After decades of languishing on the fringes of development, the energy sector has finally gained the recognition it deserves. Embedded as SDG7 in the 2030 Agenda for Sustainable Development, access to modern energy services is now universally accepted as one of the most powerful catalysts for both human and economic advancement. Without energy, it is impossible to provide healthcare and education, end hunger, supply clean water or, indeed, eradicate poverty. The enabling power of energy access is underlined by its direct links to all other 16 SDGs.
This growing recognition notwithstanding, an estimated 1.1bn people still live without electricity, while some 2.9bn people are without clean cooking facilities. The latter circumstance results in around four million premature deaths every year from household air pollution caused by the burning of biomass. More than 95% of these people live in either sub-Saharan African or developing Asia, the vast majority of them in rural areas.
Now that the importance of energy has been firmly established, the challenge moving forward is how to achieve the stated objective of SDG7—“ensure access to affordable, reliable, sustainable and modern energy for all”—within the 2030 time frame. Key will be the development of innovative technical and financing solutions, together with an appropriate mix of energy sources that respond to local situations on the ground. According to the SE4ALL Global Tracking Report 2015, the annual investment required to achieve universal energy access by 2030 is US$50bn. Other estimates are considerably higher, depending on the degree and quality of access.
OFID has assumed a lead role in global energy poverty alleviation efforts, following a direct mandate from its Member Countries in 2007. Working with like-minded partners, including the UN SE4ALL initiative, OFID was instrumental in securing an explicit goal for energy in Agenda 2030. The institution is committed to using all resources at its disposal and pursuing all viable solutions in a bid to make modern energy universally available. The strategic framework for these activities is OFID’s seven year-old Energy for the Poor Initiative, which is funded through a revolving endowment of US$1bn, a sum pledged by the institution’s supreme body, the Ministerial Council, in its June 2012 Declaration on Energy Poverty. In cooperation with all stakeholders, including the energy industry, OFID takes a nexus approach to energy poverty, addressing it alongside food and water security. This nexus forms the central pillar of OFID’s Corporate Plan 2016–2025.
As of end 2015, energy operations accounted for almost US$4,096m, or 23%, of OFID’s cumulative commitments. These resources have been distributed among 86 countries for projects ranging from infrastructure and equipment provision to research and capacity building.
In 2015, OFID committed US$213.3m in new financing for the energy sector, directly benefiting 22 countries. Of the 21 operations approved, five were for public sector projects worth a total of US$125m:
Around US$43m was delivered in trade financing for for the import of petroleum products two under a schemes run by the ITFC in Burkina Faso (US$13m) and Pakistan (US$30m).
Private sector approvals amounted to US$40m and comprised loans of $20m each to Kenya—to co-finance the construction of a 450km oil pipeline between Mombassa and Nairobi—and to Zambia—to boost the capital expenditure of the state-owned power company ZESCO.
Resources provided through OFID’s grant program totaled US$4.9m and will support a diverse range of small-scale renewable energy schemes, including solar, hydro and biogas, with a special emphasis on mini-grids in rural areas. A portion of the grant financing also supported knowledge development and exchange
OFID maintained its advocacy efforts throughout 2015, working both independently and with other lead actors to move forward the energy poverty agenda.
Continuing its role as a key partner in SE4ALL, OFID participated in May’s Second SE4ALL Forum in New York, where Director-General Al-Herbish argued for a technology-neutral approach to energy access. He also stressed the need to aim beyond “basic access,” on the grounds that all sectors of the economy depend on a reliable source of energy to be productive. Several other high-level events were utilized as advocacy platforms, including the COP21 climate change conference, the G20 Energy Ministers meeting, the World Petroleum Council Leadership Conference and the Oxford Energy Seminar, among others, as well as meetings of the Arab Energy Club, the Vienna Energy Club and the Vienna Energy Forum.