential of clean energy, he said there must be uniformed regulatory standards and enforcement must be established at the Regional Economic Community (REC) level. He stated that there must be the harmonization of fuel specifications as soon as possible.
Furthermore, he noted that, the fiscal and regulatory harmony across Africa will unlock full AfCFTA potential.