GUINEA'S POWER COMPANY SHORTING OUT

UNCLAS SECTION 01 OF 03 CONAKRY 000114

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E.O. 12598: N/A
TAGS: ECON PGOV GV
SUBJECT: GUINEA'S POWER COMPANY SHORTING OUT



1. (SBU) SUMMARY. A tour of Conakry's main power plant and
meetings with The Electric Company of Guinea illustrate the extent
of the country's electricity problem and why it is nearly impossible
to meet popular demands. The company's equipment is old,
unreliable, and for the most part, broken down. Frequent power
outages occur everyday throughout Conakry with some districts having
gone months or years without power. Most of the interior of the
country has no power other than private generators. It is going to
take substantial investment, both financially and technically, to
keep the lights on, let alone expand the capability of the power
grid to satisfy the city's growing demand. END SUMMARY.


2. (SBU) Over the past several weeks, Econoff met with officials of
Guinea's national electrical company, Electricite de Guinee (EDG).
The interlocutors ranged from the Directeur General to the Director
of Planning and Equipment. The meetings included not only office
interviews, but also a tour of the generator facility along with the
Facilities Manager for the Embassy and his assistant. In the end,
contacts generally said the same thing - the country's power network
is in bad shape and likely to get worse.


3. (U) The Director General, Mr. Diallo, said that power generation
began at the main plant in Conakry over 70 years ago with the
construction of the first generator facility, identified as Tombo 1.
(NOTE: It is no longer operational due to a lack of maintenance and
spare parts. END NOTE.) There have been various entities that have
operated the power network in Guinea. Entreprise Nationale
d'Electricite de Guinee and Societe Nationale d'Electricite were
the previous two power companies. Prior to 2000, there was a
consortium, Societe Generale d'Electricite de Guinea (SOGEL) that
operated the generators for Guinea. Then in 2000, Hydro Quebec left
the group, and they reformed as EDG.


4. (SBU) The EDG Director stated that EDG has 16 generators in
place at its main plant in Conakry, but that only four are currently
operational. The Embassy Facilities Manager, who also visited the
power plant, confirmed that the entire facility is in poor
condition. Furthermore, the EDG Director said that the four
operational generators only provide between 129 and 139 megawatts,
while they need 195 megawatts to provide power 24 hours per day for
Conakry alone. In addition, he related that the four operational
generators are over-used, and have not been adequately maintained
for at least the last six years.


5. (SBU) According to the Director, EDG also draws on
hydro-electric dams. He estimated that 80% of electricity on the
Guinean grid is derived from the dams between July and November,
while in the dry season the generators supply about 60% of the
power. Currently, Guinea has five dams on the grid; Garrafiri,
Kinkon, Grandes Chuttes, Donkeya, and Bannea. Diallo relayed that
Conakry's electrical grid only extends to a few cities in the
capital area in the southwest of Guinea, so that in effect, when he
spoke of power needs, he was only referring to the needs of the
population currently connected to the Conakry grid.


6. (SBU) Pointing out that Guinea's electrical network has not seen
significant improvement since 1987, the Director said that this lack
of investment undermines the company's ability to effectively
generate and distribute electricity. He claimed that spare parts
are so scarce that the company is scavenging parts from the
non-operational generators to keep the four remaining generators
running. Mr. Diallo was unsure how long they could continue to
maintain the generators in this fashion.


7. (SBU) The Director explained that each of the generators uses
heavy fuel oil (mazout) which EDG purchases from the Alumina Company
of Guinea (ACG). (NOTE: ACG is owned by Russian bauxite giant
Rusal. END NOTE.) He claimed that Rusal does this as a favor for
EDG free of charge, and that Rusal just increases its own imports of
mazout to cover what EDG needs. Mr. Diallo said that Rusal requires
payment upfront, and that while EDG is free to import mazout, it is
cheaper to partner with Rusal than to import independently. The
Director General stated that each generator consumes 2.5 tons of
heavy oil per hour at a cost of 580 USD per ton, or 34,500 USD per
generator, per day, if it operates 24 hours per day.


8. (SBU) On the financial side, according to Roger Milimono, the
Economic Advisor to the Minister of Finance, EDG currently is the
third largest debtor to the Government of Guinea. He claims that
EDG owes 54 billion GnF (approximately 12 million USD) to the
government. Directeur General Diallo stated that the Government

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pays EDG about 4 billion Gnf (approx. 900,000 USD) monthly for
electricity and that EDG collects another 6 billion GnF (approx. 1.3
million USD) from other customers. Since January 2008, Embassy
Conakry has solely been on generator power, due to internal embassy
technical problems. However, when the Embassy was using EDG, our
bill represented about 5% of EDG receipts. (COMMENT. In December
2006, EDG officials approached the Embassy and asked if we could pay
our bill in advance because the company would not otherwise be able
to meet payroll demands. END COMMENT).


9. (SBU) Director General Diallo acknowledged EDG's significant
debt to the Government. He said that the recent termination of the
fuel price subsidy is going to massively impact EDG since they will
have to pay 60% more for fuel than before, when the company could
not even afford to operate before the increase. Mr. Diallo said
that collections are a problem for the company. He claimed that
currently EDG has only 130,000 customers in Conakry (NOTE: Conakry's
current population is between 2 to 3 million. END NOTE.) He
lamented that most electrical customers get their power from other
people by using illegal hookups, and then paying them a markup for
the power instead of EDG.


10. (SBU) He followed with a description of a pilot project
initiated in 2004 by the World Bank (WB) and the African Development
Bank (ADB). The program began in a quartier of Conakry where EDG
had 4000 registered subscribers, but estimated 13,000 customers,
based upon usage. EDG started a surveillance operation to find the
illegal connections to homes and businesses. According to Diallo,
the program resulted in EDG disconnecting most of the unauthorized
users, while raising the number of subscribers to 10,000. EDG is
working with the WB and ADB on expanding the project to other
quartiers of Conakry. However, the Director General did not have
any information as to how EDG would follow-up on the initial project
success, to assure that the connections were not cut again.


11. (SBU) Diallo said that ADB is funding a survey of the
distribution network in other quartiers of Conakry, as well. He
admitted that over 30% of the electricity supply was lost in the
distribution. (NOTE: Embassy contacts report that the loss may be
as high as 60%. END NOTE).


12. (SBU) Recalling the installation of the current reform
government, Mr. Diallo remembered that when the then-new Prime
Minister Kouyate promised water and power to everyone within 90 days
after his March appointment, the PM had not consulted with EDG. He
said the promise was completely unfounded, and unrealistic, since it
was technically impossible to do what the Prime Minister promised.


13. (SBU) The Director General then revealed that the compromise
program to provide power three out of every four days is no longer
possible because there is less water in the dams since Guinea is
nearing the end of its dry season. The Director stated that EDG
over-used its hydroelectric generators during the Africa Cup soccer
matches held in January and February 2008, in order to keep the
televisions working and to avoid possible riots and destruction of
EDG equipment.


14. (SBU) The EDG Director said that Guinea, Senegal and other
countries in the region have entered into agreements to build dams
on the river between Guinea and Senegal, in order to provide
electricity to each of them. They expect these projects to come on
line by 2012, although he was unclear how the projects would be
funded, how the electricity would be shared, and who would pay for
the transmission lines from the border to Conakry.


15. (SBU) COMMENT. Guinea is, with the exception of the Gambia, the
country with the worst electrical network in Africa, according to a
survey by the Center for Global Development, March 2008. It
experiences over 200 days per year with electrical outages according
to the World Bank. There are frequent protests, sometimes violent,
in various neighborhoods in Conakry over the lack of power. The
situation is worse in the interior with many communities having no
power at all. The provision of reliable power would not only help
placate the population, but would enhance the ability of Guinea's
businesses to produce products efficiently, and eventually augment
GDP growth.
Unfortunately, there is no help on the horizon. It is likely only a
matter of time before the currently operating generators break down
completely. Furthermore, EDG is running a significant operating
deficit that is likely to get even bigger with the increase in fuel
prices. The GoG must either convince foreign donors to once again

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step up with large amounts of aid to fix the system, or else
completely overhaul the system themselves in order to improve
efficiency and regulate consumer registration and billing. END
COMMENT.

CARTER