Across the continent, African countries are preparing for an energy transition by implementing policy and legal frameworks that address the energy crisis and climate change and the need for renewable, carbon-neutral energy supplies in the Paris commitments. Agreement.
Lawyers in Egypt, Ghana, Kenya, Morocco, Namibia, Nigeria, South Africa, Tanzania and Uganda outlined the efforts taken by governments in their countries before the United Nations Climate Change Conference COP27 was held in Egypt in November this year. Addressing this urgent need to harness renewable energy. Such efforts are expected to create exciting opportunities for investors in the African energy sector.
In Part One of this overview, we hear from lawyers in Egypt, Ghana, Kenya, Morocco and Namibia.
Egypt
Lamya Gadelhak, Baker McKenzie Cairo Partner and Associate Head of Banking and Projects:
Article 20 of Investment Law No. 72 of 2017 (Investment Law) in Egypt states that companies established to prepare strategic or national projects that contribute to the success of development or projects in collaboration with the private sector and the government, public sector or public commercial sector, in public utilities, infrastructure, new or renewable energy, roads, A “single license” may be issued for establishment, operation and management of a transport or port, by cabinet decree. The project includes the construction permit and the allocation of real estate property necessary for the project (permit).
Such authorization will be effective without the need for any additional procedures and may include other additional incentives for the project mentioned in the investment law. The above was developed by Cabinet Decree No. 56 of 2022, which defined a series of criteria for a project to be considered a strategic and/or national project. In addition to meeting the conditions, projects must be developed in one of the fields specified in the cabinet decree, which include green hydrogen projects, green corridor projects, and renewable energy projects. projects and green hydrogen production projects for energy, and carbon capture, utilization and storage (CCUS) projects. The conditions laid down in the cabinet decree will be reviewed annually in light of the changes made in the state’s economic development plan.
Among the incentives provided by the Investment Law and among the incentives that may be included in the permit, Article 11 stipulates that companies established to operate in certain industrial groups before October 28, 2023 may receive a deduction from their taxable income. This incentive is limited to seven years from the date of commencement of the project and not in perpetuity. In addition, the Investment Law stipulates that additional incentives such as utility connection costs, land allocation costs, and technical training may be provided to a project at the discretion of the Cabinet.
The Egyptian government currently recognizes the production, storage and export of green hydrogen and green ammonia as one of the areas that fall within the state’s economic development strategy. He issued a decree allowing green hydrogen and green ammonia projects to benefit from various government support under the country’s investment law, including tax incentives. This is a key development for Egypt’s hydrogen economy and we expect to encourage private investment and new green hydrogen and ammonia projects in the country.
Ghana
Sefakor Kunyeya, Solicitor and Barrister, Kimathi & Associates in Ghana:
A recent legislative development in Ghana is the amendment of the Renewable Energy Act, 2011 (Act 832) by the Renewable Energy (Amendment) Act, 2020 (Act 1045) (Amendment Act). The amended law was approved on December 29, 2020 and establishes a procurement mechanism to provide competitive market prices for electricity generated from renewable sources.
The Government of Ghana through the Energy Commission has also developed the Renewable Energy Master Plan 2019 and the Sustainable Natural Resources and Energy Financing (Sunref) 2021. Under the Renewable Energy Master Plan, the government has provided incentives in this form. Significant tax cuts. It also proposed exemption from import duties and VAT on materials, parts, equipment and machinery (which cannot be sourced locally) for manufacturing or assembly of renewable energy sources. Also, through the Sunref program, the government, in collaboration with other agencies, is providing businesses, organizations and households with access to financing for sustainable energy projects and technical assistance in structuring green investment.
Kenya
Amin Musa, Partner and Head of Projects and Infrastructure at Anjarwala & Khana (A&K) in Kenya:
The draft Kenya Energy Sector White Paper 2022 (Draft Energy White Paper) shows that renewable energy sources currently account for more than 75% of Kenya’s installed power generation capacity. and solar (173MW) are the leading contributors. Sector reforms in the energy sector in recent years have enabled Kenya to have one of the cleanest electricity grids in the world. These reforms, among others, include the approval of several laws and policies such as the Energy Act 2019, the Nuclear Regulatory Act 2019, the Kenya Efficiency Policy 2021, the Low Cost Energy Development Plan 2017-2037 (LCPDP) and the Renewable Energy Act 2021. Bidding Policy.
Although Kenya has adopted new and emerging technologies such as smart grid solutions that continue to be a renewable future, some technologies such as sustainable biomass, battery technology and green hydrogen are not yet included in the energy mix proposed by national plans such as the LCPDP. If these technologies are fully adopted and developed, they will create more opportunities for the country to achieve 100GW of installed capacity by 2040 with renewable energy sources set out in the draft Energy White Paper.
Morocco
Keltoum Boudribila, Partner, and Saad Khaldi, Associate, Nasrullah & Associates Baker McKenzie in Morocco:
In May 2022, the Moroccan Parliament’s House of Representatives unanimously approved Law 40-19 amending Law 13-09 on renewable energies and Law 48-15 on regulating the electricity sector and creating a national electricity regulatory authority. The draft law aims to simplify licensing procedures, strengthen the attractiveness of the renewable energy sector to national and international investors, and protect the economic and social balance of public actors in the electricity sector.
The new legal framework allows industries to produce their own renewable energy for their operational needs and supply it to other consumers. Morocco has liberalized its renewable energy sector for several years, and is well on its way with these legislative reforms.
Namibia
Axel Stritter, UK Partner, Stritter & Partners in Namibia:
Namibia’s government says it is committed to energy security and positioning itself as a regional African leader in renewable energy through large-scale, low-cost renewable energy and green hydrogen and ammonia projects that are sustainable and sustainable. Maximize fiscal revenue and local development. To facilitate this energy transition, the Ministry of Mines and Energy introduced the National Integrated Resource Plan (NIRP), a medium to long-term plan that guides public and private investors in low-cost investments in the energy sector, plans and results of greenhouse gas energy projects. In addition, Harambey’s Prosperity Plan II aims to implement policy programs aimed at improving economic recovery in Namibia after the pandemic. Improving energy security in Namibia is part of this plan.
Namibia currently produces about 40% of its own energy needs, with about 60% coming from neighboring countries, including South Africa. The renewable energy projects planned to be implemented in the country aim to fill this gap and ensure that reliable energy supply is produced in the country. Renewable energy projects in the pipeline focus on biomass, solar, wind and battery energy storage.
Existing solar and wind resources allow Namibia to benefit from the production of green hydrogen and ammonia, enabling the country to become the first African country to achieve carbon neutrality.
The country’s green hydrogen and ammonia plans are supported by the government’s National Green Hydrogen Initiative to secure significant environmental, educational, economic and social investments in the country. The Southern Corridor Development Initiative of Tsau Khaeb National Park, with Hyphen Hydrogen Energy, was announced in June 2022. This is the country’s first large-scale green hydrogen project, with the first production phase planned for completion in 2026. The total investment in this project is 10 billion dollars.
In part two of this series, we hear from lawyers from Nigeria, South Africa, Tanzania and Uganda.
