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Volume 456: debated on Wednesday 31 January 2007

To ask the Secretary of State for International Development (1) what assessment he has made of the impact of the divestment of Kelvin Power by Globeleq on (a) electricity tariff rates and (b) access to electricity by deprived populations in South Africa; (112005)

(2) what assessment he has made of the potential effect of Globeleq acquisitions since June 2002 on the (a) electricity tariffs charged to consumers in the relevant countries and (b) supply of electricity to deprived populations.

Globeleq is a wholly owned subsidiary of CDC which is in turn wholly owned by DFID. It is managed independently by its own board of directors. It takes its own day-to-day commercial decisions without intervention or interference by DFID, but working within a policy framework that we have set for them. DFID would not normally make assessments such as those in question. That remains the responsibility of CDC.

Globeleq mainly operates power generation facilities and sells power on a wholesale basis to the local distribution agency. Consumer tariffs, which cover the cost of transmitting and distributing power as well as of generation, are set by the distributing agency or independent regulators. Globeleq has no direct influence on their levels. For most of Globeleq's power generation facilities, the price it receives for its power is determined by a power purchase agreement or PPA, most of which were negotiated before Globeleq bought the assets.

Although consumer tariffs may have risen since Globeleq bought generation facilities, or after it disposed of them, as in the case of Kelvin Power, there is no causal link between Globeleq ownership and consumer tariffs.

By improving the reliability of power supply, Globeleq makes a positive contribution to the provision of power. Most of Globeleq's power generation businesses meet or exceed their contractual requirements for generation. Globeleq mainly operates power generation facilities rather than distribution networks and has no control over the number of connections. That remains the responsibility of the distribution agency.

Globeleq is involved in distribution in Uganda through its ownership of Umeme which holds a concession to operate the distribution network in Uganda. Umeme has exceeded the concession requirements for increasing customer connections.