It was July 2001, and amidst much fanfare, AES Sirocco Ltd, an American company active in electric energy supply, bought Cameroon’s national electricity corporation SONEL for CFA 53bn, taking control of 56% of the shares and leaving the rest to the government. The purchase came with great expectations, with the contract talking of an investment of US$500m over 20 years.
Roll on four years later, and the long-awaited 7% annual increase in electric energy supply is yet to be attained. The US company is unable to invest the huge sum of money required to replace obsolete equipment and build new plants to boost production. Not only is AES Sirocco unable to invest such a whopping amount of money in an enterprise that had become moribund, but they are also more interested in making profits than boosting capacity.
Early attempts at retrenching workers and increasing tariffs met with stiff resistance. This notwithstanding, there is a clear need to lay off some
workers, most of them cronies and underemployed, inherited from the former State monopoly to reduce the cost of production. Thankfully, many of the tensions surrounding the layoffs have eased, and those interested can now negotiate retrenchment benefits.
Given its natural features, the Central African sub-region can satisfy half of the continent’s need in energy. Cameroon alone boasts 75% of this potential, but it lacks the financial resources to invest in power plants.
On October 20 2003, member states of the Central African Economic Community (CEEAC) signed an agreement to pool their resources in the sector. The agreement was a follow-up to reports of inadequate energy in the sub-region highlighted by the Union of Producers, Transporters and Distributors of energy (UPDEA) and CEEAC in Brazzaville on April 12 2003.
It opened the way for the use of adapted technology and support for interconnection of energy networks. As such, member states could buy,
sell or facilitate the transportation of energy through their territories. However laudable the initiative was, the project, which falls within the New Partnership for Africa’s Development (NEPAD) 2005 programme, is yet to take off.
Low output
Producing and distributing enough electric energy remains a challenge to the government. Last year, the public and the aluminium industry (ALUCAM) were in dire need of 595MW out of a total consumption of 2 800GW/h. But ALUCAM is asking for more to enable it to undertake its expansion programme. The industry, one of the highest consumers of energy in the country, uses an average of 185MW, but the AES-SONEL consortium can only supply 145MW - granted there is enough water to turn the turbines.
Unfortunately, AES-SONEL cannot exceed the 1 000MW ceiling agreed upon in the contract. When all its energy production centres are running at full capacity, the company can only supply 940MW. Other companies are expected
to be attracted to the sector, but venturing into electricity production and distribution in the country is still looked upon as a high business risk.
Rural electrification
In 2003, only 5% of the rural population had access to electricity. The Rural Electricity Agency (REA) has identified over 12 000 areas for assistance. Recent studies show that the population in these areas needs electric energy to run their water plants, health centres and schools, which may help prevent the rural exodus to the cities.
Studies show that even though electricity energy can feasibly be distributed in some villages, solar energy could be panacea to several remote ones. But this can hardly be achieved without adequate money.
REA officials say they need a colossal CFA209bn to finance electricity supply projects in 7 603 rural communities, representing about 80% of the rural population in the country. In spite of its status as a state organisation, REA is
unable to attract enough foreign funds. Its CFA1bn annual revenue, through taxes from AES-SONEL, is just enough to undertake studies and pay its workers. Given the current financial squeeze, the government is unable to pay more.
REA recently decided to undertake a full-scale drive to raise funds from international financial institutions and donor countries. While some funds are trickling in, officials of the agency argue that the government should consider rural electrification projects as a priority within the poverty alleviation programme and make available the vital funds.
Load shedding
In towns, the situation is not much better. Load shedding and blackouts in several towns are eloquent testimonies of the growing demand. In fact, Cameroonians had never experienced electricity energy rationing until a few years ago. Though energy shortages were noticed about a decade ago, the acute crisis really started in 2000, and lengthy blackouts were first
experienced in 2001.The government attributed them to inadequate rainfall and low water levels in the major hydro-electricity dams, Songloulou, Edea and Maga.
In January 2003, the Minister of Mines, Water Resources and Energy officially announced load shedding in Yaounde and Douala (respectively, the political and economic capital cities). Several parts of the cities were deprived of electricity for up to 18 to 23 hours once a week. In spite of this, the schedules were not respected. Nor did it last for a couple of months as authorities anticipated. What is more, cuts were done at peak consumption periods.
Plans to reverse the tide did not bear fruit as AES-SONEL General Manager, Jean David Bile, was back in the media assuring the public that there would be no load shedding in 2004, probably pegging his argument to a loan agreement the company signed with the Fortis Bank to finance four projects worth CFA9.8bn to boost energy generation.
The company
then constructed a thermal plant in Limbe and extended the Logbaba station in Douala and another in Oyomabang, Yaounde. The aim was to ensure enough and regular energy by 2005. Yet, lengthy cuts are still commonplace today. Parts of this very article were lost and re-written as a result of the cuts. An upsurge in night crime has been recorded, and industries have been badly hit.
Charles Metouck, the chairman of the association of Cameroon industries (Syndustricam), complained that the energy crisis had pushed down production to about half, while costs increased by about 15%. The association put the loss at about CFA10bn annually. Given the inadequacy, AES-SONEL decided to boost output in the short run by switching on the newly constructed thermal plant in Limbe.
With an increase of 74MW in the grid, the acute shortage was slightly reduced. As nature will have it, the three reservoirs were well served. At the start of the year, they contained 300 million cubic
metres of water more than last year’s volume. In 2002, the water volume was 700 cubic metres per second, producing about 450 MW. However, when 74MW was added to this, it fell short of total demand by about 40 MW. Albeit reluctantly, authorities had to fall back on load shedding.
In the meantime, the Lagdo dam that serves the northern part of the country had no problems with dwindling volume. That is probably why load shedding has been a rare phenomenon there. But long-lasting solutions are yet to be found for the problem nationwide.
The government envisages two types of projects: the construction of more thermal plants and hydro-electricity dams. The Kribi gas thermal plant will be put into use in 2007 - a less expensive short-term measure.
According to the General Manager of the electricity regulatory agency (ERA), Pierre Ndoga Hell, the company should be making 68 000 connections per year to add up to about 1.36 million in 20 years. However, the official
has endeavoured in vain to protect the company from furious clients. AES-SONEL has been unable to make these connections each year particularly because of inadequate energy supply. Clients no longer complain about low voltage as a result of saturated networks because they are not satisfied, but because they are vulnerable and powerless.
Thermal plants have produced far less than what is required. Hence, the envisaged construction of new hydro-electricity dams over the Lom Pangar, Memvélé and Natchingal rivers. All these projects are supposed to be realised by 2010. The big question is: will the funds be available?
High Bills
In the meantime, AES-SONEL wants to make profits. When it took over, consumers had to pay more as stipulated in the privatisation agreement. Bills have been skyrocketing. After a 5% increase in 2001, consumers have been facing a 7.65% increase annually. Apart from this, those who don’t meet the deadline for payments face an
additional 8% penalty.
This aside, the public has to grapple with uneven current flow, sudden and unexplained cuts and widespread theft of meters. But the company also complains of dishonest clients who manipulate their meters to reduce consumption, redistribute electricity or even steal power by connecting directly from the high voltage cables. Household appliances are often destroyed by irregular high or low voltage, and individuals are not compensated for their losses.
The ordeal of electricity users is tied to the fortunes of AES-SONEL. Consumers and big business are seeking better services. The utility promises good quality services for higher fees, but ends up being unable to satisfy either need.
Mounting pressure from frustrated staff forced Mark Miller, the first GM, to resign. His emergency plan to lay off 4 000 workers was stalled. So far, three General Managers have tried to turn the tide and failed. Helen Wilson Tarnoy was flown in from
the US, but her stay was short-lived. Will Jean David Bile, the first Cameroonian to head the company, make the difference? Time will tell.
Market news on your cellphone
Get live JSE listed shares, warrants, major indices, brent crude oil, international markets, agricultural futures & daily market analysis via SMS on your mobile.
Find out more...
Energy in
Africa
Energy in Africa is an intelligent and in-depth look at how energy impacts people, places, projects, price and development around the African continent. Subscribe now...
African Business Leaders Forum
African business and public sector leaders define and construct a prosperous future for the continent. Find out more...
Online travel bookings
Planning to travel? Book accommodation in Africa & South Africa here. Book now...
