Sudan and South Sudan power report Q2 2012

Sudan’s power sector is benefiting from large-scale investment in new infrastructure. China has emerged as one of the biggest players in the sector, having already played a major role in developing Sudan’s hydroelectric power facilities. Hydropower currently accounts for almost 60% of Sudan’s total power generation output, with the remaining output largely comprising oil-fired facilities. Meanwhile, there is growing interest from foreign investors in the potential to develop thermal and solar power sources in Sudan. A diversified approach to power infrastructure development could help Sudan extend the availability of energy to rural and peripheral regions.

From 2011 to 2016, Sudan’s overall power generation is expected to increase at an annual average rate of 0.75% to reach 8.21TWh. Contributing to this growth will be a 0.36% annual average increase in oil-fired power generation. Meanwhile, hydropower generation is expected to increase by an average of 1.02% annually over our forecast. Sudan is becoming a place of considerable interest for companies looking to invest in underdeveloped infrastructure markets where there is much scope for growth. Most notably, the country has been one of the largest beneficiaries of China’s Africa strategy. Between 2001 and 2007, Sudan received the second largest (after Nigeria) level of infrastructure financing commitments from China, totalling US$1.3bn. Much of this has been directed at the power sector and one of the most pertinent examples of this is the Merowe Dam, which was inaugurated in 2009 and has the largest capacity of any hydropower dam in Africa.

We envisage Sudan’s net power consumption increasing from 5.31TWh in 2011 to 6.58TWh by 2016; this reflects growth of almost 4.57% over the period. Underlying the rise in energy consumption will be a steady increase in GDP. In 2012, BMI predicts that Sudan’s economy will grow by just 2.4%. However, between 2012 and 2021 we forecast an average annual increase in real GDP of 4.6%.

Recent years have seen the introduction of new energy transmission infrastructure alongside major power generation projects. In addition to extending its national electricity transmission and distribution capabilities, there is potential for Sudan to engage in cooperative electricity transmission projects with neighbours such as Ethiopia.

Despite our prediction that Sudan will steadily expand its power output over our forecast period, we expect all of this increased power generation to support rising domestic demand. We do not expect Sudan to export significant quantities of power and do not currently maintain a forecast for exports. However, we do predict that a gradual decline in the percentage of transmission and distribution losses from around 12.5% in 2011 will help balance the market.

Until 2010, South Sudan was not even connected to the Sudanese national grid. Since gaining political independence in January 2011, a key concern of South Sudan has been how to develop its power generation, transmission and distribution capabilities. Given China’s interest in South Sudan’s oil resources, BMI expects China to become a major player in the development of South Sudan’s energy sector.