DR-based Consortium Presses for Action on Haiti Electricity

C O N F I D E N T I A L SANTO DOMINGO 000047 SIPDIS E.O. 12958: DECL: 2020/02/04 TAGS: ENRG EAID EFIN DR HA SUBJECT: DR-based Consortium Presses for Action on Haiti Electricity Recovery CLASSIFIED BY: Jonathan C. Weyer, Economic Unit Chief, DOS, Ecopol; REASON: 1.4(B),(D) ¶1. (SBU) Summary: Since the 1/12 earthquake in Haiti, a consortium of Dominican electricity companies (and D.R.-based international electricity companies) have been working with Electricite de Haiti (EDH) to bring the electricity sector in Haiti back on line . The group, calling itself HEART, has conducted a series of on-the-ground assessments and worked with EDH to put together a proposed 90-day budget. Although HEART officials were quick to caution that the figure may be reduced as a result of private sector contributions, the USD 83 million price tag has been described as a "gold-plated wish list." In a 2/2 conference call, HEART officials pressed the donor community to secure funding as soon as possible, since they have done all they can without said funding. The World Bank agreed to host a meeting in Washington on 2/5 to discuss. END SUMMARY. ¶2. (U) Shortly after the earthquake in Haiti, officials from Dominican and other D.R.-based international electricity companies began working with EDH to assess the damage to the grid and to bring the sector back on line. The group, eventually dubbing itself HEART, is comprised of several entities, including: CDEEE (the DR's state-owned electricity authority); the Edes (the three companies that control electricity distribution in the DR); and AES Dominicana, CEPM, and EGE Haina (three of the largest generators in the DR). On the Haitian side, NRECA, a U.S-based association of electricity cooperatives, began working with EDH to help coordinate the assessment and establish the budget. The Budget: USD 83 Million and Rising ¶3. (U) HEART presented the budget request in a 1/29 conference call. The USD 83 million budget covers two distinct needs. The first part details the funds deemed necessary to cover the first 90 days of emergency recovery operations in the metro Port au Prince (PAP) area, estimated at USD 38 million. It envisions returning PAP to the 100 mW level, below the estimated pre-quake peak demand of 160 mW. Areas outside PAP - including the resettlement areas that are eventually going to need to be connected to the network - are not covered. The second part covers EDH's operations for the same 90 day period, expected to exceed USD 45 million. This figure addresses EDH's needs to run the entire Haitian grid, not just PAP. ¶4. (SBU) HEART had hoped that donations from the private sector would reduce the USD 38 million recovery operation figure. During the 1/29 conference call, a HEART official noted that he would be speaking with the U.S.-based Edison Institute to see if any of its affiliated companies would be able to donate equipment and manpower costs (estimated to exceed USD 6.6 million). However, in the follow-up 2/2 conference call, the official reported on his conversation with the Edison Institute, and did not mention an agreement to forego those costs. Instead, he said that he had urged the affiliated companies to go to Haiti without payment guarantees, saying that the details "could be worked out later." Although the companies agreed to begin making initial preparations, they stressed three main concerns would have to be addressed fully before they would participate: 1) the security of their personnel, preferably to be provided by the U.S. Armed Forces; 2) the payments of their mobilization costs (including both equipment and personnel); and 3) the finalization of logistics for room and board for its personnel. HEART noted that, if donors could cover the mobilization and logistic costs now (estimated at USD 3.8 million), operations could begin, while a decision on the equipment and manpower costs could be worked out later. ¶5. (U) Furthermore, HEART officials expect that the USD 38 million figure will grow, not fall. This figure was based on EDH's initial assessments that all generators were operational. Upon further inspection, generators producing an estimated 60 mW of electricity will need to be replaced or repaired, given the discovery of fractures in their foundations. An engineering study still needs to be done, but, given that targeted generation is 100 mW, reconstructing generators that provide 60 percent of the projected load could increase costs significantly. A HEART official noted that some additional generating capacity will come online later this year when E-Power's generators are up and running, though some doubted whether that could happen by the end of 2010. The FUNDS: HEART Asks for Money Yesterday ¶6. (SBU) In the 2/2 conference call, HEART officials pressed hard for donors to make funds available as soon as possible. The official leading the call noted that most of the crews that had gone into Haiti are now demobilizing. He stressed that, even if all the funding were made available today, it would take seven to ten days to get teams on the ground with the necessary equipment, meaning that any delay in funding pushes back the beginning of recovery operations by weeks. To address the issue, the World Bank agreed to convene a meeting between HEART and donors in Washington on 2/5. The Politics: The "Much More than 60,000 Dollar" Question ¶7. (C) COMMENT: At this stage, HEART wants the money as soon as possible, so it can begin mobilizing teams and start the recovery process, asserting that economic recovery in Haiti cannot truly begin until the electricity grid is back online. Even after these issues are resolved, recovery operations face another challenge. Post is aware that both EGE Haina and CEPM are preparing plans to run connections into Haiti; on the 1/29 conference call, the head of CEPM noted that he could have a line in Haiti in 14 months. Several HEART officials have mentioned their ability to supply Haiti with electricity for as much as a quarter of the price EDH is currently paying. If the a connection is approved, most here assume that competition within HEART for the concession will be fierce and could endanger any HEART-coordinated recovery efforts. END COMMENT. ¶8. MINIMIZE CONSIDERED. Lambert