Over the past 10 years that the economies of many African states have been growing steadily, generating electricity that is needed to power this growth has become one of the biggest challenges facing governments.

From South Africa, the continent's biggest economy, to the Democratic Republic of Congo, which is said to have the potential to generate power for the entire continent, the shortage of energy to power growth in Africa has reached crisis proportions.

This is mainly because in many of these countries, growth in demand has far out paced supply, forcing authorities to revert to growth limiting tactics such as load shedding - commonly known as power rationing - to avoid complete supply breakdown.

Even where demand has not grown as fast, poor delivery systems have ensured that frequent blackouts add to the cost of doing business in many African economies.

It is against this backdrop that electricity producers are gathering in Nairobi this morning to find new ways of generating power needed to secure economic growth.

Top on the agenda of the three-day meeting organised by the Union of Producers, Transporters and Distributors of Electrical Power in Africa, is management of state utilities that produce much of the continent's power.

This meeting opens at a time when the World Bank has just released its latest report on doing business in selected economies across the globe. Key among its findings is that highly priced electricity stands among the many factors making African countries less competitive in the global market against emerging economic giants such as China and India.

For example, sustained economic growth over the past five years has left Kenya with a thin reserve margin of three per cent compared to the globally recommended level of 11 per cent with growth staying ahead of supply.

Power economists say much of Africa's electricity problems can be traced to reluctance by national authorities to liberalise the sector and allow private participation in meeting the demand.

Opening up the power sector to private sector participation has enabled countries like Kenya to escape an energy crisis that bears immense potential to damage economic growth, says Dr Eric Aligula, an infrastructure expert with the Kenya Institute for Public Policy, Research and Analysis (Kippra).

The magnitude of the power crisis that Africa faces is captured by the latest PricewaterhouseCoopers global survey of the utilities industry which indicates that power is among the leading concerns of business executives on the continent.

While acknowledging the efforts that national governments are making to meet their domestic power needs, the survey of 118 senior executives in 37 countries says establishing a common power pool is increasing gaining acceptance as the most viable solution to the problem.

"The supply shortage is getting more acute by the day. Development partners, governments and business leaders have started to work on the necessary regulatory framework needed to make the common pool a reality," said Mr Vishal Agarwal, the partner at PWC in charge of infrastructure.

Most power sector analysts however see the initiative as a long term measure, while emphasizing the fact that individual countries must in the short -term invest in new, cheaper sources of energy to forestall a looming crisis.

In Kenya for example, the power supply situation has worsened in the past three years with the peak demand having risen to 1,043 MW against a national supply capacity of 1,088 MW. This is the highest demand recorded in the country's history.

Statistics show that by the end of last month, available generation capacity stood at 1,185 MW - thinning out the reserve capacity margin to three per cent.

Electricity pylons

Challenges also abound in power transmission where the capacity of the system to withstand the level of demand is highly in doubt.

"Any additional generation capacity must take into consideration the existing network and its capacity to carry additional power," says Mr Joseph Njoroge, the Kenya Power and Lighting Company (KPLC) managing director.

By the end of this month, KPLC will have spent Sh1 billion on renewal of the distribution lines and installation of additional transformers in Nairobi and environs during the current financial year.

KPLC buys a bulk of its power (75 per cent) from KenGen, the public power generator. In many African countries over-reliance on a single power source remains part of the many power sector challenges.

In Kenya, hydro power accounts for 60 per cent of the country's output. Thirty five per cent of the national power requirements are met by the seven licensed independent thermal and geothermal producers.

Under investment in power infrastructure and mismanagement of public power utilities, that are major generators and distributors of power is also blamed for the current shortage.

The problem is exemplified by the persistent shortages in South Africa, which also generates electricity from nuclear sources.

Earlier this month South Africa's government allowed the state-owned power utility Eskom Holdings to raise electricity prices by 27.5 per cent to help ease a power crunch that forced gold and platinum mines to shut in January.

Electricity prices are expected to rise by between 20 per cent and 25 per cent annually over the next three years said the South Africa's National Energy Regulator.

This is still lower than the 61 per cent increment that Eskom had asked for and includes a 14.2 per cent gain in tariffs granted in December.

Eskom, which provides 95 per cent of electricity in South Africa, ran short of supplies after the government delayed investment in new power plants.

According to the World Bank, frequent and disruptive power outages plague about 35 of sub-Saharan Africa's 53 countries.

Power outages are estimated to cost African economies as much as two per cent of their gross domestic product, according to the World Bank. For big businesses, outages reduce revenue by as much as six per cent and 16 per cent in sales losses for smaller and medium scale companies.

South Africa for instance supplies power to a number of regional economies like Botswana, Zambia and Zimbabwe, countries which will also face the consequence of reduced supplies.

Experts say the problem of under investment is that new plants take years to build even as demand rises rapidly. Africa has been unable to attract private equity financing into its power sector because of delays in completing the projects and a host of corporate governance issues surrounding management of power utilities in the continent.

The continent's major power investment partner, the World Bank recently admitted that its lending for power development in sub-Saharan Africa has been "distinctly" less successful than in other regions.

"The poor performance of power utilities adds to public deficits and diverts resources from spending on social sectors such as basic education and public health," said the bank.

Some of the options being explored in the continent include co-generation from sugar producers such as Kenya's Mumias Sugar, which plans to produce 38 MW at the Tana and Athi Rivers Development Authority project.