Description
The World Bank wanted to assess the possible implications that the Coronavirus Disease 2019 (COVID-19) global pandemic would have for electricity utilities in Sub-Saharan Africa. Specifically, the World Bank wanted sensitivity analysis of the near-term financial impact of the spread of COVID-19 on African electric utilities and, as part of such impact, the utilities' abilities to honor their contractual obligations, including obligations with independent power producers (IPPs).
Service Provided
DHInfrastructure developed a Theory of Change through which utilities' financial condition could be affected by the pandemic, including the possibility of lower demand, customer hardship leading to lower collections and/or higher incidence of theft, national lockdown measures, sector-specific measures (such as bill discounts, deferrals, and cancellations), foreign exchange rate fluctuations, breakdowns in supply chains, lack of financing for working capital and investment, and lower availability of fiscal resources. We developed a questionnaire to collect information on demand by customer category, cross-border trade volumes and contractual obligations, tariff schedules, modes of customer payment, estimates of price elasticity of demand, generation by fuel type and estimated cost of fuel, and contractual obligations with IPPs. We then adapted a database, which we developed under a separate project on the performance of electricity utilities in Sub-Saharan Africa, to accommodate data on the causal factors and linkages between them, the utilities' financial statements, and the calculated financial indicators. We developed scenarios for sensitivity analysis of the impacts of the pandemic on utility financial performance and compared the results to the base case of no impact from the pandemic.