Economic component of the study on interconnection of electricity grids in west Africa

MULTISECTORAL PROJECTS UNDP/ECA

"J ^{• • • " I .}i

ECAIECO/MUU96/010 ECONOMIC COMMUNITY OF WEST

AFRICAN _STA~rES(ECOWAS)

Economic Component of the Study on

Interconnection of Electricity Grids in West Africa

ECONOMIC COMM~SSION

FOR AFRICA

UNOPjEC4

UNITED NATIONS OE\IELOPMENT PROGRiUlME ECONOMIC COMMISSION FOR AFRIC4

ECA/EXXl/MUL/96/010

ECOW,\S ECONOMIC COMMUNllY OF WEST ,\mlC4N STUES

ECO\lO\lIC CO\1PO[\.[[\. 1 O[ S fLO\'

ON I"

uneo[\.

fJ FCTHICIT\

IN

i\J Bleil

MARCH,1996

KWAM£ YOUN6-6YAMPO JOHN YOUN6 AND ASSOCIAT£S

P.O. BOX t 952 ACCQA-6HANA

T£L: 288-21-667616 • fAX: 288-21-77&48&

TABLE OF CONTENTS

CHAPTER PAGE

1.0 INTRODUCTION 1

1.1 SOURCE OF AUTHORITY 1

1.2 WORK ASSIGNMENT 1

1.3 STRUCTURE OF THE REPORT 1

2.0 EXECUTIVE SUMMARY 2

2.1 CONTEXT 2

i.i.r OVERVIEW 2

J.1.2 THE POWER SECTOR 2

2.2 VORK ASSIGNMENT 3

J.2.1 DEMAND PROJECTIONS 3

2.2.2 SUPPLY PROJECTIONS 3

2.3 CAPITAL COST 5

2.4 MARGINAL COST OF ENERGY TRANSMITTED 6

2.5 ECONOMIC ANALYSIS 6

2.6 CONCLUSIONS AND RECOMMENDATIONS 6

3.0 CONTE~t 8

3.1 BENIN 8

3.2 8URKINA FASO 11

3.3 3HANA 14

3.4 COTE D'IVOIRE 17

3.5 mE GAMBIA 20

3.6 GUINEA 23

3.7 GUINEA BISSAU 27

3.8 MALI 30

3.9 MAURITANIA 32

3.10 NIGER 35

3.11 NIGERIA 38

3.12 SENEGAL 42

3.13 SIERRA LEONE 45

3.14 TOGO 48

3.15 ZAIRE 51

4.0 POWER MARKET ADJUSTMENT 54

4.1 METHODOLOGY 54

4.2 DEMAND PROJECTIONS 55

4.2.1 BENIN 55

4.2.2 BURKINA FASO 59

4.2.3 COTE D'IVOIRE 62

4.2.4 THE GAMBIA 66

4.2.5 GUINEA 69

4.2.6 GUINEA BISSAU 72

4.2.7 GHANA 75

4.2.8 4.2.9 4.2.10 4.2.11 4.2.12 4.2.13 4.2.14 4.2.15

TABLE OF CONTENTS CONTD.

LIBERIA MALI

MAURITANIA NIGER

NIGERIA SIERRA LEONE SENEGAL TOGO

78 80 83 86 89 92 95 98

4.3 CONCLUSION 101

5.0 EVALUATION OF TIlE PROPOSED INTERCONNECTION 5.1 PREAMBLE

5.2 PROJECT COST

5.2.1 CAPITAL COST OF GENERATION 5.2.2 TRANSMISSION COSTS

102 102 105 107 108 5.3

5.4

MARGINAL COST OF ENERGY TRANSMITTED 5.3.1 INTRODUCTION

5.3.2 LONG-RUN MARGINAL COST - AN ANALYSIS 5.3.3 IMPLICATIONS FOR A TARIFF STRUCTURE

IN THE NETWORK ECONOMIC ANALYSIS

i i

112 112 112 113 117

LIST OF FIGURES

FIGURE

TRENDS IN ELECTRICITYCONSUMPTION AND SELECTED SOCIO-ECONOMIC VARIABLES 3.1

3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14

BENIN

BURKINAFASO GHANA

COTE D'IVOIRE GAMBIA GUINEA

GUINEA BISSAU MALI

MAURITANIA NIGER

NIGERIA SENEGAL SIERRA LEONE TOGO

10 13 16 19 22 26 29 31 34 37 41 44 47 50

PROJECTED ELECTRICITY CONSUMPTION (DIFFERENT SCENARIOS) 4.1

4.2 4.3 4.4 4.5 4.6 4.7 4.8

4.9

4.10 4.11 4.12 4.13 4.14 4.15

BENIN

BURKINA FASO COTE D'IVOIRE THE GAMBIA GUINEA

GUINEA BISSAU GHANA

LIBERIA MALI

MAURITANIA NIGER

NIGERIA SIERRA LEONE SENEGAL TOGO

iv

57 60 64 67

71 73 76 79 81 84 87 90 93 96 99

ANNEX I:

ANNEX 2:

APPENDIX I

ANNEXES AND APPENDICES

TERMS O' REFERENCE OF ECONOMIC STATISTICIAN

PROPOSA.S FOR A PRAGMATIC INTERCONNECTION BY TECHNICAL TEAM

WESTAFBlCA: DEMAND PROJECTIONS

(BASE, OPTIMISTIC AND PESSIMISTIC SCENARIOS)

2 SCHEDULES 2.1:

SCHEDULES 2.2:

SCHEDULES 2.3:

SCHEDULES 2.4:

CAPITAL COSTS

(DIFFERENT SCENARIOS)

ANNUAL COST OF THERMAL GENERATION (DIFFERENT SCENARIOS)

CALCULATION OF LONG-RUN MARGINAL COST (DIFFERENT SCENARIOS)

ECONOMIC ANALYSIS (DIFFERENT SCENARIOS)

UNIT MEASURES GWh

MWh KWh MW KW Mscf Mscfd MBTU Toe

GigawattHour MegawattHour Kilowatt lIour Megawatt Kilowatt

Million Standard Cubit Feet

Million Standard Cubit Feed Per Day Million BritishThennaI Units Ton Oil Equivalen!

v

1.0 INTRODUCTION

l.l SOURCE OF AUTHORITY

The CONSULTANT Kwame Young-Gyampo was contracted by the United Nations Economic Commission for Africa as per SSA number ECO/92/042.

1.2 WORK ASSIGNMENT

The consultantwill prepare the economic component of a study on the interconnection of electrical grids for ECOWAS sub-Region. The Terms of Reference (TOR) of the entire assignment are as follows:

(i) Updated tnarket power survey in the sub-Region until 2015 year;

(ii) Economic research of the scenario of a long term optimal development of the means of production and the networks of transport and interconnection of electrical grids, etc;

(iii) The reorganization of existing network at national and sub-Regional level in order to integrate it in the optimal provided network;

(iv) Establishing bill book of investment charges for the studied period;

(v) Recommendation concerning the structures related to tariffs to be applied within ECOWAS sub-Region, depending on the optimal development plan.

The TOR of the Economic Statistician are attached as Annex 1.

1.3 STRUCTURE OF THE REPORT

Section one is the Introduction and section two presents the Executive Summary.

Section three places the whole assignment in an economic context. The updated market power survey and analysis is in section four. Section five evaluates the proposed interconnection in the technical report, it estimates the long run marginal cost of the network with implications for an optimal tariff structure, it has also an economic analysis of the proposed interconnection.

1

2.0 EXECUTIVE SUMMARY 2.1 CONTEXT

2.I.1 Overview

Generally, the West African economy has performed well above the average of 2%for sub-Saharan Africa in the early nineties.

High population growth rates have suppressed the growth of income per capita despite remarkable growth rates achieved in the late eighties and early nineties in a majority of the countries.

In particular, with very low economic performance of Nigeria in the mid eighties its growth in the recent past has been very consistent, it was able to achieve an impressive average growth rate of 8% between 1989 and 1991. Ghana's performance have been an average GOP growth of 5%, however with a slowdown in the early nineties to 2.6 %.

Sierra Leone's economy has improved in recent years may be due to change in policy orientation. The Gambia has,also achieved a remarkable 5%average growth between 1984 and 1991 and continues to sustain this, whilst Senegal grew at an average of 4.3%

between 1985 and 1990, albeit with a slow down in 1991 and 1992. Benin's economy has recovered in the early nineties after a recession during rthe period 1987 to 1989.

The growth trends in the last five years in Niger, Mauritania and Benin have been mixed but with modest positive growth rates. Mali recorded an impressive average growth rate in the five years until 1991 of 5.6% but with intermittent negative growth rates. Togo and Burkina Paso's economies are weakening and Cote d'Ivoire is recovering.

2.1.2 The Power Sector

Total electrical energy generated and consumed in West Africa can be somehow linked to economic performance. The mode of generation is predominantly thermal except a few countries like Nigeria, Ghana, Mali and Cote d'Ivoire which have varying generation mixes of thermal and hydro. Overall in 1991, West Africans consumed a total of 24101 GWh of electricity. Nigeria's share was about 58% of the total.

Ghana and Nigeria are the only exporters of electricity. Benin and Togo imports from Ghana with Cote d'Ivoire and Ghana having exchanges between their grids. The interconnection of Ghana and Burkina Paso is almost completed. This makes Ghana's network with its neighbours a prototype for interconnection in West Africa. Niger also imports from Nigeria.

The household and commercial sectors are the main users of electricity. In countries with a very high urban population like Mauritania and Benin, the association between consumption and urban population is highly positive. Nigeria also exhibits this characteristics.

2

Mining activity bas also influenced electricity consumption significantly. This has been observed in Guinea, Sierra Leone, Ghana and especially Niger where the period of the uranium boom saw a significant upward trend in consumption followed by a sharp drop during thecollapse of the uranium industry.

The average annual growth in consumption from 1970 to 1991 for the sub-Region is 6.3 %. Nigerialus recorded the highest average growth of II % per annum and Liberia the lowest - (7.6~).

In 1988, Mauritania had the highest consumption per capita of 535 Kgoe. Burkina Faso, Niger and Mali tlIe lowest at 19, 19, 24 Kgoe respectively.

Tariffs are very high in the CFA zone of West Africa - a tariff range of US$0.15/Kwh to US$32 with the highest recorded in Mauritania, about US$0.32/Kwh. Anglophone West Africa has tariffs ranging from US$0.02/Kwh in Nigeria and Ghana to US$0.22/Kwh in Sierra Leone. However, projections due to the power sector rehabilitation in Nigeria and the extension of electricity grids to the rural areas in Ghana may increase tariffs in these countries from US$0.02/Kwh to US$0.05Kwh in the long run.

2.2 POWER MARKET ADJUSTMENTS

2.2.1 Demand Projections

Four different projections of electricity consumption were compared for each of fifteen countries under study. The national projections which also include projections from other studies, two sets of regression forecasts (direct linear and log-linear methods) and projections based on a simple trend analysis were compared graphically. The most likely forecasts were assumed as the demand for the short and medium-term.

Pessimistic and optimistic estimates were obtained using the same method.

The overall energy demanded in the West African Region will increase at an average annual rate of 6.0% by the year 2015. Thus, in another 19 years, it will have grown from 32399 GWh to 82850 GWh. Nigeria alone is expected to contribute about 71 % of the total. The optimistic and pessimistic scenarios yielded an average annual growth rate of 6 % and 5 % in energy consumption respectively.

2.2.2 Supply Projections

About 10,000 MW of additional power is required to supply the interconnected grid of West Africa by the year 2015. The generation sequences as proposed in the technical study was used to determine mode of generation of additional demand. In addition, thermal generation has been introduced where there were shortfalls in supply to meet projected demand. Recent thinking in the industry has necessitated the inclusion of other generation possibilities not envisaged before. The immense gas potential of West

3

Africa, in particular of Nigeria, to supply gas for gas based thermal generation has recently been given prominence in the determination of generation possibilities in the sub-region.

Today, Nigeria flares about 800 scfd (stand cubic feet per day) of gas of which 70% is recoverable. The coastal countries of Ghana, Benin, and Togo may be able to augment production of electricitytosatisfy their additional demand from this source by 1600 MW by 1998 - hence a proposed pipeline from Lagos to Takoradi.

It has also been determined that Cote d'Ivoire may be self-sufficient in gas production from its Foxtrot gas fields to supply over and above its power needs by 2015.

The immense potential of the Inga has also been considered in supplies to the West Africa interconnected network. If the economics of this resource is viable, it will be optimal for the network to purchase energy from this source by the year 2006.

The generation mix for the additional power supply is expected to be 840 MW from West Africa based hydro sources and 9049 from thermal generation sources. The alternative, considering purchases from the Inga, will be 840 MW from West Africa based hydro plants, 2597 MW from thermal plants and 6593 MW purchases from the Inga.

A total distance of 5636 Km of HV transmission lines is expected for the interconnection of grids in West Africa. However, if purchases from the Inga Dam materializes, a distance of 1800 Km of HV lines will be required to be added to the network from

Nigeria to Zaire.

The project activity summary is summarized in the Table below:

TABLE 2.1: PROJECT ACTIVITY SUMMARY

PHASE I 1997 - 2000 Consolidating net- work andcomple- ting already started hydro projects

PHASE

n

2001 - 2005

Consolidating net- work and intro- ducing serious hydro plants in West Africa.

Also implemen- ting gas based generation projects.

Likelihood of beginning Inga Project.

4

PHASEIII 2006 - 2010 Inga Project in operation and supplying network.

PHASE IV 2011 - 2015 Full Inga in

operation and supplying network.

2.3 CAPITAL COST

The total capital cost of the project by 2015 will be about <:11.75 billion. US$3.4 billion, US$2.2 billion, US$2.61 billion, US$3.5 billion will be required for phases I, II, III and IV respectively. A contingency of20% has been built into the estimates.

The project cost summary for the base case for the various phases are as follows:

TABLE 2.2: CAPITAL COSTS (US $'000)

PERIOD 1

1997-2000

PHASE

2 3

2001-2005 2006-2010

4 2011-2015

TOTAL Generation Plant

Hydroelectric Thermal

Fuel Oil Fed . Gas Fed

Sub-Total Transmission

HV Lines Sub Stations Sub-Total

595,000

997,500

1,592,500

1,165,720 107,453 1,273,173

590,474

1,237,703 2,177,970 2,922,253 1,828,177 2,177,970 2,922,253

1,185,474

997,500 6,337,926 8,520.900

1,165,720 107,453 1,273,173 Contingency (20%)

TOTAL

573,135 3,438,808

365,635 2,193,812

435,594 2,613,564

584,451 1,958,815 3,506,704 11,752,878

Given that some countries such as Ghana and Cote d '!voire are already exhibiting their optimistic demand scenarios, the total project cost forecast may fall within the range of US$I1. 75 - 15.1 billion. The end of the band being the projected optimistic demand cost for gas based generation in the medium-term and beyond. Liberia's present favourable political conditions should propel her to also exhibit its optimistic scenario.

The case without the demand of Ghana, Nigeria, Cote d'!voire, also justifies that the Mananthali, Forni, Salthino and Bumbuna projects should be included in the network to serve the net consumers in Phases! and II whilst the net suppliers concentrate on gas based generation to serve their network in the same period.

5

2.4 MARGINAL COST OF ENERGY TRANSMITTED

The Long Run Marginal Cost (LRMC) was calculated with a discount factor of 10%

for both net consumers and suppliers considered together. Comparison with other scenarios suggest that only the most optimistic scenario of fuel oil generating plants can compete with the gas based counterparts. On the other hand, the gas based combination with purchases from the Inga presents the most efficient generation mix on the network.

The scenario which brings out surpluses for both net consumers and suppliers, the case without the demand of Nigeria, Ghana and Cote d'lvoire gives a LRMC of US$0.69/KWH. This is the figure considered as the base economic tariff on the network. For commercial suppliers, a 40%upping of the figure will be prudent to absorb tax obligations and other financial costs.

A total consumer surplus over the 19 year period was estimated as US$1 billion. The producer surpluses amounted to US$339 million ..

2.5 ECONOMIC ANALYSIS

The Economic Internal Rate of Return (EIRR) was 16.91%which is acceptable in the industry. Other scenarios have rates of return which confirms the viability of the interconnection proposals. Especially, the gas based generation scenarios and their combination with purchases from the Inga were the most viable. The Inga scenario however involves a total African decision and should not delay the implementation of the entire interconnection project.

2.6 CONCLUSIONS

AND

West Africa's power demand growth patterns justifies the proposed interconnection sequence of the national grids of the member countries.

Already, the Ghanaian interconnection with its neighbours presents a model which can be replicated in the whole sub-region.

The interconnection engineering will depend on the demand patterns of the various countries. Various demand scenarios have been investigated and corresponding generation mixes proposed.

It will be prudent to locate hydro-electricity plants in the net consumer countries (ie. excluding Nigeria, Ghana, Cote d'lvoire and later, Togo, Benin, and Burkina Faso), and interconnect the grids among these countries to be supplied with electricity from these plants.

6

The superior economic statistics for fuel oil generation for the case without the net suppliers as against gas based generation reflects the present high cost of generation from fuel oil sources by the net consumers who are mostly landlocked. This must encourage the net consumers to support the realization of the interconnectionto be able to purchase electricity at far cheaper prices from hydro and gas based thermal plants.

The interconnection among Nigeria, Cote d'Ivoire, Togo, Benin, Ghana, Burkina Faso, and Niger could be completed in the first phase to take advantage of gas based generation with gas supplied from the proposed Lagos-Takoradi pipeline.

It will be profitable for commercial suppliers to take advantage of the network since there are immense financial benefits to be derived both at the level of net suppliers and net consumers. Commercial suppliers could supply the network at a moderate tariff of US$O.I/KWh.

It is of paramount importance that the study by Bain Cuneo e Associati on the gas pipeline from Lagos to Takoradi be implemented to derive the benefits of this great resource in the interconnected grids.

The Egypt-Inga interconnection could be a valuable source of purchases for the interconnected West Africa grid if its LRMC is less or equal to present tariff of Zalre (US$O.031/KWh). This is a subject of feasibility study at the African Development Bank. The West African scenario can be looked at within the context of this study.

7

3.0 CONTEXT

3.1 BENIN

3.1.1 Overview

Benin had a population of 4.8 million in 1990 with a per capita GNP of $380. Three- fourths of the active population is in agriculture which accounts directly for about 40 percent of GOP and one-third of foreign exchange earnings. The industrial sector's contribution to GOP is about 12 per cent. Oil extraction, limestone mining, which is the basis of an integrated cement complex, and sugar production are the most recently developed economic activities. The tertiary sector is dominated by trade and transit activities that link economic activities in Benin to those in neighbouring economies.

3.1.2 Economic Performance

The spill-over effects of the oil and uranium booms in Nigeria and Niger respectively, combined with the benefits of active domestic investment, enabled Benin's economy to grow at an average of 5 percent a year during 1977-80.

From 1985 to 1990, growth was reduced back to the level in the seventies, at about an average of 1.2 % per annum despite steady growth in cotton output and production of crude oil beginning in 1983.

The fundamental changes in political and economic orientation in late 1989 and early 1990 and Benin's transition to a multiparty democracy in April 1991 have created a more favourable basis for achieving its medium-term objectives of creating the basis for sustained growth in an acceptable social framework.

Benin's economic growth has reversed from the negative trends of 1986-89 and risen to an average of 4.2 percentage points in 1980 and 1992, above the population growth rate of 3.2%.

Agriculture's contribution to GOP growth will still be significant in the medium-term whilst growth in the industrial sector should remain modest.

The rate of urbanization of the country has also been high, from 18.2% in 1970, the urban population increased to almost 38% of total population in 1991.

3.1.3 The Power Sector

Benin generates very little electricity, only from thermal sources and augments it supplies through imports from Ghana. In the decade to 1988, thermal electricity production stabilized at 50 GWh per annum. Electricity consumption has however been increasing over the years, notwithstanding the fact that consumption per capita is about one of the lowest in the sub-region 38 Kgoe. From 50 GWh in 1973, consumption increased to 85 GWh. By 1980, consumption had increased to 105

8

GWh, 24% above the 1975 level. Consumption grew through the years and peaked at 189 GWh in 1984, coinciding with the period of high GDP growth. Some link between the performance of the economy and the level of consumption is evident:

consumption reduced to around 1988, a period of reduced and sometimes negative growth in GDP.

The household and commercial sectors are the major users of electricity. Industry and construction use only 10%of electrical energy in Benin. It is thus not strange the strong positive relationship between urban population and electricity consumption in this country. The bright prospects for economic growth will also influence the demand of electricity since GDP, Industrial activity, and Services are all positively correlated with electricity consumption.

Tariffs are among one of the highest in the West African Region, about US$O.19/KWh.

9

r-=c=co--

BENIN:TRENDS IN ELECTRICITY CONSUMPTION AND SELECTED SOCIOECONOMIC VARIABLES 25 - - - ,

5

~~ ---.-~.--~--K-'

~~~~~~~%n~CT~

A---&-8---8--t;s----c.:s-~---b,--

o

I I I I I 1 1 1 1 I 1 1 1 1 I 1 1 I I I

9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 20

15 -

10

YEAR

GDP ^{- I -} IND ~ SERV POP

---*- GNP/C

-c-

fig 3.1

r l = = = = = = = = = = = = = = = - -~=~oJI

3.2 BURKJNA FASO 3.2.1 Overview

Burkina Paso il landlocked and geographically positioned in a transitional zone between the Stdan-Guinean regions and the Sahel. The majority of Burkina's population of roughly 9 mil1ion inhabitants (nearly 90 percent rural), depends mainly on agriculture aid stock raising. Population growth of more than 3 percent a year is creating severe sressure on arable land. Per capita income is estimated at $380 in

1991.

Burkina's economy is constrained by high population growth and related environmental and socio-economic problems; its dependence on rainfed agriculture and hence vulnerability to drought; an inadequate and fragmented economic infrastructure, and a highly regulated and distorted economic environment that discourages private investment and exports.

The share of 'he primary sector in GDP has decreased from nearly 40 percent in the 1970s to roughly 30 percent in the late 1980s. The service sector has expanded and is now the most significant element in the Burkinabe economy, contributing over 40 percent of GDP. In the secondary sector, the contribution of mining to GDP is relatively smaf,but increasing rapidly thanks to the expansion of gold mining, which ranks after cotton and has become the country's second biggest source of export earnings. Direr mining activities, such as zinc, also have potential.

Manufacturing accounts for only about 14 percent of GDP. Informal activities permeate Burkina's economy. It is estimated that they contribute roughly two-thirds of value added in commerce, transportation, and communications, and 40 percent in the industrial sector.

Due to the relatively small markets of Sahelian countries, regional market development and economic integration are of great importance for Burkina's economy.

Roughly one-fourth of Burkina's external trade excluding informal trade is intra- regional, thehighest proportion among Sahelian countries. The potential for increased trade flows within a larger West African market is good and could be significant for Burkina's economic growth.

3.2.2 Economic Performance

Burkina's economic performance is determined by its narrow resource base, variable climate, a low level of social and economic development, and a legacy of inappropriate policies. Despite these handicaps, growth in the 1980s was sufficient to slightly raise per capita incomes and consumption, as real GDP grew by 3.7 percent a year between 1982 and 1990.

On the whole, Burkina's economic performance in the mid-1980s was satisfactory, though with a marked deterioration beginning in 1989. The pattern of real GDP growth between 1989 and 1992 was sinusoidal. In 1989 and 1991, the growth was

11

positive at 3.2 and 6.3 percentage points respectively and "0.3 and 0.7 percent in 1990 and 1992 largely because agricultural output fell with a recurrence of poor rainfall and because the public spending spree could not be sustained. Expansion of real GDP had exceeded population growth, and inflation has been moderate. Growth in 1991 was possible perhaps after the government had loosen the tight regulatory framework in 1990.

A privatization program is now in place , however, the financial sector which is the backbone of the private sector is yet to be reoriented accordingly - a defect of most structural adjustment programmes on the Continent.

3.2.3 The Power Sector

Burkina Faso has given serious attention to the power sector recently. Its interest in the integration of grids is worthy of note. The government has already started negotiations with its resource-rich southern neighbours to link grids from Bolgatanga in Ghana to Ouagadougou and in the same vein from Bobo dioulassou to Fergessodougou in Cote d'lvoire.

Hitherto, Burkina Faso has satisfied its consumption from domestic generation from both thermal and hydro sources. Electricity consumption has risen significantly (about 5% per annum) in recent years after low growth rates in the early eighties and before. Consumption has been marked in the urban areas and closely related to the rate of urbanization. Industry consumed about 56% of electricity in 1988, with the residential and other sectors consuming tlie remaining 44%. ^Itis worthy of note that the average Burkinabe together with his counterpart in Niger consumes the least electrical energy in the Region. Tariffs are high averaging over US$0.19/KWh

12

1<"-===c-=- _====-~=== = = = = - = = = = - , - = -'-==-~-'

BURJ:INA FASO: TRENDS IN ELECTRICITY

CONSUMPTION AND SOCIOECONOMIC VARIABLES

18 , - - - -

~~ =:-*-

2. . . ~~ ~.~ ~~=:=

O~~~L:='L~

I 1 1 1 I 1 I I 1 I I 1 I I 1 1 1 I 1 1

9 9 9 9 9 9 9 9 9 9 9 9

9 9 9 9 9 9 9

7 7 7 7 7 7 7 8 8 8 8 8 8

8 8 9 9 9

3 4 5 6 7 8 9 0 1

3 4 5 6 7 8 9 a I 2

YEAR

GDP

--+-

---*-

---7(- GNP/C ^~ URBPOP ^---8- CONS

1ig. 3.2

L ' = = = = = = = = = = = = = = = = = = = = = = . ·=-.~===--~

3.3 GHANA 3.3.1 Overview

Ghana after independence enjoyed a relatively higher standard of living as compared with other West African countries. However political instability and mismanagement of its economy plunged it into a deep recession in the decade before 1983 when it changed its policy orientation and adopted an economic recovery programme supported by the Bretton Wood institutions.

In 1992 Ghana's GNP per capita was U5$450, with a population of about 15.4 million in 1991 and a population growth rate of 2.9%.

The industrial sector which was totally neglected during the period of decay in favour of commerce has seen a gradual recovery after rehabilitation of the mining sector especially gold mining. In 1992, Industry accounted for about 17% of GDP as compared to 11% in 1984. Agriculture's share of GDP has fallen from 53% to 46%

within the same period whilst the services sector has maintained its share of 36 % after a rise to 40% in 1987.

3.3.2 Economic Performance

After a considerably high economic growth up to 1974, GDP growth fell drastically in 1975 and 1976, and general economic performance up to 1983 was poor. In fact from 1979 to 1983, the country experienced negative growth. The series of bold economic measures taken, beginning from 1983. ensured an average growth rate of 5 % per annum in the period between 1984 and 1989. The average growth rate in the 1990s is about 4 %.

Overall growth in manufacturing slowed considerably because of a credit crunch in 1989 and lagging investment outside of mining. Value added in mining rose by about 10 percent in 1990, reflecting rehabilitation of mines, the coming into production of new joint ventures, and increased sales by small-scale miners.

Real GDP per capita grew consistently from the early seventies up to a peak $410 in the 1980/1981 period, but reduced in 1982 and 1983, mainly due to the effects of the severe drought and accompanying bushfires. Itthen stabilized at around $390 for the 1985-90 period before increasing to $450 in 1992.

Ghana's growth targets will require strong performance from both agriculture and industry. Assuming normal weather conditions, the prospects for food and industrial crops appear bright. In the industrial sector, manufacturing is projected to remain buoyant and to turn increasingly to exports as a new source of growth, and the rehabilitation and modernization of Ghana's mines will permit a steady expansion of output. Finally, the services sector, which accounts for about two fifths of GDP, is projected to grow in line with the rest of the economy.

14

3.3.3 The Power Secor

Ghana produce! a considerably high amount of electricity, mainly hydroelectric power, supplemented by generation of a comparatively low amount of thermal electricity. Electricity generation increased generally in the decade up to 1981.

Production declined dramatically in 1982 and 1983, as a direct result of the severe drought which affected the generation of hydroelectric power from the Akosombo dam. Production picked up thereafter, and over 6,000 GWh of electricity was generated in 1991. Of this, 348 GWh, or close to 6%, was from thermal sources.

In 1992, a total of 6603 GWh of electrical energy was generated.

Electricity consumption followed the path of generation: it increased on the whole until 1981, declined in 1982 and 1983 when electricity was rationed and picked up in the following years. Consumption was almost 5,000 GWh in 1991.

Consumption has an association with economic performance and degree of industrial activity. It is also observed that the consumption series has a first order auto- correlation. Industrial production is dependent on electricity and industry's contribution to GDP growth was negative in the years of rationing. During the period of economic decay, electricity demand had come from mainly households with the industrial sectors contribution falling as low as 12% of the total.

Today, the industrial sector accounts for more than 50 % of electricity sales in Ghana in response to growth in the sector - in 1992 consumption in the industrial and commercial sectors was 3865 GWh out of a total consumption of 5093 GWh and the household and government sector consumed 1229 GWh and the remaining was due to losses in generation and transmission. The country is the fourth in West Africa in terms of the use per capita of electricity - the consumption per capita is about 132 Kgoe.

Ghana is the leading exporter of electricity in West Africa. Its interconnection with Benin, Togo and Cote d'Ivoire makes it a prototype of grid interconnection in the sub- region. In 1992, it exported 894 GWh of electricity and imported 1 GWh from Cote D'Ivoire.

With the improvement in the distribution network especially to the rural areas of Ghana, supply will have to be augmented to satisfy other obligations like exports to Cote d'Ivoire, Benin and Togo and perhaps Burkina Faso.

Tariffs are low and it is about the lowest after Nigeria. The average domestic tariff is about US$O.02/KWh. In 1993, Ghana renewed its tariff arrangement with its importers (ECCI of Cote D'Ivoire and CEB of Benin and Togo). The export tariff is a ratchet mechanism where an importer is penalized to pay more for consuming above a specified amount. The present minimum export tariff is US$ 0.051. Despite such low tariffs, the yield of the National utility is the highest in West Africa, about 9.1%,perhaps due to its low cost generation possibilities.

15

= = = = = = ^{~ _ ~ 0 _ ' . _ - -} - . __0 ._---- __ .- _.01

GHANA:TRENDS IN ELECTRICITY CONSUMPTION AND SELECTED SOCIOECONOMIC VARIABLES

60

50

20

- f--.--+---+---~

- + _

]

.-+---+----

10 ~

.+---~

I---~--- o.f-.~---...j~-+ ---~~---~~.- 4

,. ---.~ _...---... ~---" ---..--'--...--

J ^£13: :Et~--i::1 ! ~Hc_~~_=-~I

I 1 1 1 I I I I I I I I 1 I I I I I I I

9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

YEAR

GDP ^{- f -} IND 4-- SERV POP

-k--- GNP/C ~"-- URBPOP ~- CONS

fig. ^3.3

~---_._,- - ~ - -- - - - ~ _ _ 0 • •_ . ~ ._, • • ,, ~. . . . .~_ . . . _ _ _ _ .. , __ ...-_

_ _0• •_ _ " • ~_._ _ . " •• _ _. _ . • • • • • _• • •_ . _ . - _.:-_:"::=--::-::. ' ..~--::-::-_ ..~ . _ . _

3.4 COTE D'IYOIRE 3.4.1 Overview

After a long period of sustained growth and external and internal stability between 1970-85, the economy of Cote d'Ivoire has been in a state of prolonged crisis, triggered by the sharp decline in terms of trade since 1986.

From a peak of $1200 in 1980 the country's GNP per capita has almost halved to

$670 in 1992, however it still remains a middle income country and among the most developed in West Africa.

The Services lector has taken over from agriculture as the major contributor to GDP and accounts fur over 40% of value added in the economy. The proportion of Industry has however fallen from 27.4% in 1981 to 23% in 1992. The decay in the industrial sector has been in consonance with economic deterioration. Between 1981 and 1990 value added in industry has fallen by 15 percentage points in real terms.

3.4.2 Economic Performance

During the first 15 years following independence in 1960, it achieved rapid economic growth averaging 7.7 percent a year without major external and internal imbalances.

Cote D'Ivoire's economic growth in the decade up 1979 was remarkable. Economic performance in the period between 1980 and 1986 was however mixed. From 1987, the economy experienced persistent negative growth rates - in 1990, 1991 and 1992, GDP fell by 1.6%, 0.4% and 0.3% respectively. GNP per capita increased from

$270 in 1970 to

as

3.4.3 The Power Sector

The structure of electric power generation has changed drastically from a low of 30%

in the early seventies from hydro sources to 60% in recent times. Consequentially despite hikes in the price of oil, electricity generation in Cote d'Ivoire increased from the seventies to a peak in 1988, when 2310 GWh of electricity was generated.

Generation has declined to 1991 GWh in 1990, probably a consequence of the poor performance of the economy. It is noteworthy that electricity consumption and generation is perfectly correlated with economic performance. Industrial output was also affected in the period, and industry's contribution to the GDP was negative in the period. Industry's contribution to GDP growth had remained most significant from 1975 to 1981.

Cote d'Ivoire's management of the power sector is worth commending. The benefits of good management has been realized during the present economic crisis when the supply has been sustained until recently. The countries reversal of generation mix to a ratio of 80:20 from hydro and thermal sources respectively with an estimated hydro generation capacity of 2500 GWh has reduced the pressure on electricity demand

17

during this timeof adversity. It has also been able to contain this situation due to the fact that 60% of total consumption came from the domestic and services sector which will more likely adjust their demand according to changing economic conditions. Cote d'Ivoire also .inports cheap electricity from Ghana which so far has been very

reliable. .

The average tarff is US$O.158/KWh with the structure favouring industrial users than any sector in t1:e economy. Returns on investments were very low in 1988 and it is a welcome idea the privatization of the public utility in recent times.

18

It

COlE D'IVOIRE TRENDS IN ELECTRICITY

CONSUM?TION AND SOCIOECONOMIC VARIABLES

60 -

I

40

20

I

.. or:

w

*'

I ~/ ~-'-*--'

I ^'lIt-

i ^7---'

0

I 1 I 1 1 I 1 1 1 1 1 1 1 I 1 I 1 I 1 1

9 9 9 9 9

9 9 9 9 9 9 9 9 9 9 9 9 9 9

7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9

3 4 5 6 7 8 9 0 I 2 3 4 5 6 7 8 9 0 1 2

GDP -t- _IND ~ SERV POP

-*- GNP/C ^---4- URBPOP ^{- 8 -} CONS

Hg.3.4

3.5 GAMBIA 3.5.1 Overview

The Republic of The Gambia is a narrow strip of land bordering the Gambia River and sandwitched by the Republic of Senegal. The terrain is flat, and soils and rainfall are suitable for rainfed cultivation of cereals, groundnuts - the main export crop - and other crops. Other natural resources include fisheries and sites with potential for tourism development. Nevertheless, the productive base is limited, and this is reflected in a low level of incomes. Per capita GNP in 1992 was $370.

Agriculture contributed about 28 percent of the country's GDP in 1989-91, with production of groundnuts accounting for 10 percent. Industrial activity was 14 percent of GOP, mostly groundnut processing, fish freezing and drying, and leather tanning.

The services sector constituted about 58 percent of GOP, the largest contributions arising from trade (16 percent), government (10 percent), and transport (8 percent).

The direct contribution of tourism (hotels and restaurants) was 3 percent of GDP.

3.5.2 Economic Performance

In the five years to 1975, Gambia experienced very high growth rates. Indeed in 1974, the economy grew by as much as 19%. The trend more or less continued up to 1979 except for some negative growth rates in 1975 and 1978. Performance in 1980 was highly negative but remarkable in the following two years. From 1984 to 1991, the rate increased, and average annual growth over the period 1986 to 1991 was over 5%.

The country has a very high population growth rate of over 3 % per annum. Thus, despite the relatively good economic performance, the GNP per capita has not improved substantially. It has however improved from an all time low of US$170 in 1986 to $370 in 1991, one of the lowest levels in the West African sub-region.

In 1990 the government adopted a Program for Sustained Development, that aims at achieving a faster rate of economic growth. Government has set a target for real GDP growth of at least 4.5 percent a year in 1990-93 and beyond. This rate has been sustained and future prospects are bright.

3.5.3 The Power Sector

The country produces electricity solely from thermal sources. Peak production was in 1988 at 66 GWh. The period up to 1988 was one of generally increasing production; in the aftermath though, generation declined except in 1991 when it increased by 3.2% over the previous year to 65 GWh. Electricity consumption matched production, and the two remained equal until 1986. Production exceeded consumption in 1987 and 1988. In 1991, consumption exceeded production by over 36 % which may be due to self-generation.

20

Per capita conumption was 77 Kgoe in 1988, commercial and other acnvmes accounted for about 62%of electricity consumption. The household sector consumes only 38

%

Tariffs are mocerate, in the region of US$O.IO/KWh.

21

r - = · - = = C = ' ' - = = = = = = = = = = =

GAMBIA,TRENDS IN ELECTRICITY CONSUMPTION AND S;LECTED SOCIOECONOMIC VARIABLES

..~.-.-...

1'.

/+

¥ ~P

-~-~ r/

.~. ^I

~,~

~

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o

1 I I I I I I I 1 I I I 1 1 1 I I I I I

9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 a ^{1 2}

20,

I

I

15 f-

I

YEAR

---

^---+--

--*-

-+-

fig. 3.5

--..:;:;::;;:- ..--~':"

3.6 GUINEA 3.6.1 Overview

From being a major exporter of agricultural products, the Guinean economy was transformed by the mid-1970s into a major bauxite exporter and net food importer.

Urbanization accelerated as productive activities and incomes were increasingly shifted from tbe rural to the urban sector.

Guinea's agricultural, mineral and energy resources make it one of Africa's most richly endowed countries. GNP per capita has improved considerably from $420 in 1988 to $512 in 1992.

Guinea has approximately one-third of the world's bauxite resources (about 20 billion tons) and an estimated long-term gold extraction potential of between 10 and 15 tons per year. There are considerable diamond reserves which presently support a production of about 250,000 carats per year. The Mount Nimba region contains one of the world's last remaining high-grade iron ore deposits with total proven reserves of about 315 million tons of premium ore. There are proven high quality granite reserves, estimated at 40 million cubic meters, and potential for other minerals such as lead, zinc, silver, uranium, cobalt, nickel and platinum exists.

Even though most of its mineral reserves remain unexploited, the economy is dominated by the mining sector, with the sector contributing an estimated 25 percent of GOP, 95 percent of exports and 79 percent of tax revenues.

3.6.2 Economic Perfonnance and Medium-Tenn Prospects

In late 1985 a series of ambitious economic and financial reforms were embarked on to put in place a market-oriented economic system.

In the course of 1986-88 significant progress was made toward meeting the objectives of the economic reform program.

The reforms yielded encouraging results. The economy grew by 4.4 percent a year in real terms, an increase of over 1.4 percent per capita, between 1986 and 1989.

Furthermore, the economy adjusted quickly to the effects of devaluation and inflation declined from 72 percent in 1986 to 28 percent in 1989. The pace of adjustment slowed again in the first quarter of 1990.

While the government has taken substantial corrective action to establish the incentive framework needed to revitalize the economy, the full impact of the adjustment effort will take hold only with sustained good economic management over a longer period.

The increase in private investment expected in response to the new incentives environment, along with enhanced efficiency in public investment, could result in overall real growth through 1995 and an increase in per capita incomes. Agriculture and output in the secondary sector are also expected to rise with the expansion of

23

mmmg acnvity outside the bauxite subsector, rehabilitation of viable industrial enterprises, and increased construction activity. Further privatization of trade and other commercial activities should similarly stimulate growth in the tertiary sector.

The economy still remains vulnerable to adverse trends in international bauxite and alumina markets. These sectors accounted for 77 percent of Guinea's total recorded merchandise export receipts in 1986-88 and 60 percent of the government's fiscal receipts.

While bauxite and alumina production is expected to remain stable over the next five years, considerable growth can be expected in the volume of other exports during the next five years, if the economic program stays on stream.

The economy is projected to grow at an annual average rate of almost 5 percent over the 1990 through 1995 period, followed by a slight slowdown to just over 4 percent from 1996 through 2000. This sustained economic growth is expected to be driven principally by the agriculture and trade sectors, and to a lesser extent, the mining sector. The target has however not been achieved in the first three years of the period, albeit with some progress. Despite a 4.3% growth in 1990 the economy slowed down to 2.5% ad 3.5% respectively in 1991 and 1992.

3.6.3 The Power Sector

The public power supply system in Guinea is comparable to those of neighbouring countries thirty years ago. Power markets are small and separated by hundreds of kilometers. Although hydroelectric potential has been estimated at fully 26,000 GWh/year (6,000 MW) under average hydrological conditions, currently only 1 percent 300 GWh has been developed.

Installed generating capacity is greater than that of the public utility. There is auto- generation via a multiplicity of inefficient small generators at considerable economic cost to the country; only the large mining concerns are generating electricity in an efficient manner. In addition, even the limited service available from the public utility is unacceptably poor in quality - characterized by lack of continuity, wide voltage swings, and prolonged daily outages experienced by virtually every consumer.

Further, this poor service is produced at high cost and at extremely low efficiency.

Under-investment in power has plagued the country and has served to stunt growth in the economy at large.

The effect of the inefficient distribution network is seen from the fall in consumption of electricity in Guinea. Today, consumption has fallento315GWh in 1991 far below the 1970 level of 388GWh. It should be noted that Guinea attained a consumption level of 500GWh for more than a decade after 1974.

The dominance of the industrial sector in the macro-economy is reflected in the consumption pattern of electricity. 42 % of total consumption is accounted for by industry especially mining; whilst the share of households, commercial activity and

24

others are 285, 18% and 16% respectively.

It is envisagec that industry has to provide its own power if it wishes to obtain access to electricity a: acceptable levels of service. In the household sector, the introduction of modern forns of energy causes consumers to divert attention from the use of biomass (wool and charcoal).

The average tariff was about US$O.11 in 1988.

25

GUINEA: TRENDS IN ELECTRICITY CONSUMPTIO

AND SELECTED SOCIOECONOMIC VARIABLES 1

40 , - - - - 35 -

I

30 ~

251~

20 -

1 1 1 1 I I I I I I 1 1 1 1 1 1 1 1 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9

5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

15 10

1

5 t=i t=r-8~l:!:s--B----c:,~8.__tib

_A_~-A-.~-=W=:

o L

1 I 9 9 7 7

3 4

YEAR

GDP -+~ IND ~.- SERV POP

---*-- GNP/C _~ URBPOP

-ss-

fig. 3.6

3.7 GUINEA BISSAU 3.7.1 Overview

Guinea-Bissau is a small country on the West African coast with about 950,000 inhabitants. With an estimated 1990 per capita income of about $180, the country is among the poorest in the world. The economy is characterized by a large traditional rural sector, producing primarily for subsistence. Partly for this reason, measurements of economic activity are subject to an unusual degree of uncertainty.

Agriculture, fisheries and forestry account for about 90 percent of employment and an estimated 50 percent of GOP. Marketed output is largely confined to export crops, primarily cashews, groundnuts, and palm kernels; in 1989 cashews accounted for 50 percent of exports. Industrial activity is on a very small scale. The industrial sector accounts for only 9% of GOP in 1992. Services which dominated economic activity in the early eighties stagnated until recent years, contributing a significant 49%to GOP in 1992.

3.7.2 Economic Performance

From 1971 to 1976, Guinea Bissau achieved relatively high rates of economic growth, averaging over 4.5% per cent per annum. Growth declined in 1977, picked up dramatically in 1978. In 1980, negative growth was recorded. From 1981 to 1985, performance was generally very good, except for a 3.2 % fall in GOP in 1983.

Although GOP again declined by I % in 1986 and 1991, it continued to record positive rates of growth until 1992.

GNP per capita increased on the whole relative to the mid seventies, though not dramatically, and remained very low and of the lowest in the West Africa region. In

1974, GNP per capita was $160, increasingto $220 in 1992.

Guinea-Bissau's structural adjustment program should place the country in a position to achieve growth over the longer term. Guinea-Bissau's relatively generous natural resource endowment, particularly in arable land, provides a basis for optimism about the country's future once major distortions in the system of economic incentives are eliminated and the macro-economic balance restored.

3.7.3 The Power Sector

Guinea Bissau does not produce any hydroelectric power. Thermal generation of electricity averaged 14 GWh annually. Production increased considerably, and was 40 GWh in 1991. Constrained by its production during the period, electricity consumption remained an average of 14 GWh annually from 1970 to 1986. From 1987 to 1991, however, consumption grew sharply, outstripping electricity generation by the national utility. The gap between consumption and generation by the national utility is satisfied by widespread auto-generation by private organizations and individuals. Consumption in 1987 was 55 GWh, more than twice the production of 24 GWh, and has soured to an all time high of 67 GWh and 72 GWh in 1990 and 1991 respectively. Households account for about 38 % of electricity consumption,

27

13% by the industrial sector, another 13% by the commercial sector and 36 % by other users.

Tariffs are moderate, an average of about U5$0.11 per KWh.

The Government has for sometime now, been promoting the Saltinho Hydroelectric Project both as a long-term solution to the electricity supply problem and as a regional development project. The project has already been technically evaluated by several well-known engineering firms as viable.

28

Ii

GU1NEA BISSAU:TRENDS IN ELECTRICITY

CONSUMPTION AND SOCIOECONOMIC VARIABLES

2.5

.:

2

1.5

1

....I.2r

0.5

- -

al,

I 1 I 1 1 I 1 1 1 1 I I

1 1 1 1 1 1 ^I

9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9

9

7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8

9 9 9

3 4 5

7 8 9 a ^{1 2 3 4 5 6 7}

⁹ a ^{1 2}

YEAR

-+-

---*- GNP/C ^~ URBPOP ^---A-- CONS

fig. 3.7

3.8 MALI

3.8.1 Overview .

Mali is a vast, landlocked, and resource-poor country locatedin the Sahelian zone of West Africa. Nearly 90 percent of the population, estimated at about 8 million in 1988, is dependent on agriculture, which accounts for roughly 50 percent of GDP.

Per capita income is estimated at $310 in 1992. Population growth is an estimated 2.5 percent a year.

3.8.2 Economic Performance

After increasing up to 1972, GDP growth declined in 1973 and 1974 by about 2.4%

annually. In the next decade up to 1985, GDP generally increased, with intermittent periods of decline. From 1986 to 1991, GDP generally increased, with growth rates of as much as 18.6% in 1986 and 10.8% in 1989, averaging 5.6%. It however stagnated in 1990 and 1991 and recovered 1992 to 4 %.

GNP per capita increased from 1970 to the early eighties. Itfell in the next four years and started a recovery in 1986. As at 1992, GNP per capita was $310.

3.8.3 The Power Sector

Mali generates both hydroelectric and thermal electricity. Hydroelectric power generation increased consistently from 1970 to peak at 193 GWh in 1991, thanks to good generation of about 148 GWh by the Selingue hydro dam. Generation from thermal sources averaged 40 GWh in the four years to 1991. Electricity consumption increased in Mali from the seventies. Maximum consumption was attained in 1986 at 200 GWh. Itdeclined drastically to 146 GWh in 1987. Recovery started in 1988 and was 194 GWh by 1991. It must be noted that demand for electricity is stunted and will always increase with increase in hydro generation. With the connection of the Mananthali hydro-electricity project into the national grid it is expected that this problem will be mitigated and demand will pick accordingly.

Mali has one of the lowest per capita consumption of electricity in West Africa about 24 Kgoe. The average tariff is high, about US$0.20 per KWh.

30

MALI: TRENDS IN ELECTRICITY CONSUMPTION AND SELECTED SOCIOECONOMIC VARIABLES

25

---

20 -,

15 -

1 1 1 1 1 1 1

1

1

1 1 1 1

9 9 9 9 9 9 9 9 9 9 9 9 9 9

9 9 9 9 9

7 7 7 7 7 7

8 8 8 8 8 8 8 8 8 8 9

9

3 4 5 6 7 8 9 a

^{2 3 4 5 6}

^{8 9} a ^{1 2}

YEAR

----

~ GNP/C ^~ URBPOP ^---b-- CONS

l ^fig.

3.9 MAURITANIA 3.9.1 Overview

Mauritania is a vast country, with a population of 2 million and a very limited resource base. Virtually all its 1.1 million square kilometers is desert. Its major economic prospects include iron ore mining in the north, developing the fishing industry in and around Nouadhibou, and exploiting the agricultural and live-stock potential in the Senegal River Valley. Limited development of small manufacturers may also be possible, mainly in urban areas.

With only 0.2 percent of its land area suitable for agricultural production, agriculture nevertheless contributes about one third of Mauritania's GDP.

3.9.2 Economic Performance

Mauritania experienced mixed economic growth from 1970 to 1975. In the following five years, growth was on the whole positive, despite some stagnation in 1977 and 1978. Although negative growth was recorded in 1982 and 1984, macroeconomic performance improved considerably through 1989. GDP declined dramatically in 1990. Overall economic growth declined by 2.1 percent, principally reflecting a drop of 23 percent in crop production, a 30 percent decline in fisheries output and a significant scaling back in public investment projects, and then resumed by an increase of 2.8% and 2.1 % in 1991 and 1992 respectively.

The country has a relatively high population growth rate. However, GNP per capita generally increased to $480 in 1981. It declined for the following five years but then picked up. By 1991, a GNP per capita of $530 has been attained.

The Mauritanian economy remains fragile. Recent experience has made it clear that without macroeconomic stability and access to sufficient external financing, sustainable growth will remain out of reach.

Sustaining per capita income growth will hinge on the government's ability to deal effectively with population growth, now 2.9 per cent, which could exceed 3.5 percent in the absence of an effective population policy. Demographic growth and environmental issues will remain, at least for the next decade, two of the major constraints to Mauritania's development efforts.

3.9.3 The Power Sector

Mauritania generates it electricity only from thermal sources. From 1973 to 1982, production stabilized somewhat at almost 100 KWh per annum. Sharp declines in production were recorded in the following two years. Generation then started picking up, and was 270 GWh in 1991, up from 215 GWh in 1987 and 245 GWh in 1989.

32

In 1988, use of electricity for industrial purposes was estimated at 13% of total electricity consumption. The main use of electricity was for residential and commercial purposes, accounting for 61%of total consumption. Given its limited industrial base, high population growth and rapid urbanization, it is expected that electricity consumption would increase in the future mainly from increased demand from residential users in the urban areas.

The average Mauritanian consumes more electricity than his counterpart in other West African countries. The per capita consumption is 535 Kgoe - more than 28 times the consumption for countries with the least consumption per capita, Burkina Faso and Niger.

33

MAURITANIA:TRENDS IN ELECTRICITY

CONSUMPTION AND SOCIOECONOMIC VARIABLES

10

8 -

YEAR

GDP

--+-

-x- GNP/C -V- URBPOP ---8-- CONS

fig. 3.9

3.10 _~~Il 3.10.1 Overview

Niger is a landlocked country with its closest access to the sea 600 kilometers from its southern border and an area of 1.27 million square kilometers. The population is estimated at 7.5 million and growing at about 3.2 percent a year, which is above the average for sub-Saharan Africa.

Nearly 90 percent of the population is concentrated along the southern border in the 12 percent of the land area considered arable. Niger had a per capita GNP of $280 in 1992. .

Niger's economy has traditionally been dominated by subsistence agriculture, with millet and sorghum taking up 80 percent of cultivated area.

The discovery of large uranium deposits in the late 1960s triggered the development of an important mining sector in Niger. The mining sector expanded rapidly under highly favourable world market conditions for uranium during the late 1970s and uranium became the country's principal foreign exchange earner and a major source of government revenue. As a result, Niger went through a period of rapid growth and modernization, and the public sector took a dominant position in the modern economy.

The uranium boom ended in the early 19808, when prices dropped and Niger's production decreased.

Niger exhibited all the features of a typical resource-poor Sahelian country until the uranium boom raised the mining sector's share of GOP from 6 percent in 1975 to 13 percent in 1980. The industrial development is handicapped by the limited size of the domestic market, Niger's landlocked position and lack of local raw material resources and economic developments in Nigeria.

3.10.2 Economic Performance

Performance of Niger's economy over the period 1973 to 1991 was mixed, with occasional periods ofdeclines in GOP. In 1973, GOP declined by over 17 per cent, but grew at about 8.8 percent the following year. From 1976 to 1980, positive growth was recorded. The following five years however saw mixed performance of the economy. Especially in 1992 there was a sharp decline of GOP by -6.2%.

Niger has a generally high population growth rate, with a predominantly rural population. The urban population, though increasing, remained only a fifth of the total population in 1990. The combination of an overall poor economic performance and a high population growth rate affected GNP per capita, especially beginning from 1981. GNP per capita increased continuously to 440 in 1981. Itdeclined for the next five years to as low as $240 in 1986, recovering modestly to around $320 in 1990 and then falling again in 1992 to $280.

35