On July 25th, 2011, The Inter-American Development Bank (IDB) committed $35 million to help reconstruct Haiti’s electricity sector. The grant is the first of three policy-based operations the IDB expects to conduct over the next three years to help Haiti build a reliable and sustainable electricity grid.
The objectives of the grant are to develop and implement a new legal and regulatory framework to foster Haitian-based institutional capacity to govern and oversee the power sector while supporting the use of clean energy. Specifically, plans include supporting the creation of an Energy Direction as an autonomous entity in charge of planning, regulation and supervision of the energy sector. Importantly, this is the first step towards the creation of a Ministry of Energy, which Haiti does not yet have. The plans further call for expanding electricity access to rural areas and developing an institutional and regulatory strategy for urban biomass and Liquefied Petroleum Natural Gas. Finally, the grant aims to convert the national utility Electricité d’Haïti (EDH) into a financially and operationally viable company through short term targets of creating operational and financial indicators for EDH in an effort to reduce operational costs. The long term objective is to open up participation to the private sector by working with Haiti’s already established Commission for the Modernization of Public Enterprises.
EDH was created in 1971 and has a national monopoly on electricity generation, transmission, distribution and commercialization. It was formed to control the newly built Péligre hydroelectric plant. Since then, efforts have been made to privatize the company in part due to a Structural Adjustment Program led by the World Bank and International Monetary Fund in 1995; however, these efforts have since stalled. Today, combined technical and commercial electricity losses are above 50 percent. The Government of Haiti transfers 12 percent of the national budget annually, or over $100 million, to keep the company afloat.
The IDB grant comes at a particularly pressing time for Haiti. Haiti is one of the poorest countries in the world. It ranks 145th worldwide in the Human Development Index, which measures development by combining indicators of life expectancy, educational attainment and income. According to the grant’s project profile submitted by Haiti’s Ministry of Economy and Finance, more than 7 million Haitians lack access to electricity. Of the 1.2 million Haitians who do have electricity access, about half are connected to the grid illegally. Average daily availability of electricity is only ten hours, which prompts businesses and residences to install costly, environmentally harmful diesel generators. Instead of having one national transmission grid, there are nine isolated small grids throughout Haiti. Furthermore, Haiti’s commercial and industrial tariffs are the highest amongst majority-fossil-fuel dependent countries at about 35 cents per kilowatt hour. This is significant since in 2007, an estimated 12,280 barrels of oil per day were imported, or 63 percent of Haiti’s total electricity production according to the International Energy Agency. Lack of access to affordable and reliable electricity impedes further development and investment in the already low-invested country.
IDB is planning to take a multi-faceted approach to Haiti’s energy problems. Separate from this grant, IDB is also contributing funding to the rehabilitation of the Peligre hydroelectric plant, the implementation of solar technology, and EDH’s reduction of technical and commercial losses through three separate grants. As mentioned in an earlier post, the Worldwatch Institute is working on creating low carbon energy roadmaps for Haiti (and other Caribbean countries) and shares a similar, interdisciplinary approach to tackling this complex issue. One of the initial steps in Worldwatch’s energy roadmap process is to examine each country’s potential for renewable energy production, including but not limited to solar, wind, micro hydropower, and biomass. The energy infrastructure of each nation is also analyzed to explore the potential for increased efficiency through transmission, generation and building upgrades, as well as the potential for increasing energy storage capacities. We then examine the current socio-economic and policy environments to identify barriers to low-carbon development, and make recommendations for how these can be overcome. During a recent visit to Haiti, Worldwatch researchers met with a team from IDB to discuss future collaborative efforts. Perhaps taking a more holistic, collaborative approach towards solving Haiti’s electrification problems will equate to a more successful outcome in the future.