REQUEST FOR PROPOSAL TO DEVELOP A FRAMEWORK AND ROADMAP FOR THE ESTABLISHMENT OF A REGIONAL ENERGY REGULATORY AUTHORITY FOR SADC REGION UNDER THE EU PROJECT ON ENHANCEMENT OF A SUSTAINABLE REGIONAL ENERGY MARKET IN EASTERN AFRICA, SOUTHERN AFRICA, AND INDIAN OCEAN (EA-SA-IO) REGION

The Common Market for Eastern and Southern Africa (COMESA) is a regional grouping of 19 African States which have agreed to promote regional integration through trade development and investment. In this regard, COMESA through the Regional Association of Energy Regulators of Eastern and Southern Africa (RAERESA) is currently spearheading implementation of the European Union-funded Project on Enhancement of a Sustainable Regional Energy Market in the Eastern Africa, Southern Africa and Indian Ocean (EA-SA-IO) Region1.

The overall objective of the project is to enhance a sustainable regional energy market in the EA-SA-IO region, which is conducive to investment and promoting sustainable development. The project is relevant for the African Union’s Agenda 2030 and 2063. It contributes primarily to the progressive achievement of Sustainable Development Goals (SDG) target 7 of ensuring access to affordable, reliable, sustainable and modern energy for all, and promotes progress towards Goal 5 of achieving gender equality and empowering all women and girls and Goal 12 of ensuring sustainable consumption and production patterns.

Most countries in the Eastern Africa-Southern Africa-Indian Ocean (EA-SA-IO) region have experienced energy challenges, although it is a region with high potential capacity of energy when compared to other sub-Saharan African regions. These challenges are manifested by inadequate level and coverage of physical energy infrastructure due to insufficient investment in the energy sector, inefficiency and unreliability of existing energy infrastructure services, increased demand for economic growth and population growth, high cost of operating existing energy infrastructure facilities, energy poverty in terms of lower access rate and reliance on traditional fuels (wood fuels), and the issue of low utilization of clean energy option which includes energy efficiency and renewable energy. These challenges have resulted in increased cost of doing business which has negatively impacted the competitiveness of the region in its internal and external markets.

It is envisaged that the planned expansion of the cross-border power transmission interconnectors and the sections underway could, in short, medium and longer term, increase the share of energy traded between the regions and the nations. This is because power trade could be used to measure regional integration in the energy sector, which in turn, would enhance the regional integration agendas.

2. SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC)

The Southern African Development Community (SADC) is a Regional Economic Community comprising 15 Member States; Angola, Botswana, Democratic Republic of Congo, Eswatini, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Tanzania, Zambia and Zimbabwe. Established in 1992, SADC is committed to Regional Integration and poverty eradication within Southern Africa through economic development and ensuring peace and security.

In 1995, SADC established the Southern Africa Power Pool (SAPP) consisting of memberships from among the power utilities of 12 Member States: Angola, Botswana, Democratic Republic of Congo, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa, Tanzania, Zambia and Zimbabwe. The SAPP was established with the main objective of providing a forum for the development of a robust, safe, efficient, reliable and stable interconnected electrical system in the southern African region. One of the visions of SAPP is to facilitate the development of a competitive electricity market in the SADC region. In 2001, the SAPP established the Short-Term Energy Market with its own rules to govern cross border trading in the SADC region. The SAPP started the development of a competitive electricity market for the SADC region in 2004. The day ahead market (DAM) was established in 2009. In 2015, the SAPP started upgrading the market trading platform (MTP) in preparation for the intra-day market and forward physical markets. The SAPP MTP opened for live trading Intra-Day Market (IDM) in 2015, followed by Forward Physical Monthly (FPM-M) and Forward Physical Weekly (FPM-W) markets in 2016.

Regarding regulation at a regional level, the SADC Ministers responsible for Energy established the Regional Electricity Regulators Association of Southern Africa (RERA) as a formal association of electricity regulators at a meeting in Maseru, Lesotho on 12 July 2002. The Association was established in terms of the SADC Protocol on Energy (1996), the SADC Energy Co-operation Policy and Strategy (1996), the SADC Energy Sector Action Plan (1997), the SADC Energy Activity Plan (2000) and in pursuit of the broader initiative of the New Partnership for Africa’s Development (NEPAD) and the African Energy Commission (AFREC). RERA was established on 26 September 2002 and its mission is to facilitate harmonisation of regulatory policies, legislation, standards and practices and to be a platform for effective cooperation among energy regulators within the SADC region.

In its current form as an association of electricity regulators of Southern Africa, RERA does not have a mandate to provide regulatory oversight over the regional energy market in SADC. To change the status quo and aid the implementation of the SADC Regional Infrastructure Development Master Plan (RIDMP), the SADC Heads of State and Government in adopting the RIDMP in August 2012, approved as part of the new institutional arrangements, the establishment of a Regional Energy Regulatory Authority to deal with regulatory issues relating to cross-border energy trade and investment.

The envisaged transformation of RERA into a regulatory authority is important considering that it will greatly enhance the ability to implement, monitor, enforce and take remedial action on regional regulatory decisions and other imperatives pertaining to cross border energy trade and investment. This is not a peculiar development to Southern Africa given the fact that the Economic Community of West African States (ECOWAS) has established the ECOWAS Regional Electricity Regulatory Authority (ERERA) and the Eastern African Power Pool (EAPP) is in the process of operationalising the Independent Regulatory Board (IRB).

COMESA is now seeking proposals from qualified firms to a framework and implementable roadmap for the establishment of a Regional Energy Regulatory Authority for the SADC Region.

The terms of reference for the consultancy service are provided in Annex 3 to this document.



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