Any counsel or investor scoping a Sudanese power mandate this month faces a specific and immediate problem: the commercial opportunity is real, the government's appetite for capital is real, and the legal terrain beneath both is largely unmapped for anyone advising from outside the jurisdiction. Foreign investment in Sudan's electricity sector is no longer a speculative conversation — and increasingly, the capital actually closing deals is coming from China, the Gulf, and elsewhere in the East, not the West. Hunan Construction and Engineering Group's recent talks with Sudan's Ministry of Energy over two hybrid thermal-solar plants — a combined 500 megawatts at Jomi'iya and Garri — confirm that Chinese capital is moving into a sector that has absorbed close to $3 billion in war damage since 2023. For counsel advising any co-investor, EPC contractor, or DFI sitting behind deals of this kind, the question is not whether Sudan's power sector will attract capital. It is whether the legal structure around that capital will hold when tested.

Why Is Foreign Investment in Sudan's Power Sector Accelerating Now?

Three years into a conflict that has fragmented the national grid into effectively separate northern and southern networks, Sudan's energy ministry has confirmed what UNDP data already show: roughly $3 billion in cumulative damage, transmission losses running into the tens of thousands of kilometres of cable, and electricity access confined to something between 45% and 60% of the population, concentrated in the cities the army has recently retaken. Against that backdrop, Chinese, Gulf, and other Eastern investors are doing what they have consistently done across fragile and conflict-affected states over the past decade: moving early and directly, at a scale and risk appetite Western institutional capital rarely matches even outside conflict settings. That asymmetry is worth stating plainly rather than treating as subtext: given Sudan's sanctions history, ongoing conflict, and the general risk posture of Western banks and development finance institutions, Western capital is not, realistically, a near-term source of finance for this sector — whatever the statute book permits. Scholarship on the Belt and Road Initiative's footprint in conflict-affected states shows a consistent pattern: infrastructure investment moves into fragile settings ahead of institutional recovery, and project terms are shaped as much by fragmented state authority as by conventional commercial negotiation. Sudan's power sector, restructured on paper by the Investment Encouragement Act 2021 and the Public-Private Partnership Act (Law No. 10 of 2021), is a live test of how that pattern plays out under Sudanese law specifically — not as a general emerging-market proposition, but as a jurisdiction with its own statute book, its own state monopoly structure, and its own recent history with large foreign-financed power projects.

What Does Sudan's Legal Framework Actually Offer a Foreign Investor?

Sudan's Investment Encouragement Act 2021 is more permissive than many counterparts in the region. Article 5 sets out the general principles investment projects must meet, Article 6 establishes the Investment Organ with authority over strategic approvals, and Article 19 defines the category of "strategic investment" — the classification most large power projects will fall into, and the one carrying the broadest incentive package, including the tax exemptions and customs relief the Act makes available to qualifying projects. The PPP Act, passed the same year, was designed specifically to draw private capital — foreign and domestic — into infrastructure. Sector-specific reform proposals have separately sought to designate the state-owned Sudanese Electricity Holding Company as the formal off-taker under any power purchase agreement, though this has not been confirmed as settled text within the PPP Act itself and should be verified against the current Electricity Act framework before being relied upon in transaction documents. On paper, the Investment Encouragement Act and PPP Act together are a workable statutory foundation for foreign investment in Sudan's energy sector.

What Does Sudan's Legal Framework Actually Offer a Foreign Investor?

Sudan's Investment Encouragement Act 2021 is more permissive than many counterparts in the region. Article 5 sets out the general principles investment projects must meet, Article 6 establishes the Investment Organ with authority over strategic approvals, and Article 19 defines the category of "strategic investment" — the classification most large power projects will fall into, and the one carrying the broadest incentive package, including the tax exemptions and customs relief the Act makes available to qualifying projects. The PPP Act, passed the same year, was designed specifically to draw private capital — foreign and domestic — into infrastructure. Sector-specific reform proposals have separately sought to designate the state-owned Sudanese Electricity Holding Company as the formal off-taker under any power purchase agreement, though this has not been confirmed as settled text within the PPP Act itself and should be verified against the current Electricity Act framework before being relied upon in transaction documents. On paper, the Investment Encouragement Act and PPP Act together are a workable statutory foundation for foreign investment in Sudan's energy sector.

The gap is not in the legislation's ambition but in its operating environment. The sector remains a state monopoly, and regulatory responsibility is split across at least three bodies — the Directorate of Renewable Energy, the Sudanese Hydro Generation Company, and the Sudanese Electricity Distribution Company — whose overlapping mandates have historically produced inconsistent planning rather than coordinated policy. A standard, tested power purchase agreement template still does not exist for large-scale generation. For a foreign investor, that means the PPP Act's promise of a business-friendly framework has to be built out, contract by contract, rather than relied upon as settled practice.

It is worth being direct about where this leaves the current wave of Chinese-backed projects — and the lesson here is a Sudanese contracting-practice lesson, not a China-specific one. Sudan has been here before. The Merowe Dam — the country's largest hydropower project, financed substantially through Chinese contractors and Gulf and Sudanese state capital in the 2000s — was technically delivered in full, reaching its promised 1,250-megawatt capacity. What it did not deliver was clean governance: no comprehensive environmental or social impact assessment, tens of thousands displaced without adequate resettlement, and contracting concentrated among firms close to the regime with little independent oversight of the award process. Chinese and Gulf capital remain, by a wide margin, the most realistic source of financing for Sudan's power sector reconstruction — Western institutional capital has shown no comparable appetite for this risk profile. The lesson for today's Jomi'iya and Garri proposals is accordingly not about the nationality of the capital involved. It is that a project can be completed on schedule and to spec and still generate governance and reputational exposure that follows every party attached to it for years afterward. Any co-investor, insurer, or contractor — whichever government's capital sits behind the deal — relying solely on the PPP Act's statutory language, without contract-level protections addressing procurement transparency and independent verification of the award process, is underwriting a risk the statute alone does not price.

How Does Sudan's Position Compare to International Practice?

Benchmarked against the UNCITRAL Model Legislative Provisions on Privately Financed Infrastructure Projects — the closest thing to an international baseline for PPP and concession law — Sudan's framework is notably thinner on unsolicited-proposal procedures, competitive award transparency, and standardised dispute-resolution drafting. The UNCITRAL model anticipates detailed procurement safeguards precisely because their absence is what produced the governance concerns still associated with Sudan's largest prior power project, Merowe. Sudan's PPP Act does not yet carry that level of procedural detail, and the sector's regulatory fragmentation compounds the gap. The commercial implication is straightforward: deal structuring for a Sudanese power project currently has to do more work than the statute does. Arbitration clauses, sovereign risk insurance (available, notably, through the specialised insurer the 2021 Act itself created), and independent technical verification mechanisms are not optional extras — they are substitutes for procedural protections that a UNCITRAL-aligned jurisdiction would provide by default. This applies regardless of where the capital originates: treaty-level protection cannot always be assumed to backstop a co-investor's position. Chinese BITs with Belt and Road partner states, for instance, often provide narrower investor-state dispute settlement access than a Western-style BIT would — so the contract itself has to carry more of that weight directly, whichever capital sits behind the deal.

The Investment Case

Before a properly structured legal framework is in place, Sudan's power sector looks exactly as it does today: acute need, fragmented regulation, and capital entering on terms shaped more by urgency than by settled practice. After that framework is correctly built into transaction structuring — PPAs drafted against UNCITRAL-standard procedural benchmarks, dispute resolution clauses that do not rely on treaty-level ISDS access, and procurement transparency mechanisms addressing the specific governance weaknesses the Merowe precedent exposed — the same $3 billion damage figure becomes something else: a reconstruction opportunity in a market where electricity access sits at under 60% of the population and demand has nowhere to go but up. Sudan's economy lost $6.4 billion in GDP in 2023 alone, and UNDP-linked modelling puts the cumulative loss at $18.8 billion by 2043 even under an optimistic peace scenario — numbers that describe both the scale of the damage and the scale of the market waiting on the other side of a functioning legal and regulatory bridge. Foreign investment in Sudan's power sector is not a bet on the war ending. It is a bet on which capital is positioned, contractually and legally, when it does.

Where This Leaves Counsel and Investors

Sudan's commercial law environment rewards early, well-structured entry and punishes anyone treating the statute book as self-executing. SCLO has advised on Sudan's PPP and infrastructure financing landscape for close to two decades — including the €87 million Al-Manara BOT water project for Khartoum Water Corporation and direct engagement with the World Bank's PPP framework for Sudan — and is the author of the Sudan chapter in Chambers Project Finance 2019, alongside a Chambers Global ranking held continuously since 2013/2014. For any counsel or institutional investor — from Beijing, the Gulf, Ankara, or elsewhere — assessing whether and how to enter Sudan's power sector, the legal groundwork needs to be laid before the term sheet, not after. Contact SCLO to arrange a consultation on structuring foreign investment in Sudan's energy sector.