Economy of Somalia - Energy

Energy

The World Bank reports that electricity is now in large part supplied by local businesses, using generators purchased abroad. By dividing Somalia's cities into specific quarters, the private sector has found a manageable method of providing cities with electricity. A customer is given a menu of choices for electricity tailored to his or her needs, such as evenings only, daytime only, 24 hour-supply or charge per lightbulb.

Somalia has untapped reserves of numerous natural resources, including uranium, iron ore, tin, gypsum, bauxite, copper, salt and natural gas. Due to its proximity to the oil-rich Gulf Arab states such as Saudi Arabia and Yemen, the nation is also believed to contain substantial unexploited reserves of oil. A survey of Northeast Africa by the World Bank and U.N. ranked Somalia second only to Sudan as the top prospective producer. American, Australian and Chinese oil companies, in particular, are excited about the prospect of finding petroleum and other natural resources in the country. An oil group listed in Sydney, Range Resources, anticipates that the Puntland province in the north has the potential to produce 5 billion barrels (790×10^6 m3) to 10 billion barrels (1.6×10^9 m3) of oil. As a result of these developments, the Somali Petroleum Company was created by the federal government.

According to surveys, uranium is also found in large quantities in the Buurhakaba region. A Brazilian company in the 1980s had invested $300 million for a uranium mine in central Somalia, but no long-term mining took place.

Additionally, the Puntland region under the Farole administration has since sought to refine the province's existing oil deal with Range Resources. The Australian oil firm, for its part, indicated that it looked forward to establishing a mutually beneficial and profitable working relationship with the region's new government.

In mid-2010, Somalia's business community also pledged to invest $1 billion in the national gas and electricity industries over the following five years. Abdullahi Hussein, the director of the just-formed Trans-National Industrial Electricity and Gas Company, predicted that the investment strategy would create 100,000 jobs, with the net effect of stimulating the local economy and discouraging unemployed youngsters from turning to vice. The new firm was established through the merger of five Somali companies from the trade, finance, security and telecommunications sectors. The first phase of the project is scheduled to start within six months of the establishment of the company, and will train youth to supply electricity to economic areas and communities. The second phase, which is slated to begin in mid-to-late 2011, will see the construction of factories in specially designated economic zones for the fishing, agriculture, livestock and mining industries.

In 2012, the Farole administration gave the green light to the first official oil exploration project in Puntland and Somalia at large. Led by the Canadian oil company Africa Oil and its partner Range Resources, initial drilling in the Shabeel-1 well on Puntland's Dharoor Block in March of the year successfully yielded oil.

According to the Central Bank of Somalia, as the nation embarks on the path of reconstruction, the economy is expected to not only match its pre-civil war levels, but also to accelerate in growth and development due to the Somalia's untapped natural resources.