At the Power Indaba that opened in Cape Town today, Tadesse said the total electricity generated by the whole of Africa per year was about 73 gigawatts (GW), which equalled that of Spain. If SA was taken out of the equation then the total fell to 45GW - the equivalent of a country such as Argentina.

He said the average cost of generating a unit of electricity on the continent was about $0.18 per unit, but the recovery was only $0.14.

This, according to Tadesse, meant that African power generation utilities were forgoing about $2 billion in revenue due to this cost under-recovery.

"This means there are implicit subsidies being used to keep the prices as low as possible. But, it also means that utilities are unable to reinvest in their generating capacity as it makes it very difficult for them to borrow the capital they need to make these investments," he said.

Tadesse said there were about 20 African countries that did not meet the international rule of thumb of being able to generate the minimum 200 mega-watts of electricity needed for scale of economies to come through.

"There are about 20 African countries that have economies that are too small to generate the minimum to get their unit prices down. Ideally, they should be looking at regional integration with other countries, but they are reluctant to put at risk their power security and so prefer to go it alone," he said.

Tadesse said that Africa needed about $40 billion of new investment in its electricity generation per year if it was to maintain a continental economic growth rate of about 5% per year. He said that $10 billion would come from African countries themselves, and about $7 billion could come from operational efficiencies. "This leaves an annual funding gap of about $23 billion in a best-case scenario," he said.

Tadesse said that, ideally, the funds for building up Africa's generation capacity should come from international pension funds and sovereign wealth funds as the long-term nature of the investments and the fund mandates should match.

However, he pointed out that the managers of those funds needed the confidence that the cost recovery of the units of electricity should match the return required by the funds.

Tadesse said electricity generation investments took up a sizable portion of the African Development Bank of SA's portfolio.

Last year, the bank issued South African power utility Eskom with its single biggest source loan of R15 billion. The bank had also invested smaller, but still sizable amounts in Mozambique, Lesotho, Botswana and the Democratic Republic of the Congo.

Tadesse said the bank planned to invest about another five billion rand in electricity-generating projects over the next three to five years.