Sudan’s energy problems

The Merowe Dam looks impressive. A big hulking structure, towering over the snaking waters of the Nile and the shimmering desert plains. Even from the distance we had stopped at, it looked as though it meant business.

I saw the dam a week ago. We had decided to drive up to the predominently Chinese-funded structure, just to tick it off our list, during a few days spent in the north. To be fair, we didn’t expect we’d get that far – the Merawe Dam project has been enshrined in controversy almost from the very beginning – and in truth we didn’t. Stopped at a security check-point, asked our business, and then, when we told them we were tourists, immediately and unsurprisingly turned back.

The reason that the dam has proved so controversial is that, as usually happens with dams and reservoirs, a large amount of surrounding land has had to be flooded. This has swept away many ancient archaeological treasures and displaced a number of Nubian tribes people, some who have received compensation and some who have not (owing to their nomadic status: how, some argue, can you compensate someone who does not own land in the first place?)

But the dam also has some good points, which are too often looked in the Western media. Namely the fact that it promises to do much to assuage Sudan’s growing energy needs. What I didn’t fully appreciate, until the other day, is that a large part of the electricity that this dam will generate is earmarked for the agricultural sector.

Agriculture is still one of the most important industries in Sudan, accounting for 39.2% of the country’s GDP in 2006 (figures courtesy of the Central Bank). The International Monetary Fund also says that two thirds of jobs in Sudan come from the sector. And yet, still, much of the farming done in the country is woefully inefficient – subsistence farming, blissfully unaware of the new methods and technologies that are sweeping the rest of the world.

Well, good news. Foreigner investors are finally starting to see the potential of Sudan as the “breadbasket” of African agriculture and piling in. Fifty years after Sudan was first referred to as such (during the Nimieri era, just before the bottom fell out of the economy), perhaps, but at least there is now a feeling of optimism in the sector.

The current economic turmoil markets has also provided good news for investors: it has pushed land prices down.

This might all be very good news for Sudan. After all, it has a great abundance of land available, only 6% of which, according to the UN’s Food and Agriculture Organisation, is being farmed at the moment. And foreigners bring two crucial things with them – new technologies and better access to international markets. It could all be very good for the country, and indeed some projects are already taking off to great acclaim (Al-Rajhi Group of Saudi Arabia being the investor most talked about).

But there is a problem on the horizon, and that is that many investors are sitting on their land rather than building on it. Part of this is to do with a lack of liquidity – many investors just don’t think it a good idea to sink their rather limited capital into an obscure agricultural project, at a time when food prices are falling. Food prices are almost certain to go up next year (the current drop in prices is due to a bumper harvest this year and falling demand on the back of a stagnating economy), and that is why investors want land – to be in a position to develop it when prices do start to recover. The other problem is that, whilst land prices may have fallen, the raw costs of developing and running a project have not.

One of the biggest costs to any agricultural project is energy. Another is transport.

The northern deserts are now flooded with Chinese-funded road projects, a great many now nearing completion. These Chinese are busy fellows.

And for energy, look to the Merowe Dam. Ahmed Dafi, who is paid to think about agriculture at the Ministry of Investment, says that this is really going to help bring agriculture costs down – and this is something that Sudan badly needs, if it is to realise its long-delayed goal of becoming the true breadbasket of Africa.

Cheaper energy for the country is certainly a good thing, but I heard a rather worrying suggestion the other day. Apparently, Sudan has recently been holding discussions with the International Atomic Energy Agency (IAEA) and the possibility of building a nuclear power station here. Seeing as air traffic control seem to have a certain amount of trouble dealing with more than one plane on the runway at the same time, I’m not too sure I want to see Sudanese physicists trying to smash atoms together.

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3 Responses to “Sudan’s energy problems”

  1. sudaneseoptimist Says:

    “But there is a problem on the horizon, and that is that many investors are sitting on their land rather than building on it. ”

    This has always been a problem for Sudanese business/development. I believe foreign investment laws to be at fault here. It is almost as if the Sudanese government is so eager– or rather desperate if you will– to have money pouring in from outside that they are willing to overlook certain investors’ liquidity and ability to fulfill their contractual agreements. In the private sector, Osama Dawood has been good with preventing such things, but sadly he too is suffering from the shortcomings of foreign investors when it comes to DAL group’s Alsunut project.

    Great blog by the way. I have just recently discovered it and it’s quickly taking up a spot in my (blogging) heart 🙂

  2. Mandino Says:

    It’s good that Sudan has this dam as it will be serving a lot of energy needs. Although with this dam, maybe that the Sudanese government will have to focus more on the side in ending the war first. It’s not that the dam is not doing the country any good but maybe, the government will have to prioritize more on its people… I do know this site: http://emmaacademyproject.com/ asks some favor to help build a school in Sudan. I really think that the school will really do the country some good. It may not be as huge as the dam, not as quick as the delivery of the electricity from the dam, but it will really lean forward to the betterment of the future of the Sudanese people.

  3. In praise of Dal « Blake Evans-Pritchard’s Weblog Says:

    […] line of Nubian farmers/tribal chiefs. Dal Group is also a Sudanese firm through-and-through, so unlike other foreign investors that I wrote about a couple of blog entries ago, Dal is committed to the development of the country and not just betting on when crop prices will […]

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