ENERGY, THE FOUNDATION FOR DEVELOPMENT

UNCLAS ANTANANARIVO 000881 SIPDIS SENSITIVE SIPDIS DEPT FOR AF/E, AF/FO PARIS FOR D'ELIA JOHANNESBURG FOR FCS E.O. 12958: N/A TAGS: ENRG EPET PGOV PREL ECON MA SUBJECT: ENERGY, THE FOUNDATION FOR DEVELOPMENT ¶1. (SBU) SUMMARY: Energy Minister Ramiaramanana is pursuing multiple partnerships to revitalize the state electric utility company. He explained to the Ambassador August 30 his ambitious plans to improve electricity supply in major coastal cities and in Antananarivo. The Minister is also keen to seek opportunities in several alternative energy technologies. END SUMMARY. ¶2. (SBU) In a cordial first meeting with the Ambassador, Minister of Energy Patrick Ramiaramanana spoke enthusiastically about retooling the state electric and water utility, JIRAMA, so that it may be the foundation for the Madagascar Action Plan (MAP) for economic development. The Minister reported that a new power station began operation August 29 in the northern city of Diego Suarez, a region with chronic brown-outs. He said this is the first new power station construction since independence in 1960. ¶3. (SBU) Minister Ramiaramanana said the GOM has procured three new generators from the U.S. company Cummins for the tourist area of Nosy Be. He continued that power systems in Mahajunga, Tamatave, and Tulear were being refurbished and reinforced to meet demand in these key coastal cities. In the southern city of Fort Dauphin, the Minister noted that the Rio Tinto / QMM mining concession includes a provision for the company to provide power to the city. For the capital, Antananarivo, the Minister reported that economic growth and power demand had outstripped supply in recent years. He said the Ministry will bring an additional 40 megawatts online in 2008. ¶4. (SBU) Noting that in his previous position as Mayor of Antananarivo he served as Chairman of the Board of JIRAMA (a position he said he still occupies),Ramiaramanana expressed great pride in putting the state utility on track. He said the GOM is pursuing Independent Power Provider (IPP) arrangements with various partners to sell power to JIRAMA, phasing out the costly system in which the utility rented equipment from suppliers. The Minister confirmed his intention to maintain JIRAMA as a public company and has no plan to privatize JIRAMA. "It is a question of national pride," he said. ¶5. (SBU) Moving to rural electrification, Minister Ramiaramanana seeks 40 small scale power generators to provide electricity to Madagascar's second-tier cities. He also elaborated a plan, once the above mentioned supply improvements are completed, to shift more production towards alternative energy like wind, solar, and hydro. Ramiaramanana, a chemist by training, also mentioned biofuel opportunities in jatropha, sharing his plan to establish a research center in Madagascar to be a world leader in this renewable energy source. ¶6. (SBU) COMMENT: Inadequate power supply, load shedding, and JIRAMA's historically poor performance have all been obstacles to both economic growth and attracting investment to Madagascar. The Minister's positive assessment and the emergence of some early success stories (though admittedly only short-term fixes) give reason to hope that these obstacles gradually are being overcome. Additionally, his emphasis on small-scale IPPs -- rather than seeking a massive overhaul or privatization of JIRAMA -- offers a range of opportunities for relatively small investors. At the same time, the power problem remains urgent and much is on the line, not least the Minister's own future in the cabinet. Although JIRAMA and the Minister are also responsible for water supply (another urgent challenge),this topic did not surface in this meeting. MARQUARDT