ENERGY IN ERITREA: AN OFF AND ON PROPOSITION

C O N F I D E N T I A L ASMARA 000815

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LONDON FOR AFRICA WATCHERS
PARIS FOR AFRICA WATCHERS

E.O. 12958: DECL: 10/05/2016
TAGS: PGOV ECON EPET ER
SUBJECT: ENERGY IN ERITREA: AN OFF AND ON PROPOSITION


Classified By: AMBASSADOR SCOTT H. DELISI FOR REASONS 1.4(b) and (d).


1. (U) Summary: The following cable provides a snapshot of
the erratic energy situation in Eritrea from the spring to
the present. Resulting from the GSE's strictly controlled
economy, a limited supply of hard currency and an opaque and
seemingly uncoordinated bureaucracy, uncertainties in power
and energy availability will continue to plague end users in
Asmara. End Summary.

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Power Ups and Downs Through the Spring and Summer
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2. (C) On the first of April 2006, the Eritrean Electric
Authority (EEA) announced scheduled, rolling power outages of
six hours per day blaming a worldwide shortage of generator
lubricant due to Hurricanes Katrina and Rita and the Asian
tsunami of 2004. As is often the case with the government

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announcements, this information was partly true and partly
false. A source in the petroleum industry explained that the
major manufacturers of the lubricant are, in fact, in
Indonesia and Louisiana. The natural disasters had resulted
in a constriction of the supply and an increase in price.
However, the shortage in lubricant was actually created when
the EEA failed to renew the supply contract when it came due
because of a shortage of hard currency. When they belatedly
entered negotiations for a new contract, the price was beyond
what they could immediately afford (as a result of the higher
prices caused by the natural disasters) which resulted in
delayed procurement until they could scrape together the
money for the purchase. A decision apparently was made at
the time to reduce power production due to the lubricant
problem. However, even after the lubricant shipment arrived
at the port of Massawa at the end of April, the EEA announced
a new, more extensive schedule of rolling cuts for the month
of May, ostensibly still due to the lack of lubricant.


3. (U) As the summer months progressed, power outages
increased in duration and breadth. Citywide, there was no
electricity from midnight to 7:00 AM. During the rest of the
day, alternating sections of Asmara,s power grid were out
for six to eight hours at a time. At first, the outages
adhered to a schedule (published only in the local language
version of the government newspaper). As June turned into
July, the outages increased in duration and the published
schedule became completely irrelevant. The third week of
July encompassed the most severe shortages, with some sectors
of the grid receiving no power for over 24 hours at a
stretch. On July 26, rumors began to circulate that the
power was going to be put back on 24 hours a day. With no
official notice and without explanation, the electricity in
Asmara returned to 24-hour the same day, and has been ever
running continually ever since.

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Impact of Outages on Local Economy
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4. (C) Post has heard rumors that thousands of dollars
worth of damage may have been inflicted on the city,s power
generation and transmission equipment, which are not built to
withstand the power surges that normally occur when power is
turned on and off. Although the cellular network was
unaffected for several weeks after the initial power cuts in
the spring, cellphones began to fail wholesale as the finite
supply of diesel was increasingly cornered by an increasing
number of standby generator owners. By June, the mobile
phone network was simply shut down from midnight onwards and
by July, the system was only operating about half of the time
during daylight hours. The main server tracking individual
phone records crashed repeatedly, and finally collapsed,
costing the government-owned telephone company Eritel
additional revenue. (Post heard a figure of $50,000). The
landline telephone system also suffered increasingly from
damaged transformers and alternating surges and outages.
Towards the end of the outages, land lines were no longer
dependable even when power was on in the surrounding grid.


5. (C) While statistics for businesses, particularly small,
family-owned businesses, are not available in this closed
environment, anecdotal reports indicate damage to Eritrea,s
already suffocating business environment was severe.
Examples of businesses known to Embassy employees that closed
over the summer include an ice cream shop and four hair
salons; enterprises that require a predictable and dependable
electric supply. Post's medical officer reported a serious
spike in food poisonings and illnesses in the spring related
to poor food handling, as restaurants coped with the loss of
refrigeration and freezers. Embassy operations were, on the
whole, only minimally affected. For several days, however,
the Embassy,s American Center, which is off-compound and has
no backup generator, received no power until 2:00 PM, making
it increasingly difficult to run internet and library
services or keep offices going.

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COMMENT
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(C) According to the source in the petroleum industry, the
GSE decided to cut the power in a deliberate attempt to save
limited hard currency but unfortunately did not consult with
any technical experts about the potential consequences of the
decision. Only after incurring significant damage to the
power generation and transmission equipment, and significant
hard currency costs in any event, did the GSE reverse the
decision and return to uninterrupted power. Whether it has
the financial resources to continue a constant power supply
for the foreseeable future is, however, uncertain.
Unfortunately, the shortage of marine lubricant in country
(the original, publicly provided reason for the outages) will
also continue to present a problem in the months ahead as
foreign currency reserves in Eritrea continue to dwindle. The
concerns about power generation, coupled with the fuel
shortages discussed septel, will ensure that Eritrea,s
energy future remains highly uncertain for some time to come.
DELISI