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It has been known for some time that Blackstone Group was unhappy with Black Rhino Group, but the announcement that the global investor will pull out of its African energy and infrastructure vehicle is a reminder that international money won’t wait around. Blackstone had talked up the potential for $5bn of investment, working alongside Nigerian billionaire Aliko Dangote; it is now selling Black Rhino to management. With some $482bn of assets under management at end-2018, Blackstone has decided it can find richer pickings elsewhere.

Others are also discouraged. African Energy understands Quantum Power principal Idan Ofer has lost patience with painfully slow deals where returns are elusive, despite spending large sums developing projects. After failing to resolve problems at the 125MW Sendou coal-fired plant in Senegal, which broke down soon after commissioning, Israeli businessman Ofer culled senior executives in December. It is not clear whether further funds will be available to move Quantum’s projects forward.

Long delays to African infrastructure projects are a familiar problem. Meanwhile, investors grumble that governments and development finance institutions (DFIs) are aggressively squeezing margins. Governments looking to drive down generation costs have attracted international investors seeking returns outside their traditional markets, but too many have made little attempt to address critical issues undermining transmission and distribution utilities. Some investors complain DFIs now expect them to accept unrealistically low returns and a bigger share of risks, without offering much in return.

A two-tier system may be emerging, as governments move away from providing guarantees for generation and certain projects are favoured by DFI programmes such as Scaling Solar. This is an issue in Nigeria, while in cash-strapped Zambia, investors wonder whether payments to First Solar and Neoen’s Scaling Solar project will be prioritised above other obligations and what this would mean for Zesco’s other creditors.

Numerous disputes now in arbitration reflect problematic business environments, including Symbion Power in Tanzania, Endeavor Energy in Côte d’Ivoire and until recently Kenya’s Kinangop wind. Rwanda’s Energy Utility Corporation on 17 January registered a case against KivuWatt at the International Centre for Settlement of Investment Disputes; this is not the methane-to-power project’s first arbitration.

There are signs of private projects making progress, although success stories seem increasingly restricted to official procurement programmes or projects with strong DFI buy-in. Heavy development costs and elevated risks, with decreasing returns, are leading some investors to reconsider, but others are standing firm. Symbion and Endeavor have made progress with other projects over the past few months, while preliminary figures from African Energy Live Data show 54 private or public-private power projects began construction in 2018, with a combined capacity of around 3.34GW. This was a substantial improvement on 2017, when construction began on only 700MW of similar capacity, and 2016 (2.76GW). Live Data shows opportunities exist, even if there are not as many as investors would like.

But the troubles facing Blackstone and Quantum Power show that investors’ interest should not be taken for granted. More progress with more projects is needed to maintain momentum from private companies, who bring something different from the multinationals competing in DFI-backed procurement programmes. This investor class get involved in development at an earlier stage, in different markets, and will be sorely missed if they are squeezed so hard they leave the market.