CAMEROON'S MINISTER OF ENERGY AND WATER ON SECTOR

UNCLAS YAOUNDE 000072 SIPDIS SENSITIVE SIPDIS DEPARTMENT PLEASE PASS USTDA E.O. 12958: N/A TAGS: CM ECON ENRG EPET EWWT SUBJECT: CAMEROON'S MINISTER OF ENERGY AND WATER ON SECTOR CHALLENGES ¶1. (SBU) Summary: Cameroon Minister of Energy and Water Jean Bernard Sindeu realizes there is a serious energy deficit, costing the economy an estimated 1-1.5% of annual GDP growth. He is planning a major expansion in the electricity sector but foresees continued significant supply shortfalls in 2008. He praised USTDA support for their 2001 and 2007 missions in Cameroon to explore a number of possible energy projects. The Minister discussed possible new private investments in the energy sector, including renewable energy and oil, and noted continuing problems with water distribution. End summary. The Troubled Power Sector -------------- ¶2. (U) In a recent courtesy call by Ambassador, Minister of Energy and Water Jean Bernard Sindeu said Cameroon's electricity sector was in transition. Major reforms in past seven years led to the privatization of electricity utility company to a U.S. firm (AES/Sonel),the creation of an electricity regulatory board, and a new rural electrification agency. He hoped to see a continuing reduction in the role of the state in power generation, distribution and transmission. ¶3. (U) He acknowledged that AES/Sonel inherited a degraded infrastructure and has had many difficulties meeting the energy demand of both private households and the industrial sector. However, in 2007 AES/Sonel made some investments in transmission and generation. Sindeu anticipated major expansions in the sector, with the addition of an AES gas plant at Kribi, and five new hydroelectric dams at Lam Pangar, Nachtigal, Memve'ele, Colomine, and Birni a Warak. ¶4. (U) Nevertheless, he said the economy is losing 1-1.5% GDP growth each year because of the poor quality and insufficient supply of electricity. He thought 2008 would be a difficult year for the electricity sector, with an 8% rise in demand every year and rising frustration with the sector's problems, especially in rural areas. He appreciated the USTDA's cooperation in exploring the feasibility of the construction of two gas plants in Kribi and Limbe and hoped the U.S. could help with financing energy projects. The GRC has an energy action plan, but lacks the funding to fully implement it, he said, adding that "there is no magical touch" to solve this problem. Energy Options -------------- ¶5. (U) The Minister's staff outlined several renewable energy options, including a prospective $2 billion investment by the U.S.-based Grynburg Petroleum Company to produce ethanol from sugar and biodiesel from jatropha. The GRC is reportedly in the final stages of developing a biocarbon policy and is considering solar power alternatives, with two solar pilot projects in the south. Cameroon imports LPG for cooking but has bottlenecks because of insufficient storage. Oil production has been falling since 1985 but several companies are considering new exploration investments. An oil pipeline is contemplated between Limbe's refinery and Douala and possibly between Malabo and Douala (for LNG). Water -------------- ¶6. (U) Minister Sindeu noted that Cameroon has serious water problems as a result of poor infrastructure and climactic conditions, especially in the arid north and Douala. The GRC had recently privatized water distribution to a Moroccan firm serving 107 urban centers. Sindeu said he would welcome U.S. assistance in this sector. Comment -------------- ¶7. (SBU) An engineer and career civil servant, Sindeu was logical, candid and informed, bringing an impressive team of his energy experts into the meeting. Electricity problems are a top business complaint in Cameroon and a major, growing frustration for the population at large. Unfortunately, Sindeu was not hopeful for a major change in the short term (a more downbeat prognosis, he said, than AES/Sonel would give). While Cameroon is said to have the second biggest hydroelectric potential in Africa (after the DRC),only about one percent of that capacity has been developed, with three dams along the Sanaga and Benoue rivers, generating a total of 722 megawatts. AES/Sonel operates 42 small thermal plants but its operations are plagued by inefficiencies. Water problems are also chronic, with 34 percent of the population lacking access to potable water. There are additional U.S. commercial opportunities in these sectors, which we will continue to explore. GARVEY