14 EU energy facility for the African,
Caribbean and Pacific (ACP) countries
| (26101)
14040/04
COM(04) 711
| Commission Communication on the future development of the EU Energy Initiative and the modalities for the establishment of an Energy Facility for ACP Countries
|
| Legal base | — |
| Document originated | 26 October 2004
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| Deposited in Parliament | 9 November 2004
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| Department | International Development
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| Basis of consideration | EM of 20 November 2004
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| Previous Committee Report | None
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| To be discussed in Council | To be determined
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
14.1 The Cotonou Agreement, signed in 2000, provides the latest
framework for a 20-year partnership for development aid to the
77 African, Caribbean and Pacific countries, funded mainly by
the European Development Fund (EDF). The current funding mechanism,
EDF9, has three financial "envelopes": country programmes
(€10 billion); regional programmes (€1.3 billion); and
the Investment Facility (€2.2 billion) managed by the European
Investment Bank. The Cotonou Agreement's principles of resource
allocation are based primarily on needs and performance. "Needs"
include factors such as income, population, social indicators,
level of indebtedness and export earnings losses; "performance'"
captures issues such as institutional reforms, governance, use
of resources, poverty alleviation or reduction, and macro-economic
and sectoral policy. Each country allocation includes two
elements: a sum for macro-economic support, sectoral policies,
programmes and projects; and a sum for unforeseen needs, such
as emergency aid, internationally agreed debt relief initiatives
and to mitigate the effects of instability in export earnings.
In addition, regional allocations are based both on estimated
need and the progress towards and prospects of regional cooperation
and integration.
14.2 Energy is essential for a wide range of services,
such as lighting, heating, cooking, transport, agriculture, industrial
production and modem communications. Lack of access to reliable
and affordable energy in developing countries is a barrier to
the economic and social development of the poor, affecting most
development objectives. The EU Energy Initiative for Poverty Eradication
and Sustainable Development (EUEI) was launched at the 2002 World
Summit on Sustainable Development, to provide energy services
for the benefit of the poor, and contribute to the achievement
of the UN Millennium Development Goals.[42]
Africa is an urgent priority due to very low access rates, while
small-island countries are particularly sensitive to energy import
costs.
The Commission Communication
14.3 The EUEI hosted a conference in Nairobi, Kenya
in November 2003 attended by government representatives from some
40 countries from sub-Saharan Africa. In his helpful Explanatory
Memorandum of 20 November 2004, the Secretary of State for International
Development (Mr Hilary Benn) says that:
"the conference recommended that priorities
for the EUEI should include rural energy, electrification, improving
access to energy for households and national and regional sector
strategies and policies. The Conclusions of the April 2004 General
Affairs Council (8568/04) confirmed a need for adequate financing
for the Initiative and recognised that the Commission and Member
States need to be more involved in responding to the priorities
expressed at the Conference. The Council requested the Commission
take the lead in the follow-up to the Conference."
14.4 He summarises the Communication as follows:
"The Communication provides information
on the objectives of the proposed Energy Facility, how it will
operate, the activities it would support, and the intended management
and funding arrangements. The main focus of the Facility will
be to increase access to modern energy services in rural areas
in Africa, although the distribution of funds between ACP regions
will follow the principles of the Cotonou Agreement. Three main
types of activity are envisaged:
"Delivery of Energy Services:
Joint financing of investment projects, leveraging funds from
other sources, including Member States, other donors, International
Financial Institutions (IFIs) and the private sector.
"Creating an Enabling Environment:
Assistance to countries to: develop or Implement national energy
policies and strategies for the implementation and management
of energy programmes; and to improve monitoring and evaluation
capacity. This could include the institutional, legal and regulatory
framework for the energy sector.
"Facilitating Future Large-Scale
Investment Programmes: Finance for preparatory activities
for investment into cross-border interconnections, grid extensions
and rural distribution. This will prepare ACP countries for financing
by IFIs, World Bank and the private sector, and will reflect African
Union and New Partnership and African Development (NEPAD)[43]
priorities. This will be aimed at leveraging significant additional
capital investment in energy infrastructure from other sources.
"The Delivery of Energy Services is
expected to take the largest share of the Facility, with no more
than 20% being devoted to the other two main activities.
"The Commission will manage the Energy
Facility, using external specialists where necessary. Existing
decision-making processes between the EU and the ACP institutions
will be applied."
The Government's view
14.5 The Minister says that:
"The UK has made a commitment to improving
access to energy through the EUEI. These are reflected in the
DTI's Energy White Paper (February 2003) and in the FCO's Energy
Strategy (October 2004). Improving access to energy will need
adequate resources to effectively follow up on the outcome of
the 2003 Nairobi conference and 2002 WSSD[44]
commitments.
"The proposed source of funding is the
remaining funds from the conditional €l billion (£700
million) of the 9th European Development Fund (EDF).
The EU Council decided in March 2004 to establish the ACP-EU Water
Facility, with an initial allocation of €250 million (£173.9
million) drawn from the conditional funds. The EU Council will
decide by March 2005, in the light of the mid-term reviews of
Country Strategies and on the basis of a performance review of
the 9th EDF, whether to allocate a further €250
million (£173.9 million) to the Water Facility and use the
remaining €500 million (£338 million) for purposes to
be agreed. The EU Energy Facility is likely to be just one of
several competing demands for the remaining conditional funds.
"The UK, together with other Member
States, do not want to pre-judge the outcome of the performance
review of the 9th EDF. Should the Council decide to
release some or all of the remaining conditional funds, then we
will consider this proposal. We do not expect there to be any
substantive debate of the Energy Facility before this process
is concluded. The ACP States will need to be consulted and agree
on the proposed use of the funds."
Conclusion
14.6 A separate Commission Communication, on
decisions and expenditure in 2004 under the Ninth European Development
Fund, which we examine in para 18 of this Report, looks ahead
to the performance review to which the Secretary of State refers.
As we say there, we look forward to hearing from him on the
outcome and on any consequential proposals. Like him, we do not
wish to prejudice the outcome. That said, there is clearly a
certain momentum in this particular proposal. Given the widespread
interest in development issues and the role that Africa is set
to have during the UK's Chairmanship of the Group of Eight and,
in the second half of this year, Presidency of the EU, we considered
it appropriate to draw it to the attention of the House.
14.7 We now clear the document.
42 UN millennium development goals to be achieved by
2015 - the eradication of extreme poverty and hunger, achievement
of universal primary education, promotion of gender equality and
female empowerment, reduction of child mortality, improvement
of maternal health, combat of HIV/Aids, malaria and other diseases,
environmental sustainability and a global partnership for development. Back
43
The New Partnership for Africa's Development (NEPAD) arises from
a mandate given to the five initiating Heads of State (Algeria,
Egypt, Nigeria, Senegal, South Africa) by the Organisation of
African Unity (OAU) in July 2001 to develop an integrated socio-economic
development framework for Africa, spearheaded by African leaders
and supported by the G8 economies, that will address the current
challenges facing the continent. Back
44
The World Summit on Sustainable Development, held in Johannesburg
on 26 August-4 September 2002, which resulted in a wide range
of commitments by the US, the EU and other members of the international
community on Water and Sanitation, Energy, Health, Agriculture,
Biodiversity and Ecosystem Management and Trade and Economic Issues. Back
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