The widespread absence of modern energy access continues to hamper socio-economic progress in developing countries worldwide. With nearly 1.3 billion people lacking access to electricity and 2.6 billion people relying on biomass for their domestic cooking and heating needs, urgent action is imperative. Affordable, efficient energy is needed to meet basic human needs, including food security and healthcare, and also to boost productivity and income-generation, prolong work and study hours, and generally enhance the social participation of communities.
The need to eradicate energy poverty became a global priority in 2012, the UN year of “Sustainable Energy for All,” an initiative that launched international efforts to achieve universal energy access by 2030. In December 2012, the UN General Assembly underscored this commitment by announcing a “Decade for Sustainable Energy for All” to run from 2014 to 2024, which calls upon member states to step up efforts to make universal access to sustainable modern energy services a priority. Although an estimated US$48 billion will be required annually to make this a reality, it is nevertheless considered a realistic objective, as demonstrated by successful experiences in China, India and elsewhere.
Energy poverty alleviation has been a strategic focus of OFID since November 2007, when its Member Countries called for intensified action in this area. OFID approaches the challenge through the advocacy and allocation of substantial supplementary resources. Solutions may involve renewables as well as fossil fuels, with neither given precedence over the other. The priority is to provide energy in whatever form that is best suited to the circumstances. OFID is working with a wide network of partners, including the petroleum industry, and utilizing all financial instruments at its disposal. As of December 31, 2012, energy operations accounted for almost US$2.9b, or 20%, of OFID’s cumulative commitments. These resources have co-financed a diverse range of operations in a total 85 countries, from infrastructure and equipment provision to research and capacity building, among others.
In keeping with strategic priorities, the energy sector secured close to 30% of total approvals in 2012, receiving $382.6m for 27 operations benefiting 36 countries, the majority of them in Africa. The majority was comprised public sector lending (57%), followed by trade financing (25%) private sector financing (17%), and grants (1%).
Private sector investments included a US$25m loan to Ghana for power plant upgrading and US$15m to Kenya for a wind-power project.
Through its grants program OFID approved US$4.1m for a total of 11 projects, mostly relating to small-scale solar and hydro-power energy provision in rural communities, and including the establishment of an OFID/CAF energy projects preparation facility in the LAC region.
OFID maintained its energy advocacy efforts throughout 2012. As part of the UN Secretary-General’s High-Level Group on Sustainable Energy for All, the institution helped to develop the Action Agenda that was submitted to the Rio+20 Global Summit in June, where OFID was an active participant in its own right as well as part of the Group. Other high-level events utilized as an advocacy platform were the World Future Energy Summit, the 13th International Energy Forum, the 5th OPEC Seminar and the Vienna Energy Forum, along with meetings of the Vienna Energy Club and the Arab Energy Club.
The highlight of the year, however, was the release in June of a Ministerial Declaration on Energy Poverty. Issued by the Ministerial Council, OFID’s highest authority, the Declaration reaffirmed the commitment of Member Countries to the eradication of energy poverty and announced the provision of a minimum US$1billion to finance OFID’s Energy for the Poor Initiative, an amount that may be scaled up should demand warrant.