Schemes to expand electricity access generate private sector opportunities in Cote d'Ivoire

Electricity coverage and access rates have improved in Côte d’Ivoire in recent years as a result of renewed investment in distribution networks and a number of financial measures aimed at easing the cost of connection. The government has strongly supported these efforts through flagship initiatives such as the National Rural Electrification Programme (Programme National d’Electrification Rurale, PRONER) and the Electricity For All Programme (Programme Électricité Pour Tous, PEPT). While the push towards greater electrification is generating many business opportunities – as well as competition – much remains to be done.

Recent Improvements

In 2014 Côte d’Ivoire had a total of 40,455 km of low- and medium-voltage lines and 4697 km of high-voltage lines. According to the government, public spending on electricity transport and distribution totalled CFA146bn (€219m) between 2011 and 2015. Moreover, electricity access – the population living in electrified municipalities as a share of total population – increased from 74% in 2011 to 80% in 2015, whereas electricity coverage – electrified municipalities as a share of total municipalities – rose from 33% to 48% over the same period. In total, 4100 municipalities were connected to the grid in 2015, compared to 2847 in 2011.

Despite these efforts, coverage remains far lower than access, especially in rural and suburban areas. Launched in July 2013, PRONER seeks to expand electrification in rural areas, to include all villages with at least 500 inhabitants by the end of 2016 and to all municipalities by 2020. With an estimated CFA600m (€900m) budget, the programme should have succeeded in extended electricity coverage to 95% of villages by 2020, compared to 31% in 2009, and full electrification is expected by 2025.

International Support

Government electrification efforts are receiving international support. China recently signed two loan agreements worth $809m to rehabilitate and develop Côte d’Ivoire’s electricity network. This includes the construction of 1555 km of transmission lines, supplying electricity equipment and connecting 500 rural municipalities to the grid. The EU is also supporting efforts to expand access through the ENERGIES project, including a €70m grant and a €117m European Investment Bank loan, alongside a €52m West African Development Bank loan. The project seeks to rehabilitate and expand electricity networks in the cities of Bouaké, San Pedro and Abidjan, and create a new national distribution centre in Yamoussoukro.

The EU has also linked up with the UN Industrial Development Organisation (UNIDO) and NGO the Akwaba Foundation in a €2.56m pilot project to develop decentralised electrification infrastructure in seven isolated villages in the Zanzan region. Renewables, in particular solar photovoltaic mini-grids, will generate electricity in these targeted communities. Komenan Koffi, project coordinator at UNIDO, told OBG, “In the beginning, this set up will be managed by local communities, stimulating a sense of ownership. However, if by 2017 this approach has failed to yield any success, then alternative solutions will be considered, including private sector management.”

Facilitating Connections

At the same time, the government is working on facilitating grid connections through the PEPT. The programme is introducing social tariffs, including a CFA1000 (€1.50) connection payment, with the remainder of the CFA150,000 (€225) connection cost spread out over the next 10 years. The country’s private electricity company, Compagnie Ivoirienne d’Électricité (CIE), is currently responsible for grid connections and pre-finances in-house wiring to increase affordability. The government hopes to double the number of electricity subscribers in the country to more than 2m people in the coming years.

The PEPT draws inspiration from a previously successful International Development Association pilot project. Many households do not have access to energy, or buy electricity illegally to avoid paying for a costly legal connection. Furthermore, in Côte d’Ivoire, as in much of Africa, “The lack of reliable electricity has made butane an alternative for households in both urban and rural areas,” Philbert Sinté Séka, chairman of Saphyr, an energy trade group, told OBG. This adds to the challenge of implementing new electricity infrastructure.

Bearing this in mind, the subsidised first-time connection charge helped to overcome an important obstacle to greater electricity access and aided in connecting 45,000 new households in less than two years. According to the Ministry of Petroleum and Energy, the PEPT should add an annual 200,000 subscribers to the list by 2017. According to local news sources, 90,000 people had already been connected by June 2016.

Rising Tariffs

Rolling out such vast investment programmes has necessitated an increase in tariffs. Even though the country’s electricity company has been privatised since 1990, the government has until recently heavily subsidised tariffs to ensure affordability. Côte d’Ivoire’s electricity segment has recorded large deficits in recent years, at CFA107bn (€160.5m) in 2011, CFA44bn (€66m) in 2012 and CFA39bn (€58.5m) in 2015. According to Adama Toungara, the minister of petroleum and energy, the state loses CFA63bn (€94.5m) per year due to electricity subsidies.

To achieve a balance, the government decided to raise industrial tariffs by 10% in 2012 and reportedly planned on increasing prices by 6-10% for 60% of subscribers, with the remaining 40% falling under the umbrella of social tariffs. The latter tariff hike, however, effective from January 2016, was met with strong social discontent, as many reported 30-50% increases in their bills. In light of this situation, President Alassane Dramane Ouattara demanded that the utility reimburse payments in excess of the agreed tariff increases, and called on other actors to invest in Côte d’Ivoire’s electricity and water segments to foster greater competition. According to the CIE, as of June 2016 electricity tariffs had returned to 2012 prices of CFA66.96 (€0.10) for up to 80 KWh and CFA58.04 (€0.09) for more than 80 KWh. Some argue in favour of additional measures aimed at balancing the books and keeping costs lower, including fighting fraud, boosting energy efficiency and strengthening sector governance. Others say that investment in new energy infrastructure with lower production costs – such as hydroelectric dams – could significantly lower electricity prices in the long run.

Drawing Investment

The government’s push to expand the sector is improving its appeal. “The electrification business in Côte d’Ivoire is very competitive and appealing; there are many companies capable of answering present sector tenders in the market, and the KWh production cost is so far lower than the KWh consumer price,” Stéphane Dadie, sales engineer at Schneider Electric, told OBG. “As a result, we have witnessed a decline in proposed project costs over the past five years, and this trend is likely to continue over the next two or three years at least, before it stabilises.”

 

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The Report: Côte d'Ivoire 2017

Energy chapter from The Report: Côte d'Ivoire 2017