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Nigeria approves N33bn intervention fund for meter procurement


Nigerian Tribune

by Gbola Subair

The acute shortage of electricity meters in the country will soon be a thing of the past as the Presidency has approved the sum of N33 billion intervention fund for its procurement.

The fund, which attracts a very low interest rate, will be made available to Distribution Companies (DISCOs) to buy meters and other electricity accessories with a view to bridging the meter deficit gap which is about three million yearly.

The Director-General of the Bureau of Public Enterprises (BPE), Mr Benjamin Ezra Dikki, speaking in Abuja, also gave an assurance that the fixed charge currently borne by electricity consumers in the country would be dispensed with as soon as power generation increases to an economically sustainable level.

The director-general, who said the fixed charge was a temporary measure, appealed to electricity consumers to bear the burden, as it would soon be abolished, noting that the country had an installed power capacity of 6,000 megawatts, but was generating only about 3,000 to 4,000 megawatts. 

The BPE boss stated that the revenue from the 3,000 megawatts was not sufficient to support the power infrastructure.

”When power generation increases, the fixed charge will go,” he maintained.

According to him, it was the initial sacrifice consumers had to make given the huge financial investment made by the new power investors who are yet to obtain adequate returns on their investments.

Dikki added that as what obtained at the initial stages of the reform in the telecoms sector, when the cost of   the Subscriber Identity Module (SIM) cards and telephone handsets was as high as N50,000 per SIM, “the electricity fixed charge will also crash.”

Dikki debunked claims of lack of transparency in the privatisation of Kaduna Electricity Distribution Company (KEDC) and the picture created of a conflict between Geometrics Power Group and Interstate Electrics Ltd, the core investor of Enugu Distribution Company.

On KEDC, he said the reserved bidder could only be invited to step in if the preferred bidder failed to pay.

He added that the preferred bidder was, within the time limit, to pay the 75 per cent balance of the bid price after an initial payment of 25 per cent had been made.

The director-general said it was wrong for anybody to call for the revocation of the sale, as the process had to complete before reversion to the reserved bidder could be made.

On Geometrics, Dikki explained that it had a 20-year contract with the Enugu Distribution Company to supply power to the Aba and Ariaria districts, which is not in contention.

“Both parties are aware of this but it baffles me when people go out to deliberately distort the facts. We don’t understand the hue and cry that Geometrics is short-changed in the transaction,” he said.

Uganda: Embrace new guidelines for procurement


The Observer

Editorial Sunday August 24, 2014

The country has been left in some confusion as regards the upgrading of the Mukono-Katosi-Nyenga road.

First, the company that supposedly won the deal to build the 74-kilometre road is reported to have dissociated itself from the company in Uganda – with the same name – which signed the contract with the Uganda government. In the meantime, nearly Shs 25bn has already been paid out by the government to the contracted company.

Last week, MPs toured the road and found that some 13 kilometres had already been covered. This raises the question: which company is doing the Mukono-Katosi roads. Could it be that the Eutaw that signed the contract in Kampala only shares a name with the Eutaw in the United States? There are strong indications that the Uganda government has been taken for a ride.

But as the police tries to get to the root of the matter, the junior minister for Works, John Byabagambi, last week made a startling revelation; he suggested that as many as 50 per cent of the firms that bid for public contracts in this country were not genuine. Quoted in The Observer on Friday, Byabagambi said these companies were so crafty they could beat any amount of due diligence.

These are perilous times for a country whose president only recently renewed his commitment to fight corruption. Despite Byabagambi’s telling statistic, however, it is important that everything possible is done to ensure that these disingenuous firms do not find an ingenuous government bureaucracy. Instead, technocrats in government should develop some kind of sixth sense to beat the craftiness.

A good starting point is the guidelines recently issued by the secretary to the Treasury, Mr Keith Muhakanizi. As The Observer reported on Friday, Muhakanizi wants a three-phase system of due diligence involving accounting officers, financial institutions and the Public Procurement and Disposal of Public Assets Authority.

It is important these guidelines are followed and any breaches thereof followed by stringent sanctions. Obviously the crafty businessmen and women could find loopholes, but the public procurement system needs to ensure it remains one step ahead of those who want to steal from Ugandan taxpayers.

 

SA sets up infrastructure to verify local-content claims


Engineering News

July 5, 2013

A new technical instrument has been introduced to support South Africa’s strategy of increasing the level of local content in the goods and services procured by government and State-owned entities and to add impetus to the country’s re-industrialisation efforts.

The tool in question is a South African Technical Specification (SATS) 1286, which will be administered by a new Local Content Verification Office housed within the South African Bureau of Standards (SABS).

Trade and Industry Minister Dr Rob Davies, who presided over the official launch on Friday, says SATS 1286 sets objective criteria for the issuance of an audited ‘Local Content Certificate’.

The verification process follows on from the initial ‘designation’ of products and services that are required to incorporate minimum thresholds of local content before they can be procured by national and provincial State departments, municipalities and State-owned companies. The requirement is supported by updated Preferential Procurement Policy Framework Act (PPPFA) regulations, issued in December 2011.

The current thresholds range from 100% for textile, clothing and footwear procured for government-issued uniforms to 30% for digital television set-top boxes. But Davies stressed that these thresholds should be regarded as a “floor rather than a ceiling”.

The initial designations announced by the Department of Trade and Industry (DTI) cover rail rolling stock, electrical pylons, textile, clothing and footwear, canned or processed vegetables, some oral solid-dose pharmaceutical products, digital television set-top boxes, furniture, solar geysers and power and telecommunications cables.

But further rounds of designations will be introduced in future, following research and consultations.

SABS CEO Boni Mehlomakulu says the infrastructure is in place for the organisation to conduct the verification process, which will be required only for entities that win government tenders.

The process involves a self-assessment by the company that is delivered to the SABS in the form of a local content-declaration. A team of auditors then conducts an analysis of the documentation to verify the declaration, which is followed but a factory visit by a separate team of auditors. A consolidated document is then sent through to an approval board, which makes a final recommendation to the CEO, who issues the verification certificate. The costs of the process will be born by the winning bidder.

Mehlomakulu believes that multi-step process, which involves separate teams of auditors, has materially reduced the potential for fraud and corruption, but stresses that the SABS also operates an ethics hotline should an individual have concerns. The objective criteria employed also reduce scope for discretion, which tends to contaminate the administration of regulations.

Davies argues that there is significant potential to increase the domestic job creation around government procurement generally and also the multibillion-rand public infrastructure programme. However, without mechanisms to verify local-content claims the impact of ‘buy local’ initiatives could be diluted.

“We now have a standard and the infrastructure in place to verify,” he says, adding that breaches could lead to penalties and even the cancellation of contracts.

 

All South Africa construction majors ‘involved’ in collusion, price-fixing – Patel


Engineering News

By: Natalie Greve

11th April 2013

Economic Development Minister Ebrahim Patel has said that all the major South African civil engineering and construction companies currently active in the sector have been involved in infrastructure-related collusion and price-fixing.

“This problem is huge and pervasive in the infrastructure space,” he said at the inaugural Project and Construction Management Professions Conference on Thursday.

The State reportedly lost billions of rands through large-scale collusion and price-fixing by private sector companies during several past infrastructure projects, which instigated investigations by the Competition Commission into several completed public build projects.

These enquiries, which included investigations into the Gautrain project and several stadium developments, uncovered substantial evidence of collusion and price fixing by private sector participants, the Minister noted.

In cases involving critical projects, a number of companies came forward to acknowledge their involvement in the unlawful practises, Patel added.

“We have received about 400 admissions of incidents of collusion by companies in the sector,” he commented.

South African Council for the Project and Construction Management Professions (SACPCMP) president Professor Raymond Nkado said he was “shocked” that registered members of the SACPCMP had been found to have been involved.

“As a council, we have decided that we might take additional disciplinary action against these [companies],” he said.

Fast-Track Process
Based on the evidence gleaned from the commission’s investigations, which indicated the pervasiveness of the involvement by private companies, it was decided to introduce a “fast-track settlement process”, which would avoid lengthy legal processes that could persist for up to eight years, and which Patel said could potentially distract the project management process.

“We approached the industry and said we were prepared to put a voluntary disclosure process on the table, which would bring this to a conclusion expeditiously. In return, what is required is full disclosure, a commitment to end the cartels and an acceptance that the law must take its course,” he explained.

Once the disclosure process had been completed and admission of guilt received, the commission would then determine appropriate fines or penalties related to the value of the project.

Several such processes between the Competition Commission and private companies were currently under way, with most in the final stages, where the extent of the penalty was being determined in cases where organisations were “improperly enriched”.

Patel added that the first company to come forward and admit collusion would receive preferential treatment in terms of the penalty levied.

“We also take into account the extent of cooperation, so that there is an incentive to come clean. However, these companies will still have to pay substantial penalties as prescribed by the Competition Act,” he cautioned.

In cases where investigations implicated public servants, this information would be referred to law enforcement agencies.

There would be public disclosure once settlements had been reached.

Incentivisation

Public Works Minister Thulas Nxesi added that the findings of the investigation challenged the common perception that corruption and malgovernance was only pervasive in the public sector.

“The opinion that only government has such problems has been proved incorrect. There are huge problems in the private sector and we must expose them,” he said, encouraging the private sector to engage in “self reflection”.

Nxesi noted that key to the prevention of corruption in infrastructure projects was the establishment of a strong financial system, transparent procurement processes and incentivisation.

Moreover, Patel advised that the competition authorities had used the findings of the investigations to identify networks and channels used by companies in collusive practises and had identified the lead players and managers.

This would be used to develop internal preventive controls to reduce the opportunity for future collusion.

In addition, Patel said the CEO of any company awarded an infrastructure tender would be required to sign an “integrity pact” that committed them to competitive and noncorrupt practises and to create a culture in their organisation in which anticompetitive behaviour was discouraged.

“This will require executives to commit personal responsibility and liability,” he said.

The integrity pact was currently being piloted in a number of infrastructure tenders and would be fully implemented throughout the course of this year.

Patel said it was critical that the new phase of national infrastructure development not be characterised by similar high levels of collusion and price-fixing.

“Companies will have to make an important calculation. In the past, they thought collusion was a no-brainer; that they would secure the contract and walk away with the money. Now they see that we have developed the investigatory capacity to track the evidence down and to bring companies to book. That is the most important breakthough for us,” he said.

Edited by: Chanel de Bruyn

Senegal’s reforms and red carpets


Africa Report

November 27, 2012

Senegal’s President Macky Sall has slashed government spending to finance new infrastructure projects.

Faced with an audit of Wade-era projects, the opposition says he is playing political games. Dakar has been rolling out the red carpet in recent weeks.

Elected in March on a reform ticket, President Macky Sall is in demand as an interlocutor – whether it is by the World Bank, the UN or France’s President François Hollande, who stopped in Dakar on 12 October en route to his more controversial landing in Kinshasa for the Francophonie summit.

This month, the Mo Ibrahim Foundation is holding its annual development conference in Dakar to salute Senegal’s political achievements.

Dakar’s National Assembly gave Hollande the chance to set out his Africa policy, which he insisted was non-interventionist and non-paternalistic.

Hollande seized the chance for a tête à tête with Sall, seeking his help for the regional effort to tackle the worsening in- security in Mali.

Senegal’s troops, alongside Ghana’s, are regarded as the most professional in the region.

But Sall has plenty of local problems to tackle – such as the perennial rainy-season flooding.

The government’s failure to invest in flood defences was one of the reasons for voters turning against former President Abdoulaye Wade.

In September, Macky Sall pushed through a bill to abolish the Senate, the second chamber in the National Assembly.

He promised that the 767bn CFA francs ($1.5bn) would be used to finance a 10-year plan for effective flood defences, storm drainage and sanitation.

Opponents to Sall’s plan accuse him of partisan plotting.

The Senate was dominated by members of Wade’s [I]Parti Démocratique Sénégalais[/I].

But Sall’s supporters insist the plan reflects the need to cut ballooning government overheads inherited from the Wade era.

The Sall government aims to cut the budget deficit from current levels of 7.4% of gross domestic product down to 4% by 2015.

So far, Sall has closed 59 moribund state institutions, banned first-class travel for civil servants and is selling a presidential jet.

To promote accountability, Sall has published details of all official salaries, declared his own assets and promised to cut salaries at state-run companies to below 5m CFA francs per month.

“Humility, sobriety and rigour should govern our politics,” Sall told The Africa Report’s sister magazine Jeune Afrique after his election.

“I assure you that there will be a profound break from the practices that were in force under my predecessor.”

The new government has quickly launched audits of government departments and projects for evidence of illicit disbursements.

This includes projects run by Wade’s son Karim, such as the 650bn CFA franc energy crisis programme, Plan Takkal.

Britain, France and the United States have pledged cooperation in tracking down stolen money.

Sall rejects claims of political vindictiveness: “The only thing that interests us is that the errors of the past don’t repeat themselves,” he said.

The courts will take cases identified by the audit.

His promise to cut the presidential term from seven to five years with immediate effect won local and international plaudits, as did his agreement with the African Union to set up a special tribunal for Chad’s ex-leader Hissène Habré, in exile in Senegal since 1990.

Iranian bidder sparks halt to $2 bln Uganda dam project


Reuters Africa

September 7, 2012

By Elias Biryabarema

KAMPALA, Sept 7 (Reuters) – Uganda has halted plans to develop a $2.2 billion hydropower dam after objections were raised over the short-listing of an Iranian company in potential contravention of international sanctions, a procurement official said on Friday.

Billed as one of East Africa‘s largest infrastructure projects, construction of the 700 MW Karuma dam on the Nile river was expected to begin by the end of this year aimed at overhauling the east African nation’s stuttering energy supply.

“We received petitions by a whistleblower and representatives of other companies which were left out who said one of the firms that prequalified was an Iranian (firm),” said Vincent Mugaba, spokesperson for Public Procurement and Disposal of Public Assets Authority (PPDA).

“The Iranian company would not have the capacity to conduct international trade in light of sanctions imposed on Iran so we have halted the whole procurement process until we complete an investigation into the matter,” Mugaba said.

Washington and Europe have imposed sanctions on Tehran over its disputed nuclear programme. Some of the sanctions make it difficult for other countries to trade with Iran.

Mugaba said PPDA had requested the energy ministry, which is managing Karuma’s procurement process, to explain why it had overlooked the impact of sanctions on the Iranian company, Perlite Construction.

“What happened was that when we prequalified the Iranian company the U.S. sanctions had not come into effect but of course we realise that the company might have problems executing the contract if its bid was to be successful,” Yusuf Bukenya-Matovu, a public relations officer at the energy ministry, told Reuters.

“Uganda isn’t bound to respect U.S. unilateral sanctions but nevertheless there are implications. Perhaps there would be problems if the Iranian firm were to win but we’ll cooperate with the PPDA investigation,” he said.

LATEST DELAY

The Karuma dam is expected to more than double the country’s total power output. The state-run Electricity Regulatory Authority says Uganda produces a total of 550 MW while power demand at peaks stands at about 480 MW.

The snag was the latest to stall progress on Karuma, which the government is banking on to help prevent persistent power outages that have put a strain on the economy and discouraged investors from pouring more money into the oil-rich country.

Several years ago, a Norwegian investor that had expressed interest pulled out because it failed to secure funding for the project.

The Ugandan government wants to develop Karuma as a public-private project with the private investor as lead financier.

Uganda is keen to woo investment in its cash-starved energy sector to rapidly increase its generation capacity and in October plans to start pegging power tariffs to changes in inflation, international fuel prices and the exchange rate to make the sector more attractive.

Energy officials say the internal rate of return for energy projects in Uganda is fairly attractive at between 15-18 percent and higher than South Africa’s 12-14 percent, although the country has a higher risk perception.

Commercial hydrocarbon deposits were discovered along the Albertine rift basin along its border with the Democratic Republic of Congo in 2006 and reserves are estimated at 2.5 billion barrels. (Editing by Yara Bayoumy and Jason Neely)

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Kenya: Procurement law set for review


 

Sunday Nation

By  TOM MOSOBA tmosoba@tz.nationmedia.com

August 18th, 2012

IN SUMMARY

  • The review is in response to a spate of court cases and controversies that continue to plague tendering for major public projects, including those in critical areas such as the forthcoming General Election, national security and infrastructure development, he said.
  • Local suppliers also want to use the window to seek legal protection against stiff competition from established foreign firms while a stringent appeals formula is being proposed as the best way to escape prolonged litigation among querulous bidding parties.
  • But the law society says corruption and lack of capacity in public entities, rather than the flaws in the law itself, were to blame for the procurement gridlock.

The procurement law is finally to be reviewed to remove bottlenecks in tendering for public projects and make it easier for private entities to transact business.

The ministry of Finance is spearheading the process to amend the Public Procurement and Disposal Act 2005 and attendant regulations, ostensibly to align it with the new Constitution, but there is the view that it is largely to fix growing tendering nightmares.

However, the Law Society of Kenya has cautioned against mutilating the law and has asked the government identify ways to address tendering loopholes and confront corruption which it says is the main issue.

Public Procurement Oversight Authority director-general Maurice Juma told the Sunday Nation in an interview that the agency and other parties have started on the review.

Mr Juma said the amendments would help plug a number of shortcomings and incorporate lessons learnt over the five years that the Procurement Act has been in force.

“A number of stakeholders’ views and input have been gathered and will inform the amendments envisaged in the new Act,” he said.

“At this point in time, views and comments gathered from stakeholders are raw proposals for amendments. The next step will be validation of these views through public consultative meetings with various stakeholders.

“It is only then that we will have specific and concrete proposed amendments that we can share with you and other interested parties,” he said when pressed for specifics.

The review is in response to a spate of court cases and controversies that continue to plague tendering for major public projects, including those in critical areas such as the forthcoming General Election, national security and infrastructure development, he said.

The push to amend the procurement law recently attracted the attention of Prime Minister Raila Odinga who said new legislation must be put in place urgently to cater for Kenya’s development needs.

The current one, he noted, was forced on Kenya by the International Monetary Fund and the World Bank.

The Sunday Nation learned that among the changes being sought by the private sector include the separation of the tender process for huge projects from the routine undertakings by ministries and public agencies.

Local suppliers also want to use the window to seek legal protection against stiff competition from established foreign firms while a stringent appeals formula is being proposed as the best way to escape prolonged litigation among querulous bidding parties.

Kenya’s Vision 2030 chief executive officer Mugo Kibati said the amendments were inescapable if the country is to move forward. “We cannot move this way, and I have made my point to the Treasury and the Public Procurement Oversight Authority,” he said.

Mr Kibati said tendering for infrastructural projects with a huge economic impact on the country should not be subject to the same kind of bureaucracy common in ministries and the same adjudicating committees involved in buying furniture and cars.

“The current law also encourages unnecessary and costly court suits and is short on the sophistication that is needed for some of the projects lined up to attain growth levels of a newly industrialised economy,” Mr Kibati said.

A new law that offers remedy to aggrieved parties but does not hold the nation at ransom or punish hard-working public servants at the behest of a few profiteers is what is desired, he said.

Kenya Publishers Association chairman Lawrence Njagi said the new law should clearly define the role of the public private partnership in procurement.

“For instance, to get value for money, we as publishers would like to be involved in the auditing of post- bidding services to ensure what was sold is actually delivered to the final consumers,” he said.

Mr Njagi said the 10 per cent country preference rule should also be operationalised to safeguard local manufacturers against undue foreign completion.

Public sensitisation

“The private sector would also like to be involved in public sensitisation because as it is now the task cannot be carried out sufficiently by the oversight authority,” he said.

But the law society says corruption and lack of capacity in public entities, rather than the flaws in the law itself, were to blame for the procurement gridlock. (READ: Public procurement a haven of graft, TI)

“There could be some justification for those advocating the amendments, but I must say that corruption remains the biggest threat, and therefore as a country we should be careful not to mutilate the stringent regulations to check the vice,” cautioned Mr Eric Mutua, the law society chairman.

“We should look at the bigger picture and demand that only minimal amendments be allowed,” he said. The chairman said many times government officials have overlooked legal counsel to engage in wheeler-dealing.

Earlier, Mr Juma reinforced the corruption claim and said it is a monster that all must be ready to face. He also said the penchant for shortcuts did not help matters.

“We have had instances where procuring entities are brought before the Public Procurement Administrative Review Board and advised to address various anomalies before they re-tender. When they re-tender, these entities ignore the advice of the Board and commit the same mistakes… In such cases, the law cannot be blamed for deliberate human failures,” he said.

On the positive, he said the high number of procurement cases and complaints filed with Public Procurement Oversight Authority and the procurement review board is proof that more people were now conversant with the procurement law and are aware of their rights.

 

Zambia: Witness testifies against Dora


Zambia Daily Mail

By JIMMY CHIBUYE

July 13th, 2012

FORMER minister of Communications Transport Dora Siliya issued instructions to halt the contract for the supply, delivery, installation and commissioning of Zambia air traffic management surveillance radar system awarded to Thales Air Systems of South Africa , a State witness has testified.
Former Zambia Public Procurement Authority (ZPPA) director-general David Kapitolo said Siliya instructed the then permanent secretary Eustern Mambwe to halt the process and retender the duly awarded contract because of alleged corruption. Mr Kapitolo however said the only person who can make variations for the cancellation of the tender awarded by the Central Tender Committee (CTC) is the minister of Finance, who is the chairperson of the CTC and the variations should be done through a statutory instrument.

He was testifying in a case in which Siliya, who is MMD Petauke Central member of Parliament, is charged with two counts of abuse of authority of office, contrary to the Laws of Zambia.The tender for supply, delivery, installation and commissioning of a Zambia Air Traffic Management Surveillance Radar System was for Kenneth Kaunda and Harry Mwaanga Nkumbula International airports.

“I received a letter which was not directed to me but to Ministry of Communications and Transport permanent secretary Eustern Mambwe from the minister asking him [Dr Mambwe] to halt the tender and retender the process because the best evaluated bidder, Thales Air Systems, was not a manufacturer,” he said.

Mr Kapitolo said the procurement process and tender awarded to Thales Air Systems of South Africa was conducted in accordance with the ZPPA rules, up to the selection of the best evaluation bidder and notification but Siliya interjected. He said Selex Systemi Integrati was not among the bidders who submitted their documents for the tender of the radars because their bidding documents were rejected for being delivered late. Mr Kapitolo said he received a letter from Dr Mambwe, seeking the cancellation of the tender awarded by the CTC but he advised that the contract cannot be cancelled by an individual. He said he replied to Dr Mambwe’s letter and advised him that he cannot ask the CTC to cancel the tender because the manufacturer who authorised Thales Air Systems to bid was a reputable institution capable of making the radars.

Mr Kapitolo said unfortunately his letter to Dr Mwambwe was leaked to the media, forcing then President Rupiah Banda to set up a tribunal to investigate the matter. He said after the tribunal’s verdict which cleared Siliya of abusing her office, his contract of employment was terminated.
Mr Kapitolo also said the ZPPA received an anonymous letter alleging that the awarding of a contract to Thales Air Systems was marred by corruption and it should be halted. He said after investigations, it was revealed that the allegations contained in the anonymous letter were a ploy to halt the procurement process so that it could be redone and allow Selex Systemi Integrati to be part of the bidding process.
Mr Kapitolo said the permanent secretary is the purchaser and buyer of any ministry.

It is alleged that Siliya between February 20, 2008 and April 20, 2009 in Lusaka, employed as Minister of Communications and Transport, abused the authority of her office, by directing the cancellation of a duly awarded tender. The tender was for the supply, delivery, installation and commissioning of a radar system to Thales Air Systems South Africa, whose implementation was frustrated. This act was prejudicial to the rights or interests of the Government of the Republic of Zambia. Particulars of the second offence are that during the same period, in breach of laid down procedure, Siliya did accept a purportedly free offer from Selex Systemi Integrati for the repair of a Radar Head at Lusaka International Airport, as a result of which government actually paid K1, 943, 932, 360, an act prejudicial to the rights or interests of the Government of the Republic of Zambia.
The matter will come up today for continued hearing.

HBS Policy Brief: The G20’s Energy Infrastructure Plans for Africa: What is Missing?


At their Seoul, South Korea Summit in November 2010, the G20 adopted a Multi-Year Action Plan on Development which aims to promote economic growth, particularly in about 80 low-income countries. Infrastructure development is at the top of the nine-point agenda. In order to close Africa’s energy infrastructure gap, the group emphasises large-scale public-private partnership projects in order to promote economic growth and regional integration.

The G20 asserts that new investments into the continent’s energy sector are long overdue. This is true. However, Saliem Fakir (WWF SA) takes issue with the group’s call for delivering solutions with an entire focus on large-scale, centralised energy infrastructure projects. He argues that more attention should be given to modular and more flexibly deployable renewable energy technologies that can reduce poverty and minimise financial risk while maintaining a small carbon footprint.

Download the complete policy brief here.

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