Identifier
Created
Classification
Origin
08ASMARA322
2008-06-16 13:36:00
CONFIDENTIAL
Embassy Asmara
Cable title:
ERITREA'S FUNCTIONAL YET TEETERING ELECTRICAL
how-toVZCZCXRO0341 RR RUEHROV DE RUEHAE #0322/01 1681336 ZNY CCCCC ZZH R 161336Z JUN 08 FM AMEMBASSY ASMARA TO RUEHC/SECSTATE WASHDC 9743 INFO RUCNIAD/IGAD COLLECTIVE RHEHNSC/NSC WASHDC RUEKJCS/SECDEF WASHDC RUMICEA/JICCENT MACDILL AFB FL RUEPADJ/CJTF-HOA J2X CAMP LEMONIER DJ RUEKDIA/DIA WASHDC RHMFISS/CDR USCENTCOM MACDILL AFB FL RUEAIIA/CIA WASHDC
C O N F I D E N T I A L SECTION 01 OF 02 ASMARA 000322
SIPDIS
DEPARTMENT FOR AF/E AND INR
LONDON AND PARIS FOR AFRICA WATCHERS
E.O. 12958: DECL: 06/15/2018
TAGS: ECON ENRG PGOV PINR ER
SUBJECT: ERITREA'S FUNCTIONAL YET TEETERING ELECTRICAL
SYSTEM
Classified By: Ambassador Ronald K. McMullen for Reason 1.4 (d)
C O N F I D E N T I A L SECTION 01 OF 02 ASMARA 000322
SIPDIS
DEPARTMENT FOR AF/E AND INR
LONDON AND PARIS FOR AFRICA WATCHERS
E.O. 12958: DECL: 06/15/2018
TAGS: ECON ENRG PGOV PINR ER
SUBJECT: ERITREA'S FUNCTIONAL YET TEETERING ELECTRICAL
SYSTEM
Classified By: Ambassador Ronald K. McMullen for Reason 1.4 (d)
1. (SBU) Summary: Eritrea's electrical system provided
remarkable electricity availability to communities connected
to the main grid for several years. Without expensive
overhauls of the seven main heavy fuel oil (HFO) fired
generators during the next few years, however, Eritrea can
expect brownouts and blackouts in 2009 and complete system
collapse by 2011. The Eritrean Electric Company (EEC) must
also curtail future expansion for the time being, upgrade its
operational capacity, and begin charging customers market
rates for the system to survive. The World Bank (WB) has
engaged the Eritrean Ministry of Energy and Mines (MEM) to
fund the necessary upgrades to keep Eritrea's electrical
system running. End Summary.
MAIN GENERATOR CAPACITY
--------------
2. (SBU) The EEC operates two main electrical generation
facilities in Hirgigo and Beleza. The Hirgigo facility is
located outside Massawa and runs four MAN B&W 12K60MC-S HFO
engines, each rated at 22 megawatts (MW),for a total plant
rating of 88 MW. The engines were installed in 1998 and
2000, and supply 80% of Eritrea's on-grid electricity. The
Beleza plant, located 10 miles north of Asmara, consists of
three 5.7 MW Wartsila Vasa 46 diesel engines commissioned in
1995. These engines are fueled by HFO, operate in parallel
to Hirgigo, and are required to restart Hirgigo after a
blackout.
3. (SBU) Assab and Tessenai also use the Wartsila Vasa 64
diesel engines. Assab has two, erected in 1993, rated at 2
MW each, and 7 Mirrlees Blackstone engines, erected in 1988,
rated at 680 kilowatts (KW) each. Tessenai's total
generating capacity is 1.2 MW. All engines are currently
running light diesel fuel. Electricity in Assab and Tessenai
is limited to only a few hours per day.
OTHER PHYSICAL INFRASTRUCTURE
--------------
4. (SBU) The EEC's electrical grid runs from the main
generating facilities in Massawa to Asmara, where it branches
to cover most of Eritrea's population centers, including the
towns of Mendefera, Dekemhare, Keren, and Barentu. The
remote on-grid towns of Barentu, Agordat, and Adi Keih each
have their own generator, supply from 1-2 MW each. The EEC
provides electricity to 33% of Eritrea's population,
including the recent WB funded extension of service to 59
villages; 90,000 of Asmara's 450,000 people also have direct
access to electricity. The Government of the State of
Eritrea (GSE) plans to eventually expand rural
electrification, but this project is on hold while more
important systemic issues are addressed.
ALTERNATIVE ENERGY
--------------
5. (SBU) Eritrea generates only 1% of its electrical needs
(750 KW) from an off-grid wind farm near Assab. The GSE
claims it will expand the use of wind power, but no definite
plans are known. The MEM is also exploring a potential
geothermal field near Alid, 55 miles south of Massawa, which
could potentially provide 30 MW (20%) of Eritrea's current
electrical needs. The field is presently off-grid and will
require extensive additional investment in high-capacity
transmission lines before it is useful.
OVERHAUL OR OVERLOAD
--------------
6. (SBU) The EEC's main generators are in need of an
overhaul to forestall brown/blackouts in 2009 and complete
system failure in two or three years. According to the WB,
some generating units have exceeded their scheduled overhaul
times, and others will soon. If the overhaul is delayed, the
units will be damaged, increasing the eventual cost to
rehabilitate. An overhaul will also allow the engines to
operate at rated capacity; some generators currently run at
only 80%-90%.
7. (SBU) Asmara's electricity distribution system is more
than 40 years old and in need of an upgrade. The present
system creates large voltage fluctuations and loses 18% of
ASMARA 00000322 002 OF 002
transmitted power due to "technical losses." Upgrading the
distribution system will reduce technical loses to 7% and
result in estimated fuel savings of $2 million per year at
present prices.
THE WORLD BANK TO THE RESCUE
--------------
8. (SBU) The WB plans to finance the overhaul of the diesel
generators in Hirgigo and Beleza, as well as Asmara's
electricity distribution system, through a combination of
credits and grants. The project will save Eritrea's electric
system from complete collapse by 2011. Without the overhaul,
the generators will lose capacity and begin sustaining damage
until they become inoperative. The total cost of the
project, including funds already allocated, will be $39
million.
CHALLENGES TO ERITREAN ELECTRIC COMPANY'S OPERATIONS
-------------- --------------
9. (SBU) The EEC operates as a state-owned entity, providing
subsidized power and operating at a loss. Present customer
revenues do not cover operations, let alone capital
expenditures, due to GSE restrictions on customer rates and
recent increases in the price of fuel. Lucrative industrial
customers' electrical consumption fell from 60% of the total
in 1998 to only 26% in 2006, reflecting Eritrea's
deteriorating economy. The EEC is working with the WB to
improve its institutional capacity by raising electrical
rates to cover necessary institutional improvements, a
customer billing and tracking system, a new accounting
system, better fuel stock control, and improved metering and
billing.
10. (C) Comment: The WB rates Eritrea's electrical system as
satisfactory, despite its deficiencies. If the GSE follows
through on the WB's institutional capacity program, the EEC
will have better customer and supply information available to
allow more accurate financial analysis and to adjust
operations accordingly. Rather than being merely an
operational appendage of the GSE, the EEC can become a
stand-alone (although still state-owned) enterprise. It is
notable that the EEC is supervised by the MEM, which is known
by mining sector investors, like Nevsun, as professional,
forward-looking, and non-ideological in comparison to other
GSE ministries. End Comment.
MCMULLEN
SIPDIS
DEPARTMENT FOR AF/E AND INR
LONDON AND PARIS FOR AFRICA WATCHERS
E.O. 12958: DECL: 06/15/2018
TAGS: ECON ENRG PGOV PINR ER
SUBJECT: ERITREA'S FUNCTIONAL YET TEETERING ELECTRICAL
SYSTEM
Classified By: Ambassador Ronald K. McMullen for Reason 1.4 (d)
1. (SBU) Summary: Eritrea's electrical system provided
remarkable electricity availability to communities connected
to the main grid for several years. Without expensive
overhauls of the seven main heavy fuel oil (HFO) fired
generators during the next few years, however, Eritrea can
expect brownouts and blackouts in 2009 and complete system
collapse by 2011. The Eritrean Electric Company (EEC) must
also curtail future expansion for the time being, upgrade its
operational capacity, and begin charging customers market
rates for the system to survive. The World Bank (WB) has
engaged the Eritrean Ministry of Energy and Mines (MEM) to
fund the necessary upgrades to keep Eritrea's electrical
system running. End Summary.
MAIN GENERATOR CAPACITY
--------------
2. (SBU) The EEC operates two main electrical generation
facilities in Hirgigo and Beleza. The Hirgigo facility is
located outside Massawa and runs four MAN B&W 12K60MC-S HFO
engines, each rated at 22 megawatts (MW),for a total plant
rating of 88 MW. The engines were installed in 1998 and
2000, and supply 80% of Eritrea's on-grid electricity. The
Beleza plant, located 10 miles north of Asmara, consists of
three 5.7 MW Wartsila Vasa 46 diesel engines commissioned in
1995. These engines are fueled by HFO, operate in parallel
to Hirgigo, and are required to restart Hirgigo after a
blackout.
3. (SBU) Assab and Tessenai also use the Wartsila Vasa 64
diesel engines. Assab has two, erected in 1993, rated at 2
MW each, and 7 Mirrlees Blackstone engines, erected in 1988,
rated at 680 kilowatts (KW) each. Tessenai's total
generating capacity is 1.2 MW. All engines are currently
running light diesel fuel. Electricity in Assab and Tessenai
is limited to only a few hours per day.
OTHER PHYSICAL INFRASTRUCTURE
--------------
4. (SBU) The EEC's electrical grid runs from the main
generating facilities in Massawa to Asmara, where it branches
to cover most of Eritrea's population centers, including the
towns of Mendefera, Dekemhare, Keren, and Barentu. The
remote on-grid towns of Barentu, Agordat, and Adi Keih each
have their own generator, supply from 1-2 MW each. The EEC
provides electricity to 33% of Eritrea's population,
including the recent WB funded extension of service to 59
villages; 90,000 of Asmara's 450,000 people also have direct
access to electricity. The Government of the State of
Eritrea (GSE) plans to eventually expand rural
electrification, but this project is on hold while more
important systemic issues are addressed.
ALTERNATIVE ENERGY
--------------
5. (SBU) Eritrea generates only 1% of its electrical needs
(750 KW) from an off-grid wind farm near Assab. The GSE
claims it will expand the use of wind power, but no definite
plans are known. The MEM is also exploring a potential
geothermal field near Alid, 55 miles south of Massawa, which
could potentially provide 30 MW (20%) of Eritrea's current
electrical needs. The field is presently off-grid and will
require extensive additional investment in high-capacity
transmission lines before it is useful.
OVERHAUL OR OVERLOAD
--------------
6. (SBU) The EEC's main generators are in need of an
overhaul to forestall brown/blackouts in 2009 and complete
system failure in two or three years. According to the WB,
some generating units have exceeded their scheduled overhaul
times, and others will soon. If the overhaul is delayed, the
units will be damaged, increasing the eventual cost to
rehabilitate. An overhaul will also allow the engines to
operate at rated capacity; some generators currently run at
only 80%-90%.
7. (SBU) Asmara's electricity distribution system is more
than 40 years old and in need of an upgrade. The present
system creates large voltage fluctuations and loses 18% of
ASMARA 00000322 002 OF 002
transmitted power due to "technical losses." Upgrading the
distribution system will reduce technical loses to 7% and
result in estimated fuel savings of $2 million per year at
present prices.
THE WORLD BANK TO THE RESCUE
--------------
8. (SBU) The WB plans to finance the overhaul of the diesel
generators in Hirgigo and Beleza, as well as Asmara's
electricity distribution system, through a combination of
credits and grants. The project will save Eritrea's electric
system from complete collapse by 2011. Without the overhaul,
the generators will lose capacity and begin sustaining damage
until they become inoperative. The total cost of the
project, including funds already allocated, will be $39
million.
CHALLENGES TO ERITREAN ELECTRIC COMPANY'S OPERATIONS
-------------- --------------
9. (SBU) The EEC operates as a state-owned entity, providing
subsidized power and operating at a loss. Present customer
revenues do not cover operations, let alone capital
expenditures, due to GSE restrictions on customer rates and
recent increases in the price of fuel. Lucrative industrial
customers' electrical consumption fell from 60% of the total
in 1998 to only 26% in 2006, reflecting Eritrea's
deteriorating economy. The EEC is working with the WB to
improve its institutional capacity by raising electrical
rates to cover necessary institutional improvements, a
customer billing and tracking system, a new accounting
system, better fuel stock control, and improved metering and
billing.
10. (C) Comment: The WB rates Eritrea's electrical system as
satisfactory, despite its deficiencies. If the GSE follows
through on the WB's institutional capacity program, the EEC
will have better customer and supply information available to
allow more accurate financial analysis and to adjust
operations accordingly. Rather than being merely an
operational appendage of the GSE, the EEC can become a
stand-alone (although still state-owned) enterprise. It is
notable that the EEC is supervised by the MEM, which is known
by mining sector investors, like Nevsun, as professional,
forward-looking, and non-ideological in comparison to other
GSE ministries. End Comment.
MCMULLEN