Each quarter the partners set down what has held our attention across the four practices. This autumn the pattern is familiar. Sponsors want certainty on revenue before they commit, governments want private capital without taking on new liabilities, and traders want tariff cuts they can actually claim at the border. What follows is drawn from the mandates we are working on from Accra, Dakar and Kigali, and from the conversations around them.
Storage is moving into the tender documents
A year or two ago, battery storage was something a sponsor might offer as a variant bid. In several of the solar tenders we have reviewed this year it is a stated requirement or a scored option, and South Africa continues to run a dedicated storage procurement programme alongside its other independent power rounds. The technology is no longer the hard part. The contract is. A storage asset earns its keep through availability, response and cycling, while most PPAs in our markets were written for energy delivered. Before bidding, we ask clients to settle four questions. Is storage paid through a capacity charge or folded into the energy tariff? Who carries degradation and the cost of augmentation in year eight or ten? How is deemed energy calculated when the system operator curtails the plant? And which party issues the dispatch instruction? Awa Ndiaye’s team in Dakar has found that bids which answer these plainly hold up better in evaluation than bids that simply cut the price.
The technology is no longer the hard part. The contract is.
The next AfCFTA tariff step, and the paperwork behind it
Under the AfCFTA, State Parties reduce tariffs in annual steps set out in their schedules of tariff concessions, with longer timetables for least developed countries and for goods classed as sensitive. Because the cuts arrive year by year, the preference on a given product can change from one year to the next, and the end of the year is a sensible point to review it. In our experience the tariff rate is rarely the obstacle. The obstacles are whether both the exporting and importing country have gazetted their schedules, whether customs systems at the border reflect them, and whether the goods meet the product-specific rules of origin with a valid certificate of origin. Jean-Paul Mugisha’s team in Kigali spends more time on that last point than on anything else. Our advice is simple: run one compliant shipment end to end before building the preference into a price list or a business case.
Market entry: better questions, slower approvals
Most of the market entry enquiries we received this quarter came from mid-sized firms rather than multinationals: manufacturers from North Africa and the Gulf, distributors from within West Africa, and a few European engineering firms following their clients. Their questions have changed. Fewer ask which country is largest. More ask which country will let them register quickly, repatriate profits without long waits for foreign exchange, and meet local content rules without a partner they have not chosen. The answers sit across the investment code, the central bank’s foreign exchange rules and the sector regulations, and the three rarely line up neatly. Esi Mensah’s advice to clients in Accra is to read all three before choosing a structure, and to plan for approvals that take months, not weeks. A short regulatory review at the start costs far less than restructuring an entity once it is trading.
Why port concessions keep closing
Port terminal concessions have continued to reach signature across West and Central Africa this year, with operators from the Gulf and Morocco among the most active. Clients often ask why ports close while toll roads, hospitals and water schemes in the same countries stall. The answer is mostly in the revenue. A container or bulk terminal earns user fees from shipping lines and cargo owners, often priced in or linked to hard currency, with traffic records that lenders can test. The government grants the concession and collects fees, and does not have to find availability payments in a stretched budget. Experienced operators bring their own balance sheets, and the structure is well understood by lenders. Moussa Diop’s team in Dakar applies the same test elsewhere. Where a project can carry real user revenue, structure around it. Where it cannot, be honest about the viability gap funding it will need before going to market.
What we are watching next quarter
- Results from storage and hybrid solar tenders, and how winning bids treat degradation and augmentation.
- Year-end budget statements in our markets, for what they signal about PPP payment commitments and arrears to independent power producers.
- Customs notices on the next round of AfCFTA tariff cuts, and whether border systems are updated in time.
- Further terminal concession awards, and whether dry ports and inland logistics projects follow the same model.
- Foreign exchange availability in the markets where our clients are repatriating dividends.