Electricity Pricing System and Performance of Power Sector in Sub-Saharan Africa

Sub-Saharan Africa (SSA) was recently ranked the worst in the world in terms of electricity- access and supply. The region which has population of about 936.1 million 48% of the total population lack access to electricity. This makes the performance of the power sector in the region far below expectations. Thus, fulfilling the economic and social promise of the region, and Africa, depends on the ability of government and private to develop the electricity capacity, as the region is incredibly rich in potential power-generation capacity with 1.2 of base-load potential terawatts of capacity (excluding solar); including solar, there is more than a staggering 10terawatts of potential capacity. In essence, SSA countries embarked on massive power industry reforms during the last two decades, the effort which attracted investment from private sector and increased fuel-supply options for power generation. One of the areas that received significant attention is electricity pricing, which is a critical mechanism towards the performance and stability of power sector. This study examined the impact of the recent electricity pricing reforms on the performance of power sector in Sub-Saharan Africa. Correlational research design was employed in a cross-section of 27 sub-Saharan countries for a period of five years (2009-2013). Panel regression technique of data analysis was used and the study after controlling for equity and electricity cost recovery found that residential tariff, residential low-income tariff and price affordability have significant impact on the performance of power sector in the region. The study on the other hand found after controlling the effect of equity and recovery of costs that non-residential commercial tariff and non-residential industrial tariff have an insignificant impact on the performance of power sector in the Sub-Saharan Africa. The study recommends that, governments, policy makers and other stakeholders in the power sector of Sub-Saharan Africa should initialize a process to review the existing electricity pricing system in the sub region. The proposed pricing system should reflect affordability, equity and cost recovery