Burkina Faso - Electric power sector development review

Report No. 11 703-BU Burkina Faso Electric Power Sector Development Review February 28, 1994 Industry and Energy Operations Division Sahelian Department Africa Region FOR OFFICIAL USE ONLY U~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Document of the World Bank This document has a restricted distribution and may be used by recipients only - -. in the perforrnance of their official duties. Its contents may not othierwise be ~t disclosed without World Bank authorization -;  CURRENCY EOUIVALENTS Currency Unit = CFA Franc (CFAF) 12/08/93 US$1 = CFAF 293.6 2/27/94 US$1 = CFAF 587.1 12/08/93 SDR 1 = US$1.3881 2/27/94 SDR 1 = US$1.391 ACRONYMS AND ABBREVIATIONS CCCE Caisse Centrale de Cooperation Economique' CPPEG Cellule des Programmes et Prdvisions Economiques Generales (General Economic Programming and Projections Unit) DANIDA Danish Development Agency DPC Danish Power Consult ECG Electricity Corporation of Ghana ECOWAS Economic Commrunity of West African States EdF Electricit6 de France ENERGEE AOF Energie de l'Afrique Occidentale Francaise (French West Africa Power) GMB Grands Moulins du Burkina Faso (Burkina Mills) IBE Institut Burkinabe de l'Energie (Burkina Faso Energy Institute) IBICA Impots sur les Benefices Industriels, Commerciaux et Agricoles (Industrial, Commercial and Agriculture Profits Taxes) IMFPIC Impot Minimum Forfaitaire sur les Professions Industrielles et Commerciales (Minimum Flat-Rate Tax on Industrial and Commercial Professions) MDEM Delegated Minister of Energy and Mining MESSRS Ministry of Secondary and Higher Education and Scientific Research MET Ministry of Environment and Tourism ,ICM Ministry of Industry, Trade and Mining SAFELEC Societe Africaine d'Electricit6 (African Electric Power Company) SOFITEX Societ6 des Fibres Textiles (Textile Fibers Company) SONABEL Societe Nationale d'Electricite du Burkina (Burkina Electric Power) SONABHY Societe Nationale Burkinabe d'Hydrocarbures (Burkina Hydrocarbons) SOREMIB Societe de Recherches et d'Exploitation Miniere du Burkina (Burkina Mining Research and Operations Company) SOSUCO Societe Sucriere de la Comoe (Comoe Sugar Company) UNDP United Nations Development Program UPDEA Union des Producteurs et Distributeurs Electriques Africains (Union of African Electricity Generating and Distributing Companies) VOLTELEC Societe Voltaique d'Electricit6 (Upper Volta Electric Power Company) VRA Volta River Authority WAEC West African Economic Community WAMU West African Monetary Union I Now the Cai.. PFmpaiw de D6vckopwmt (CFD).  FOR OMCIAL USE ONLY BURKINA FASO ELECTRIC POWER SECTOR DEVELOPMENT REVIEW TABLE OF CONTENTS SUMMARY AND CONCLUSIONS .............................................................. i I. GENERAL FRAMEWORK OF THE ELECTRIC POWER SECTOR .......... 1 A. Profile of Burkina Faso ........................................................... I B. Population ...............................................................1 C. Economy .............................................................. 5 D. Energy Sector .............................................................. 6 II. ELECTRICITY DEMAND .............................................................. 10 III. SONABEL .............................................................. 16 A. Legal Status and Tax Treatment ................................................... 16 B. Internal Organization and Management Structure ............................... 18 C. Labor Force and Job Instruction/Training ..................................... 24 IV. ELECTRIC POWER GENERATING, TRANSMISSION AND DISTRIBUTION SYSTEM .............................................................. 28 A. Objectives and Strategy ........................................................... 28 B. Electrification of the Country .................................................... 29 C. Existing Supply Facilities ........................................................ 31 D. Transmission Network .............................................................. 37 E. Distribution Network .............................................................. 38 F. Connections and Network Extensions .............................................. 38 G. Ongoing System Development and Investment Program ..................... 40 V. SONABEL FINANCES .............................................................. 44 VI. POWER SECTOR DEVELOPMENT OUTLOOK .............................................................. 51 A. Energy Generation .............................................................. 51 B. Importation of Electric Power .................................................... 53 C. Search for an Optimum Development Program ................................. 55 D. Tariff Policy and Development Financing .................................... 57 E. Conclusion of a Contrat-Plan .................................................. 57 LIST OF REFERENCE SOURCES .............................................................. 59 ANNEXI .............................................................. 62 ANNEXI .............................................................. 64 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  BURKINA FASO ELECTRIC POWER SECTOR DEVELOPMENT REVIEW LIST OF ANNEX H TABLES 1. Electricity Generation, 1972-1991 2. Evolution of Demand in the Central Electricity System (Ougadougou), 1986-1990 3. Evolution of Demand in the Western Electricity System (Bobo Dioulaso), 1986-1990 4. Evolution of Demand in the Isolated Centers, 1986-1990 5. Demand Projections Made in Previous Studies 6. General Energy Balance, 1990 7. Thermal Generating Plant 8. Operating of Thermal Power Stations, 1990 9. Characteristic Operating Figures. Cost Price per kWh Sold, 1987-1992 10. SONABEL: Operating Accounts 11. SONABEL: Balance Sheets 12. SONABEL: Borrowing Status as at December 31, 1991 13. SONABEL: Labor Force, 1977-1991 14. SONABEL: Financial Projections 15. Revised Investment Program, 1991-1997 16. Electricity Selling Rates in Burkina Faso  BURKINA FASO ELECTRIC POWER SECTOR DEVELOPMENT REVIEW LIST OF FIGURES Figure 1 SONABEL Network, 1992-93 Figure 2 SONABEL Network According to Master Plan (2000-2005) Figure 3 High-Voltage Network and Interconnection Projects Figure 4 Population Density, by Province, 1985 Figure 5 Energy-Sector Institutions Figure 6 Total Demand Projection (SONABEL Total) Figure 7 Main Organization of SONABEL Figure 8 Organization Chart of the Technical Directorate Figure 9 Organization Chart of the Administration and Finance Directorate Figure 10 Distribution of Labor Force, by Wage Category, 1991 Figure 11 SONABEL: Labor Force Productivity Figure 12 SONABEL: Organization Chart Figure 13 Spare Parts Expenditure, 1987-1991 Figure 14 SONABEL: Age Distribution of Installed Capacity, 1992 Figure 15 Power Sales by SOSUCO to SONABEL Figure 16 Output of Kompienga Power Station Figure 17 SONABEL: Distribution of Investment, 1991-1997 Figure 18 SONABEL: Central System, Single-Phase Scheme Figure 19 Total Cost Price, 1987-1992  BURKINA FASO ELECTRIC POWER SECTOR DEVELOPMENT REVIEW LIr OF TABLES Table 1 Population of Burkina Faso Table 2 Distribution of Resident Population, by Province (1975 and 1985 Census Figures) Table 3 Population of Urban Centers, 1986 Table 4 Energy Balance Structure, 1990 (ktoe) Table 5 Electricity Sales, 1991 Table 6 Development of Sales Structure, 1986-1990 Table 7 Consumption Projections Used Table 8 SONABEL Power Stations Table 9 Diesel Plant of SONABEL Power Stations. Number of Sets and Installed Capacities, by Age Class and Unit Capacity Table 10 Labor Force and Wage Bill Table 11 Average Selling Price (CFAF/kWh) Table 12 Current Electricity Tariff, 1992 Table 13 Fixed Assets Table 14 Customer Debtors Account  FOREWORD 1. The purposes of this report are (i) to assess the current situation and development potential of the electric power sector in Burkina Faso; (ii) to identify the sector's main problems, development strategy and institutional framework, and (iii) to establish a basis fbr discussion with the Burkina authorities on the possible role of the World Bank in assisting the sector's development. 2. Danish Power Consult (DPC), with financing by Denmark Development Cooperation (DANIDA), helped to prepare and produce this report. A mission comprising Messrs Max Pilegaard and Michel Patou (Consultants) and Nadjib Sefta (World Bank, AF5IE) visited Burkina Faso from June 1 to 27, 1992 in order to (i) ascertain the current situation of the sector, (ii) gather the necessary documentation, and (iii) visit the major generating units in service and the recently completed electrification projects. 3. A second mission to Burkina Faso took place in June 1993 during which SONABEL presented its comments on the draft report. 4. This report was prepared and revised by Messrs Pilegaard, Patou and Sefta in collaboration with Mrs. Francoise J. Fabian, Mrs. Alvire C. Paul and Mr M. Guirbo, Staff Assistants. The report reviewers were Messrs Wilton (AFTPS) and Ouahes (EMTIE). The report was completed on December 8, 1993. The data and analysis do not take into account the parity change of the CFA Franc which occured on January 12, 1994. The delay between December 8, 1993 and February 28, 1994 is due to the preparation of the translation of the report into English.   SUMMARY AND CONCLUSIONS Characteristics of the sector 1. There has been little development of the electricity sector in Burkina Faso. Total electricity consumption, which was about 270 GWh in 1992, corresponds to a per capita average of only 28 kWh/year, one of the lowest in the world.2 This average is, in any case, not very significant because only 4% of the population actually has access to electricity. 2. The sector is composed of a public electricity corporation, SONABEL, which is the sole distributor, and a certain number of self-producers of various sizes, who, together, produce about one-fourth of the total quantity of electricity consumed in the country, i.e. about 70 GWh. Approximately 40 GWh of this amount is produced by five medium-size industrial plants, the rest being produced by extremely small self-producers. 3. At present, about 85% of the electricity is produced by diesel plants, the fuel for which is imported at a high price (because of the cost of road transport from the ocean ports more than 1,000 km away). About 4% of the total electricity production comes from the use of local fuels by the self- producers, including agro-industrial biomass waste. The remainder, i.e. about 119%, comes from hydroelectric production. This is handled by the 14 MW Kompienga plant, which came into service in 1989 and which has yet to reach its installed average annual production level. During the next few years, once the new 16 MW hydro plant in Bagre comes into service (1993), hydro electricity will amount to between 65 and 70 GWh per year on average and will thus cover about one quarter of total consumption. 4. One of the basic characteristics of the sector is the high price of electricity (CFAF 85/kwh on average in recent years, which is one of the highest in all the countries of the region). This is attributable, in particular, to the high price of fuel for the diesel plants, as mentioned earlier, but is also because of the large investments made during the last decade in the development of hydroelectric production, the natural conditions for which are not particularly favorable in Burkina. It should also be noted that the high price indicated above is less than the supply cost. SONABEL actually receives a large amount of financial support from the Government, in the form of fiscal relief, a subsidy on the fuel consumed by the power plants and the Government's assumption of 70% of the debt contracted for the construction of the Kompienga hydro plant. The real cost of electricity, taking all costs into account (excluding taxes) is approximately CFAF 10 more than the selling price. 5. The power system operated by SONABEL comprises three subsystems: (i) the central network supplying the capital city Ouagadougou, the city of Koudougou about 100 km away and a few outlying communities; (ii) the western region network, currently being established, with the city of Bobo Dioulasso as its main center; and (iii) a dozen or so secondary centers, customarily supplied by a diesel plant of some hundred kW. The latter together consume about 7% of the total amount of electricity distributed by SONABEL, while the two main cities of Ouagadougou and Bobo Dioulasso consume about 85%. The generation costs differ considerably between the secondary centers, where the diesel sets operate on gas-oil (or DDO), and the main centers, where heavy fuel is used. 2. For comparison purposes, the per capita consumption figures in kWh/year ar as follows for some countries: Gabon 700, Mauritius 450, Cameroon 200, Scnegal 100, Cape Verde 70, Tunisia 600, China 500, India 290, Indonesia 240.  - ii - 6. SONABEL is organized rationally and operates in a relatively satisfactory manner, particularly where the distribution network operations and customer management are concerned. It is worth noting that the total losses of the networks are less than 10%. However, overall personnel productivity, i.e. 0.16 GWh/employee, which has remained the same or slightly lower during the past decade, is mediocre and would indicate the need for better staffing management. 7. In terms of its institutional position, SONABEL operates under the supervision of the Government, which appoints the members of the Board of Directors, sets tariffs for the sale of electricity and approves development plans. As owner of the company, the Government has also to approve the accounts presented by the Board of Directors. It should be pointed out here that SONABEL enjoys a certain autonomy of management which could be strengthened by institutionalizing a formula for the independent audit of SONABEL's accounts and financial statements. 8. The Government's policy for the electricity sector assigns priority to nationwide electrification, so as to make electricity accessible to a higher proportion of the population and facilitate the development of the modern sectors of the economy. The Government is, at the same time, anxious to reduce the country's dependence on imported energy. The desire to develop national energy resources and hydroelectric power, in particular, should, however, remain secondary to the objective of providing the country with lower-cost electricity. With this in mind, opportunities to import electricity at competitive prices from Ghana or CMte d'lvoire should be explored and utilized in a more systematic manner. Increase in demand 9. The average annual rate of increase in the consumption of electricity distributed by SONABEL has been 9% over the last 20 years. Between 1983 and 1986, consumption remained stationary, but since 1986 there has again been a steady increase (8.3% on average during this latter period), which is not often found in most countries in the subregion. The increased demand reflects, in part, the progress of the modem sector of the Burkina Faso economy and, above all, a social need of the population which aspire to improve their living conditions. If the rate of increase is maintained at such a high level, a special effort will be needed to control and rationalize demand, in general, and demand for air-conditioning and lighting, in particular. 10. The studies made by SONABEL and several consulting firms to forecast demand show that for the next two decades an increase in demand averaging between 6 and 8% per annum can be expected, this increase being dependent not only on the development of the country's economic activities but also on how rapidly electrification progresses. Management of SONABEL 11. The main management problems identified in the course of this sector development review concern: (i) the age of some of the diesel-fueled thermal generating equipment; (ii) personnel productivity which is low even compared to similar companies within the region; (iii) the alarming increase, in recent years, in customer debts and in amounts owed by the public sector and government agencies, in particular; and (iv) the fact that SONABEL does not fund the repayment of the debts contracted in connection with the construction of the Kompienga hydroelectric development project.  - iii - 12. SONABEL's thermal power plant equipment is of two different types: (1) in the two main cities, Ouagadougou and Bobo Dioulasso, most of the generating sets have a unit capacity of between I MW and 7.6 MW, two-thirds of the installed capacity of this type operating on heavy fuel; and (ii) in the secondary centers most sets have a unit capacity of less than 300 kW. More than 90% of the small sets are relatively new (less than 10 years old), while most of the equipment in the two main plants is old (80% of the capacity installed in these plants being over 13 years old). Given these circumstances, it is clear that the maintenance and repair of the equipment is becoming increasingly costly (expenditure on spare parts has multiplied ninefold in five years), which raises the issue of the need to decide without delay to appropriately rehabilitate the equipment that can be rehabilitated and to decommission the units that are too old. 13. With respect to technical quality, SONABEL operates relatively well in terms of both its power plants and its distribution networks, including the network expansion work, construction of lines, stations, etc. The enterprise has a training school, which enables it to maintain and update the skills of its personnel. 14. Additional efforts are needed, however, in order to improve overall personnel productivity. In recent years, in fact, although the average real wage of SONABEL's personnel has increased substantially, this has not brought about a corresponding improvement in overall personnel productivity and has increased the cost per kWh sold. 15. The increase in the production cost per kWh over the last five years has remained relatively moderate, thanks, in particular, to the preservation or even reduction, of the biggest item of expenditure, i.e. fuel. It should be mentioned here that SONABEL has made satisfactory arrangements with respect to procurement, and that the Government has given the company favorable treatment in the form of major fiscal relief and even a small subsidy on fuel for use by the plants. 16. With respect to customer management, the Distribution Department conducts an efficient operation in terms of both regular billing of electricity consumed and treatment of new subscribers. But in recent years, the customer debt account has, at the same time, been increasing at a rate of close to CFAF 2 billion each year. The main items in the customer account are Central Government and Government arrears. 17. In the secondary centers and the newly electrified districts, SONABEL is undertaking promotional activities to encourage applications for new connections and thereby to increase at a fairly rapid rate the charges collected from the new networks so as not to extend the deficit period which generally characterizes the early years of operating a network. 18. In certain recent housing developments, in Ouagadougou and Bobo Dioulasso in particular, SONABEL is experiencing a problem that is quite the opposite: it is unable to meet all the applications for connections because of a lack of funds to finance the corresponding extension work. What is happening is that the budget that the company has been able to allocate for this purpose has been limited to CFAF 200 million/year in recent years, which has proved insufficient and has led to an accumulation of unsatisfied applications totaling CFAF 1.2 billion. For 1993 SONABEL increased the budget for network expansion to CFAF 800 million. 19. SONABEL's financial situatio has changed considerably in recent years, since the Kompienga hydroelectric plant came on line, its fixed assets, totaling CFAF 36 billion, accounting for  - iv - over half the company's current balance sheet. The corresponding amortization, amounting to CFAF 1.14 billion/year, is not offset by the savings in fuel costs brought about by the hydroelectric production of Kompienga, which has meant an increase in the overall production cost per kWh. SONABEL's financial results have not suffered in this respect, however (it regularly makes a profit), because only a small part of the debts contracted for Kompienga is directly paid by SONABEL, most of the corresponding debt being borne by the Government. Sound management would require that all the costs incurred in supplying its customers with electricity be reflected in SONABEL's accounts and that the tariffs be adjusted accordingly. But this would mean increasing the sale tariffs, which are already very high (para. 4 above) from CFAF 5 to CFAF 6/kWh, which has been viewed by the Government as untenable by the country's economy. 20. This present treatment of its debt should have given SONABEL a wide self-financing margin and enabled it to participate to a substantial degree in the financing of its investment program. But the run-away increase in the customer debt account, as mentioned above, has made a large proportion of this margin unusable. The development program 21. The sector development program, adopted by SONABEL and approved by the Government, is based on the study of the "Master Plan for the Electrification of Burkina Faso," prepared in 1987 with the assistance of the consulting firm Coyne & Belier. This important document, which is based on a long-term approach, is used as a reference for the ad hoc studies and updating work periodically undertaken by SONABEL, preparatory to decisions on the individual projects it plans to carry out. It should be mentioned, however, that (i) this 1987 master plan does not really provide an economically optimal investment sequence; and (ii) in any case, a document of this type needs to be revised periodically (every four or five years) to reflect any economic and technical changes that have occurred. This is particularly true when evaluating hydroelectric potential and its cost and also when assessing opportunities for importing electricity at a competitive price. 22. The above-mentioned master plan gives priority to the development of hydroelectric resources, which are practically the only significant national primary energy source for electricity production. The main project studied, i.e. Noumbiel (180 to 200 GWh/year), situated on the Mouhoun River (Volta Noire) in the area where it borders on Ghana, uses hydroelectric resources, half of which are owned by Ghana and half by Burkina Faso. It will therefore be possible to carry out this project only if both parties are interested in doing so. Unfortunately, the Noumbiel dam would result in water loss from evaporation between about 500 and 800 million m3 per annum, resulting in production losses of between 90 and 130 GWh at the existing plants at Akosombo and Kpong, situated in Ghana. A certain reservation on the part of Ghana toward the Noumbiel project is therefore to be expected, although the positive effect of river regulation, thanks to this project, would also brings gains of about 60 GWh for the future Bui project, which is also located in Ghana. The complexity of this problem leads to the conclusion that the feasibility of the Noumbiel project will have to be demonstrated from an overall standpoint, taking all the different interests involved into account. 23. As for other hydroelectric development projects, it should be pointed out that there is no inventory of the country's hydroelectric resources on which to base optimal planning of future projects. A water resource development study is therefore needed, which will have to evaluate hydroelectric production costs and take account of the fact that it will, in many cases, be necessary to  plan multipurpose development projects (e.g. hydro-agricultural projects, as in the case of the Bagre project, which is currently under way). 24. The country does not have any other primary energy resources with proven potential for electricity generation. Further technical research would be needed in order to clarify the possibilities for using the graphite shales in the area surrounding Kaya, which were discovered in the course of recent works in connection with the UNDP geological cartography project in Burkina Faso. 25. Given the limited and uncertain nature of Burkina's energy resources for electricity generation, one can only conclude that thermal production based on imported fuel remains the solution of reference (in that any other solution will have to be better in order to be acceptable). Development of this production will, of course, have to be studied carefully in order to determine the most beneficial type of equipment, unit capacity and installation schedule. 26. The most promising alternatives for Burkina Faso seem to be those offered by interconnection with neighboring countries and specifically with Ghana and C0te d'Ivoire. In these two cases, the electric energy that could be supplied to Burkina would be more economical than local diesel production. Among the factors determining the feasibility of such interconnection projects, one that needs to be clarified is whether or not the exporter country is able to commit to a long-term supply arrangement or merely to the occasional supply of surplus energy. 27. The development of transport networks depends to a large extent on which solutions are adopted for the production (or importation) of electricity. If diesel production is to predominate, the centers of consumption can be supplied without the need for a major development of transport networks. On the other hand, if the electricity is going to come from hydroelectric production or imports, transportation will have an important role to play. At the present time the necessary information has not yet been collected to be able to make a clear choice of one strategy over another. For this reason, the extremely large-scale development of transport networks that is included in the 1987 Master Plan in connection with the development of hydroelectric production, is just one possible variant of the study. 28. The development of the distribution networks will have to move toward a more advanced standardization of the construction and equipment solutions, which will be reflected in the simplification of the operation, the reduction of stocks of equipment and spare parts and, finally, in a reduction of total distribution cost. The strategy of this development will have to be carefully defined, because it involves a very long period of time, i.e. several decades. With this in mind, the most urgent task is to standardize the studies and rural electrification works, where SONABEL already has valuable experience. 29. All the aspects mentioned in the foregoing paragraphs will have to be taken into account in order to arrive at a global approach aimed at formulating an optimal development program which will be able to ensure that demand for electricity is met at the lowest total cost to the Burkina at large. Preparation of such a program will be done gradually, reaching increasing levels of integration and refinement, as the basic data and project hypotheses become better managed. Initially, the optimal program will only consider those generating plants and international interconnections that need to be decided on as a matter of urgency.  - vi - 30. The optimal development strategy formulated as indicated above will have to be supplemented by a coherent set of accompanying measures all geared toward the same basic objective, i.e. to reduce the cost of electricity supplied to consumers. This will call for: (a) launching programs of action to bring about more efficient utilization of electricity for the various purposes for which it is used and for air-conditioning and lighting, in particular; (b) introducing tariff formulae that are more likely to encourage subscribers to consume electricity in a manner that is more cost-efficient for them and more energy-saving for the country as a whole; (c) improving SONABEL'S management at all levels and above all, getting personnel costs under control. 31. Opening of the sector to other operators besides SONABEL should also be envisioned in a spirit of economic competition and electrification expansion. This might attract some new private operators, consumer cooperatives (as in the case of rural electrification) or the self-producers, who would be authorized to sell their surplus to distribution customers. Urgent tasks - some suggestions for a short-term action plan 32. (a) Improve operations * Organize the monitoring of fuel consumption by generating unit; then introduce a procedure for establishing the running schedule for the sets and for distributing the load so as to minimize overall fuel consumption. * Study customer motivation with a view to better adapting the tariff formulae and connection-related arrangements. * Have SONABEL's accounts and financial statements audited by an experienced consultant in order to improve the handling of accounting and financial data and of management procedures in general. 33. (b) Strengthen SONABEL's autonomy and give it more responsibility * Clarify the financial relationship between the Government and SONABEL by (i) gradually making SONABEL responsible for all Kompienga debts; (ii) settling the arrears owed by the Government; (iii) strict measures ensuring that the Government and public agencies pay their electricity bills regularly. * Study and formulate a tariff indexing system * Formulate performance indicators for operations and, based on these, establish a Contrat-Plan between SONABEL and the Government and procedures for monitoring/ control/arbitration to ensure that it is diligently complied with by all the parties concerned. 34. (c) Ensure harmonious and effective development * Help SONABEL establish an elaborate planning methodology using efficient and appropriate models and tools.  - vii - * Organize, targeting young SONABEL managers with good basic education, specialized training in the planning of power generation and networks expansion; involve them in the work done by the consultants hired to prepare projects for Burkina Faso. * Launch a study on the current status of the thermal equipment of the plants in Ouagadougou and Bobo Dioulasso in order to identify the sets that need to be rehabilitated and those that should be decommissioned. Based on the findings, formulate an emergency rehabilitation program. * Analyze, with other countries of the region, possibilities for producing and importing/exporting electricity with a view to deciding on the advisability of international interconnections and incorporating them into the development plans.   Goron- Gor m Dilbo Donr NETWORK, 1992-93' Ouahigouya J Kongoussi Toulon 4 * Yako 0 Kaya Bogande Nouna Zinlare Dedougou R&o OLJAGADOUGOU R 2o 2 Poyteng3o Koupela Dmpa K(oslelougou- I oiadou Kon issirIn kv Zorgo Boromo Man g Teiikodogo o-0 Pour~a Fara Bagre Power Station \ kV BOBO-DIOULASSO Leo I t ~~~~~~~Diebougou p _ |DOrodara / _ __-__ Kompienga Power Staiion | v ~~Banlora\ q B~~~~~~~nIora - ~~~~~~~~~~132-kV linie Go \ llydroelectric Plant 0 Gaoua ) o Thermal Plant 33-kV line 0 Niangolok( (Distribution voltage S.S kV) \ City being supplied City to be supplied in the future  GoromGor in NETWORK ACCORDING TO MASTER PLAN J 0 (2000-2005) Ouahigouya * ~~~~Kongoussi No3 /i Uako Bogand1 Ri ~ O GADOUGOU q kV Poytenga Ko pela Dipaga\ / / / Kg~~~~~~~~~~~~iss rIIIV Zorg\ ( ~~~~~~~Borom" TcnikodogoI < / | Bagre Power ntatioP K BOBO68 -DIOUL LASS Leo \ |Orodan / k l g | < -0 / o B/j!on \ \ < ~~~~~~~~~~~~~~~/, Koinpienga Power Station |/ BoIgJ anga . ylydroelectric Plant 132-kV line * W oGao:aX o Tlhermal Plant 33-kV lint: (Distribution voltage 5.5 kV) \ pNU-- 161- or 220-kV line 2n 0 City supplied C1 City to be supplied in the future Ferkss eoudoupu  vI nantali fg,Bamako v ) 3 .t<oua aduou - - Hirnin Kebbi Ganibou 13kV I.' Sikasso% , _ (Project) \ B-0 booo --A ~~K onga A D/ Pioula t Bolgalariga Nigeriani Network 1f 1161kV I Fcrkessedougou HIGH-VOLTAGE NETWORK AND 220 kV Ghanian Network I1TERCONNECTION PROJECTS Key: G. Exisling IL. - - Project uiider study 1. _ Project lo be studied Ivorian Network   I. GENERAL FRAMEWORK OF THE ELECTRIC POWER SECTOR A. Profile of Burkina Faso 1.01 Burkina Faso is a landlocked country in the heart of West Africa. It is a flat country with a lateritic soil; its vegetation is predominantly brush and scrub. In the Northern region, the country becomes sabelian. The capital, Ouagadougou, is located in the transition zone between the tree and shrub savanna zones. In the South, in the Banfora region, rainfall is greater and there are forests and irrigated fields where sugar cane is grown. Burkina Faso has an area of 274,000 km2. It is bordered on the north and west by Mali, on the northeast by Niger, on the southeast by Benin and on the south by Togo, Ghana and Cote d'Ivoire. The average elevation of the plateaus is 500 m; the highest point-the Tenakourou, located in the eastern part of the country-is 747 m. Burkina Faso is traversed by three major rivers: the Mouhoun, Nazinon and Nakambe. All three flow into Lake Volta in Ghana, created by the Akosombo hydroelectric power station dam. Climate 1.02 Thanks to its geographic location in the Sudanian zone, Burkina Faso enjoys a tropical climate with two seasons, a dry season from November to April and a rainy season from May to October. The period from November to March is marked by the Harmattan, a dust-laden wind. Annual rainfall is 300400 mm in the North region and 1100-1200 mm in the South. B. Population 1.03 In 1992 Burkina Faso had a population of about 9.6 million, giving an average density of 35 people per square kilometer. The annual population growth rate is currently about 3 percent. Studies by the National Institute of Statistics and Demography indicate that this rate will hold up, with slight variations, over the next two decades. The population will reach nearly 18 million by 2015. Population density. housing 1.04 Population distribution by region is fairly uneven, as the appended map shows. Population density is lower in the eastern regions of the country (under 10/kin2), while in the central regions, notably Kouritenga and Kadiogo, it exceeds 100/km2.  - 2 - TABLE 1 Population of Burkina Faso (OOOs) Actual Projection 1950 3 770 1995 10 456 1960 4 400 2000 12 038 1970 5 380 2005 13 812 1975 5 638 2010 15 733 1980 6 988 2015 17 790 1985 7 965 1990 9 126 Average Annual Growth Rate (%) 1950-1975 1.62 1995-2005 2.80 1975-1980 3.51 2005-2015 2.60 1985-1990 2.70 Sour, : National Institute of Stati'stics and Demography. 1.05 Most of the population live in small rural localities. According to the 1985 General Population Census, about 85 percent of the people live in localities with under 10,000 inhabitants. 1.06 The urbanization rate is very low (of the order of 10 percent); it is difficult to quantify since it depends on the criteria used to define urban localities. In Burkina Faso it has been agreed to distinguish between rural and urban localities by reference not to size but to development level (potable water distribution, electricity, existence of schools, medical units, and so on). Thus, in 1975 only the five localities classified as urban (Ouagadougou, Bobo Dioulasso, Koudougou, Ouahigouya and Banfora) were electrified. In 1985 another 13 localities were added to this list, most of which were electrified between 1983 and 1986.  TABLE 2 Distribution of Resident Population, by Province (1975 and 1985 census figures) 1975 Population 1985 Population Province Number Density Number Density Bam 145 767 36 162 575 40 Bazega 217 840 41 303 941 57 Bougouriba 177 304 25 220 895 31 Boulgou 277 345 31 402 236 45 Boulkiemde 310 989 75 365 223 88 Comoe 175 422 10 249 967 14 Ganzourgou 124 638 30 195 652 48 Gnagna 146 574 17 229 152 27 Gourma 168 585 6 294 235 11 Houet 308 670 19 581 722 35 Kadiogo 184 590 158 459 826 393 Kenedougou 98 718 12 139 973 17 Kossi 203 357 14 332 960 25 Kouritenga 144 035 89 198 486 122 Mouhoun 200 026 19 288 735 28 Nahouri 73 485 19 105 509 27 Namentenga 130 429 17 198 890 26 Oubritenga 252 620 54 304 265 65 Oudalan 74 853 7 106 194 11 Passore 218 529 54 223 830 55 Poni 180 288 17 235 480 23 Sanguie 173 442 34 212 277 42 Sanmantenga 283 776 31 367 724 40 Seno 146 073 11 228 905 17 Sissili 120 391 9 144 919 18 Soum 133 153 10 186 812 14 Sourou 232 377 24 268 108 28 Tapoa 92 056 6 158 859 11 Yatenga 530 192 43 536 578 44 Zoundweogo 112 670 33 155 777 45 BURKINA 5 638 203 21 7 694 705 29 FASO  FIGURE 4 BURKINA FASO: Population Denstiy, by Province, 1985 C S .56~~~~~~~~~~~tS TABLE 3 Population of Urban Centers, 1986 (OOs) Center 000 Cente 000 Ouagadougou 441.5 Reo 18.5 Bobo Dioulasso 228.7 Nouna 15.2 Koudougou 61.9 Po 14.2 Ouabigouya 39.0 Yako 14.2 Banfora 28.3 Gouray 14.4 Kaya 25.2 Orodara 13.0 Tenukodogo 23.3 Tougan 12.6 Dedougou 21.0 Dori 11.0 Fada N'Gourma 20.9 Gaoua 10.7  1.07 The two major urban centers, Ouagadougou and Bobo Dioulasso, have experienced substantial population growth during the last few years, with annual rates of the order of 8 percent. Large-scale subdividing operations, carried out in main localities from 1984-85 onward, have created new neighborhoods which are still developing. The 1985 census shows average household size as 7 persons for the country as a whole but 5.5 persons in urban areas. As a rule, 3 or 4 households live grouped together in a "concession," particularly in the rural areas. C. Economy 1.08 Burkina Faso belongs to the less developed countries group. Its GDP was only US$290 per capita in 1992. The economy is based on farming and herding, which contribute about 40 percent of GDP and employ nearly 90 percent of the population. The major agricultural products are sorghum and millet, which form the traditional basic diet of the rural population. Industrial development centers chiefly on agroindustries that process cotton, groundnut, sugar cane, karite (shea), etc. All manufacturing industries together contribute about 17 percent of GDP with construction and public works sector, which had developed greatly in the 1980s, accounting for nearly 10 percent of GDP. Trade and business, transportation and services and other non-mercantile activities together contribute above 35 percent of GDP. GDP growth was fairly strong over the period 1980-88 (average annual rate 5.5 percent) but slowed in 1989-92 (to around 2 percent). 1.09 A major economic asset of Burkina Faso is its membership of the West African Monetary Union (WAMU). WAMU manages the common currency, the CFA franc, which is linked to the French franc by a guaranteed fixed parity. This ensures a degree of price stability and offers conditions of monetary security attractive to investors. Since 1985, however, a rapid appreciation has taken place in Burkina's real exchange rate as well as those of the other countries of the CFAF zone. This resulting deterioration in the competitiveness of these countries in terms of relative prices is cause for concern. 1.10 Burkina Faso is also a member of the two regional economic organizations, the West African Economic Community (WAEC), comprising the French-speaking West African countries, and the Economic Community of West African States (ECOWAS), which comprises all the West African countries. Note that by virtue of these regional agreements Burkina Faso enjoys substantial financial support deriving from savings of emigrant workers in the other coastal countries (notably Cote d'Ivoire). Modernization of the economy 1.11 The development of infrastructures and of the modern sector of the economy has been fostered during the last few years by a relatively high investment rate (averaging 23 percent of GDP over the period 1986-92). Through 1990, this was accounted for in large part by public investment in the execution of major works projects (including the Kompienga and Bagre dams). The Government of Burkina Faso is actively studying the implementation of far-reaching reform of the country's economic structures, including phased privatization of competitive-sector activities.  - 6 - D. Energy Sector 1.12 Burkina Faso's energy resources base is fairly limited. The major domestic resource is biomass, with firewood as its main source, together with harvest and animal residues. The country's hydroelectric potential is estimated at 90 MW, though no systematic study has yet been done. A 14-MW power station, Kompienga, entered into service in 1989 and a second one, Bagre, with a capacity of 16 MW, is under construction. The largest potential is located at Noumbiel on the Mouhoun River (Volta Noire) in the area where it forms the border with Ghana; however, development of this site remains uncertain owing to its possible adverse impact on the Akosombo power station and the Bui project in Ghana. There are moreover alternative projects to Noumbiel. While these are located entirely within Burkina Faso, their capacity is lower than that of Noumbiel. Petroleum products provide the main primary source of electricity generation: gas oil, DDO and fuel oil (FO). While these are entirely imported at the world market price, their c.i.f. prices are heavily inflated by land transportation costs to Burkina Faso from Togo, Benin or Cote d'Ivoire ports. In the Kaya region there are deposits of graphite and carbonaceous black shales. One site, Datari, is being studied by the UNDP project (mining research project) for possible utilization as a fuel material. 1.13 Burkina Faso's energy needs, which total about 2 million toe,3 are met mainly out of non-commercial sources (firewood and plant waste), which account for 90 percent of total gross consumption, while commercial sources (petroleum products and electricity) account for only 10 percent. Table 6 shows Burkina Faso's general energy balance for 1990. Gross consumption of energy from commercial sources was 202.4 ktoe in 1990, i.e. only 22.2 kg per inhabitant, which is characteristic for the country's low level of industrialization. Note that this energy derives 99.6 percent from imports, in the form of petroleum products. A large part of it (57 percent) goes to the transportation sector. Households consume 8.6 percent, in the form of lamp oil and gas, and industry, agriculture and services together 6.3 percent. The share of imported petroleum products used for electricity generation is 27 percent. In these circumstances, it is clear first that the need for development of the modern sectors of the economy will generate a growth of energy demand sustained over a long period, and second that the cost of this energy will be boosted durably by the high delivered cost of imported petroleum products due to the long land trip between the ocean ports and Burkina Faso. 3 Ton of oil equivalent.  TABLE 4 Energy Balance Structure, 1990 (ktoe) | Non- lll Conunercial Petroleum l________________________ Energy Electricity Products Total Primary Energy * Domestic production 1 925 0.8 1 925.8 Imports l 201.6 T 201.6 Total [ 1 L 127.4 Conversions * Electricity generation (4) 20.4 (54.4) (38.0) * Charcoal production (12) T T _ (12) Total Available 1 909 21.2 147.2 2 077.4 Losses _ 2.0 2.0 Consumption * Households 1 863 4.2 17.4 1 884.6 * Transportation X 117.1 117.1 * Industry, agriculture, 46 15.0 12.7 73.7 services Source: Mission assessments. Institutions 1.14 The following are the government institutions and departments involved in coordination and supervision of the energy sector in Burkina Faso: The Ministry of Industry, Trade and Mining (MICM), with a Delegated Minister responsible for Energy and Mining (MDEM), who has jurisdiction over the two main energy-sector companies: Societe Nationale d'Electricite du Burkina (SONABEL) (electric power); Soci&e Nationale Burkinabe d'Hydrocarbures (SONABHY) (hydrocarbons).  Within the MDEM, the activities of the energy sector as a whole form part of the responsibilities of the Directorate General of Energy and Mining (DGEM). The Ministry of Environment and Tourism (MET), within which the General Directorate of Environment (DGE) (Directorate of Village Forestry and Forest Development) is responsible for the development of firewood and charcoal production. The Ministry of Secondary and Higher Education and Scientific Research (MESSRS), with the Burkina Energy Institute (IBE). The Ministry of Water Resources (ME), which is responsible for designing river development so as to meet the water needs of the economy and the population and at the same time, wherever possible, generate electricity. FIGURE 5 Energy-Sector Institutions MlCM MiL f;yof M tni of SonayandWae Deieped |Higher Raeources Ministr for Education Energy and ar d Minmg Scitific CkDUc D I I _ore* of Energ SONABHY Energy ~~~~~PI~~t Authonty, _SONABHY E t Dun SONABEL | Bod of Direcw_  - 9 - 1.15 Concerning energy prices, note that hydrocarbons are among the products whose prices are regulated; they are set by an Order (Arrt) of the Ministry of Trade. Management of the petroleum subsector is entrusted to SONABHY, which is accordingly responsible for preparing and documenting requests for approval of price structures, which comprise inter alia the following data: * the f.o.b. supplier price; * the calculations for the various price structure components: duties and taxes, security stock,' transportation costs, petroleum company costs and margin, SONABHY costs and margin, including transfer to storage, equalization charge (perequation) and city retail price. The General Inspectorate of Prices and Economic Affairs (Inspection Generale des Prix et des Affaires Economiques-IGPAE) is the technical department responsible for price review. It is assisted by a Price Approval Technical Commission (Commission Technique d'Homologaton de Prix). The Commission meets to examine the data furnished by SONABHY; if price revision is justified, the General Inspectorate is empowered to draw up a Ministerial Order on the composition of price structures and levels, which is submitted to the Minister of Trade for approval and signature. 1.16 The company SONABEL is the sole distributor of electricity in Burkina Faso. SONABEL is a public establishment, and consumer electricity rates are established by means of an entire preparation and approval procedur culminating in the final decision by the public authorities. Electricity rates can be reviewed whenever SONABEL's accounts fall out of balance. In that event, after consulting the public authority, SONABEL performs a tariff study, proposes solutions and then submits the documented application to the Government for decision. Preparation of the electricity rates tariff is based on petroleum prices and SONABEL's investment program for development of the generating facilities and infrastructures included in the Electrification Master Plan. The current tariff structure is based on long-term marginal cost. The rates include a fixed premium and energy prices; the latter may differ according to the time of day. The rates are the same throughout the country. The Government regards this national equalization as essential for the development of electrification of the country. The tariff level must be affordable by the average consumer and at the same time safeguards SONABEL's interests. Both the public authorities and SONABEL monitor this requirement, and prices are directly controlled by the Administration. 4 SONABHY is responsible for managing the security sock to ensure that the country possesses at leart a stock of each prduct equal to at least 90 days consumption.  - 10- II. ELECTRICITY DEMAND Development and structure of consumption 2.01 The status and trend of electricity demand is one of the basic parameters of development of the electric power sector as a whole. Historical analysis of demand level and structure provides a picture of gross demand trends. It thus provides a frame of reference for projecting the consumption levels that development of the system will be required to satisfy. 2.02 Some 20 localities currently possess public electricity distribution service, operated by the national company SONABEL. Electrification came relatively recently to most of them (less than ten years ago) and their consumption is low. The country's two major cities, Ouagadougou and Bobo Dioulasso, together account for about 85 percent of total electricity distribution volume in Burkina Faso. TABLE 5 Electricity Sales, 1991 Center GWhI Ouagadougou 103.55 61.2 Bobo-Dioulasso 40.06 23.7 Koudougo 11.85 7.0 Banfora 1.81 1.1 Other Centers 11.86 7.0 TOTAL 169.13 100.0 2.03 It should be noted however that the above total does not include the electricity generated by certain industrial, agricultural or private self-producers in non-electrified localities. These amounts are not known precisely since statistics are not kept. Their total can be estimated very approximately at some 60-63 GWh/year, 20 percent of which is generated using biomass waste in agroindustry (see paras. 4.16 through 4.22). 2.04 Over the past two decades electricity generation and sales by SONABEL have grown at an average annual rate of 9.1 percent. Growth has not however been even over the period. The rapid growth during the ten-year period 1972-82 was followed by a pause due to the political and economic upheavals of 1983-84. For several years during that period, when the Government initiated a directed economic policy, assigning priority to a number of social objectives rather than to boosting industrialization, consumption levels remained practically stationary as the net result of a fall in industrial consumption offset by growth of domestic,  - 11 - administrative and social consumption, the latter being obtained in part by electrification of new centers. Thus, the five localities that were electrified in 1982 (Ouagadougou, Bobo Dioulasso, Koudougou, Ouahigouya and Banfora) were joined by seven new centers in 1983 and another six in 1986. Growth recovered after 1986: over the period 1986-90, the growth rate for the country as a whole averaged 9 percent (see Annex II, table 1). 2.05 The structure of consumption varies widely from one center to another. The two major cities, Ouagadougou and Bobo Dioulasso, contain all categories of consumers, though share of industrial consumption is larger in Bobo Dioulasso. In some secondary centers, certain important industries may account for the bulk of consumption, as for example at Koudougou, where the Faso-Fani textile factory consumes 80 percent of all the electricity sold. 2.06 Most industrial units located in secondary centers, however, possess their own generating facilities and buy little power from the public network. Tables 2 and 3 depict the development of consumption for the two (nascent) electric power systems: first, the central system, comprising Ouagadougou and Koudougou, interconnected in 1991, and also the satellite localities; and second, the western system, comprising Bobo Dioulasso and Banfora (in process of interconnection). It is noted that during the recent period, 1986-90, low- voltage consumption generally grew faster than medium-voltage consumption.  - 12 - TABLE 6 Development of Sales Structure, 1986-1990 1986 1990 Growth Rate GWh % GWh % (%/year) Central System MV 46 575 57.5 55 609 50.3 4.53 (Ouaga., Koudougou) (See table 2) LV 34 382 42,5 54 872 49.7 12.40 Total 80 957 100.0 110 481 100.0 8.08 Westernaten MV 18 625 61.2 23 906 60.9 6.44 (Bobo, Banfora (See table 3) LV 11 792 38.8 15 320 39A. 6.76 Total 30 417 100.0 39 226 100.0 6.57 Isolated Centers MV 1 751 34.6 3 235 31.5 16.6 (See table 4)l LV 3 65.4 7 049 68.5 20.8 Total 5 059 100.0 10 284 100.0 19.4 Total, SONABEL MV 66 951 57.5 87 750 51.7 5.4 LV 49 482 42.5 77 241 A48U 11.8 Total 116 433 100.0 159 991 100.0 8.3 2.07 The structural change in electricity sales noted over the last five-year period is not explained by structural modification of the Burkina economy but rather by the effect of the directed activities of electrification of new localities and of new neighborhoods in the major cities. These activities, backed by commercial campaigns aimed especially at promoting connections to the new networks, conducted by SONABEL with some degree of success, are in fact addressed mainly to the small LV subscriber group (households, businesses, government). It can therefore be considered that the growth of LV consumption reflects to some degree the stimulatory effect of SONABEL's marketing campaign while the growth of MV consumption reflects more passively the general evolution of economic activity. 2.08 The characteristics of daily and seasonal demand fluctuations differ appreciably from one center to another, reflecting each center's consumption structure. At Ouagadougou, office air-conditioning is a large electricity user: it accounts for nearly 45 percent of peak consumption and its share in the formation of demand peaks widely exceeds that of lighting. At Bobo Dioulasso, air-conditioning consumption represents only 15-20  - 13 - percent of peak demand, and is in better balance with the other types of consumption; this produces a load curve with three equally important daily peaks during the hot months and consequently a high peak capacity utilization factor. At Koudougou, the demand fluctuations chiefly reflect the work program of the Faso-Fani textile factory. The latter normally operates continuously for 11 months of the year and shuts down for a month in July or August. In the small secondary centers, lighting generally tends to be the major consumption category, with a characteristic peak in the evening and a fairly moderate seasonal variation. This diversity of consumption structures between the various centers will narrow in step with their interconnection in increasingly extensive regional networks. Detailed study of these aspects continues to be important, however, for dimensioning the networks and generating facilities. Moreover, concerted action needs to be mounted in order to gain better control over electricity use by consumers and boost its efficiency for the various use categories, particularly lighting and air conditioning. Note that the Government has enacted administrative regulations limiting air-conditioning periods in public buildings; these measures need to be refined by means of specialized technical studies and supplemented by improvement to the air conditioning plant in question. Demand forecast 2.09 Despite the rapid growth of electricity consumption, sustained over more than two decades, per capita consumption remains low. In 1991 it was only 20 kWh/year. This national average is obviously not very meaningful since the great majority of the population have no access to electricity service at all. In 1992 the electrified cities together accounted for about 15.5 percent of the total population of the country, and only 20-30 percent of their households were connected to the electricity network. This means that only about 4 percent of the population of Burkina Faso currently have access to electricity service. This figure points to a substantial latent demand and implicitly indicates the advantage of effectively capturing it by continuing the process of electrifying new neighborhoods and localities and also through appropriate methods of promoting connections within the new networks. Under these circumstances, the future evolution of electricity demand depends not only on the estimated general trend of economic activity and the purchasing power of the population but also to some degree on the development goals set by the Government in light of the financial resources at its disposal. 2.10 Demand forecasts have been produced by a number of studies during the last few years. These include: the study for the Burkina Faso Electrification Master Plan carried out by the consultants Coyne & Bellier (France) in 1987; the tariff study conducted by Electricite de France in 1989; * the study of the Ghana-Burkina Faso interconnection done by Tractebel (Belgium) in 1991. Table 7 and figure 6 show the projections made by these studies and the recent (1992) projections by SONABEL. The table shows that the projections made in 1987-88 were generally not borne out by the facts since the actual figures for 1990 and 1991 exceeded the maximum levels projected. The recent SONABEL projections seem to be well-judged, being based on more fruitful data than the previous studies.  - 14 - 2.11 Table 7 shows a breakdown of the projections used for the analyses contained in the present report. It is necessary to set quantified goals with respect to maximum demand, minimum demand and the apparently most likely level between these two extremes, each of these levels having a specific function in the planning studies. For the purposes of this presentation we have used the three consumption subsets already referred to: the central system, the western system and the isolated centers. Some of the centers now isolated will obviously be linked in time to the central or western system; the pace of interconnection could therefore affect the limits of sharing among the three subsets. Total consumption, however, will depend primarily on first the country's general economic development and second the expansion of the distribution networks. The presentation of figures below in no way implies that the projections problem can be regarded as resolved. Studies designed to update the projections will have to be performed at regular intervals by SONABEL staff. TABLE 7 Consumption Projections Used (gwe) _________ ___ (cul _____ _ ____ 1990 1995 2000 2005 2010 (Actual) Central system max 110.5 162 228 305 408 min 148 193 241 300 Western system max 39.2 60 86 115 154 min 50 64 80 100 Isolated centers max 10.3 23 46 81 143 min 18 29 43 63 Total, SONABEL max 160.0 245 360 501 705 min 216 286 364 463 Growth Rate 1990-95 1995-2000 2000-2010 (% / year) Central system max 8.0 7.0 6.0 min 6.0 5.5 4.5 Western system max 9.0 7.5 6.0 min 5.0 5.0 4.5 Isolated centers max 18.0 15.0 12.0 min I 12.0 10.0 8.0 N.B. Date of the study: September 1992.  - 15 - FIGURE 6 Demand Projection (SONABEL Total) T 700 ,SONABEL 1992, max 600 Pr-oction propo/d by the mission % > - (see pan. 2.11) 500 -= 4OSNABEL 1992, min Trctebel 200 _L X = .. Master Plan, min. 100 - - ~~~Tariff Study 0 - 1990 1995 2000 2005 2010 2015  - 16 - III. SONABEL A. Legal Status and Tax Treatment 3.01 Although the Societe Nationale d 'Electricite du Burkina (abbreviated SONABEL) has existed under this name only since 1984, its current legal status was established in 1976. Until then the company (which was then called VOLTELEC) was a limited liability company which held a number of concessions. In 1976 it was accorded the status of a public establishment, industrial and commercial category (Decree no. 76- 344/PRES/MTP/URB) and also the exclusive right to generate, transmit and distribute electric power, as principal activity, throughout the national territory (Ordonnance 76- 021/PRES/MTP/URB). The company's capital is currently CFAF 1,387,628,180 and is held entirely by the Government. Brief history 3.02 The beginnings of public electricity distribution in Burkina Faso date back to 1954, when the company ENERGIE AOF (Energie de l'Afrique Occidentale FranVaise), a mixed-capital company based at Dakar, began to carry out this activity in the cities of Ouagadougou and Bobo Dioulasso under the managership system. In 1956 the company also obtained a management contract for water distribution in these two cities. In 1957 the managership system was replaced by the concession system in the case of electricity generation and distribution only, while water distribution remained under management. 3.03 Following independence in 1960 the Company, which was engaged in similar activities in other West African countries, was converted into a multinational mixed-capital company, Societe Africaine d'Electricite (SAFELEC), with a capital of CFAF 150 million, distributed among Electricite de France, the Republics of Upper Volta, Mauritiania and Niger, the Caisse Centrale de Cooperation Economique (CCCE) and various private shareholders. 3.04 Desiring to control essential economic activities within its territory, the Republic of Upper Volta decided to set up a national agency responsible for the public electricity generation and distribution service. Thus began the nationalization process which was to culminate in the transfer of ownership of SAFELEC to the Upper Volta Government. As the first step in this process, in 1968 SAFELEC's activities in Upper Volta were brought together in a limited liability company established under Upper Volta law, Societe Voltarque d'Electricite (VOLTELEC), whose capital continued to be held by SAFELEC's shareholders. The second step was taken in October 1969, when the Government bought back all the shares in VOLTELEC. 3.05 In 1970, following the creation of the National Water Company (Societe Nationale des Eaux--SNE) by the Upper Volta authorities, VOLTELEC transferred its water distribution operations to SNE and retained only the electric power operations, under the concession system at Ouagadougou and Bobo Dioulasso and under the managership system at Ouahigouya. Between 1971 and 1976 the cities of Koudougou and Banfora were added to VOLTELEC's concession and the managership system was replaced by the concession system for all the cities served by VOLTELEC.  - 17 - 3.06 Since September 1976 the Company has been a public establishment (industrial and commercial category)5 with the exclusive right to generate, transmit and distribute electric power, as principal activity, throughout the national territory. This "exclusivity" is generally understood in Burkina Faso to mean a monopoly even though, legally, it can be interpreted differently. However, so far as electricity generation is concerned, in practice the 'monopoly" is ineffective. 3.07 The regulations governing public industrial and commercial establishments in effect in Burkina Faso' prescribe the modus operandi of these agencies and in particular the procdures for their supervision by the Government. Such an establishment, "which, in a habitual manner, perform business acts and operate in conformity with the laws and usages of trade and business' is subject to government tutelle of three kinds: technical supervision, exercised by the ministry responsible for the sector concerned, in this case the Ministry of Energy and Mining, within which a post has been provided of Delegated Minister of Mining and Energy; - rinancial supervision, exercised by the Ministry of Finance and Planning; - management supervision, exercised by the Ministry of Industry, Trade and Mining. 3.08 The supervisory agencies perform this function by nominating the members of the Board of Directors and the General Manager (Director General), who are appointed by the Council of Ministers, and permanently monitoring the work of the Board of Directors. They can oppose any decision of the Board of Directors that is deemed to be inconsistent with government policy. 3.09 SONABEL's Board of Directors comprises seven members of whom four represent the supervisory ministries and the Water Ministry and three represent the workers' unions. In principle the Board can have up to 12 members, half of them representing the Government and the other half delegates of the workers' unions. The Board of Directors elects its Chairman from among the directors representing the technical tutelle agency, for a term of three years, which is renewable. The Chairman of the Board of Directors is accountable to the Council of Ministers, which may revoke his appointment and remove him from the office of director, for example if the mandatory annual meeting does not take place. The Board of Directors can propose to the Council of Ministers, through the Minister with technical jurisdiction, that the appointment of the General Manager be revoked if the latter is in default or has committed a serious management error. Decree no. 76/344lPRES/MTP/URB. J - Order (Ordonnance) no. 84-058/CNRIPRES of August 15, 1984 laying down genemil regulations goveming the state public establishments. - Decree no. 84-304/CNR/PRES/MF/MCSE of August 15, 1984 defining the genaal statute of the industrial and commercial public establishnments.  - 18 - 3.10 The chief observation prompted by the current institutional structure is that it does not further the aim of reducing the cost of electricity. It is in fact cumbersome and composed largely of government agencies or representatives who are not necessarily cut out to manage economically a complex technical system like the electricity sector. The large number of workers' union representatives on the Board of Directors could hamper pursuit by the General Manager of a stricter policy designed to control personnel expenditures. That being so, it would be advisable to examine the possibility of opening SONABEL's capital to private participation, making it possible to strengthen the Board of Directors by representatives of national entrepreneurs and possibly also of the donors. Tax System 3.11 SONABEL enjoys preferential tax treatment, being exempt from all duties and taxes on the importation of equipment, spare parts and tools and on assembly and maintenance. It is also exempt from all taxes, all entry duties and the specific tax on fuels and lubricants intended for the operation of generating plant. The exemption does not apply to the importation of services or to vehicle fuels. SONABEL is however liable to a number of taxes and duties, notably the IBICA (tax on industrial, commercial and agricultural profits), the IMFPIC (minimum flat-rate tax on industrial and commercial professions), VAT (value added tax), the taxes on the rental value of premises used for professional purposes, and the stamp duties. B. Internal Organization and Management Structure 3.12 SONABEL's organization has undergone a number of changes during the last few years, including abolition of the post of Assistant General Manager and the creation of two directorates: a Technical Directorate and an Administration and Finance Directorate. The Company's senior official is the General Manager, whose work is supervised by the Board of Directors.  - 19 - FIGURE 7 Main Organization of SONABEL Board of Directors General lMangernent Technila and_ Diretr Fuse Directomnw 3.13 The General Manage is assisted by four consultative units composed of senior management staff: * The General Economic Programs and Projections Unit (CPPEG), which provides advisory assistance on budgets and investment programs. * The Internal Control Unit, which monitors all activities of the various services and verifies compliance with the internal operating regulations. * The Management Control Unit, whose activities include supervision subscribers and installations; its main purpose is to supervise budget execution. The Legal Affairs Unit, which among other functions organizes the Company's calls for bids. A new unit, with the status of a service, has been added to those answerable directly to the General Manager: the Organization and Methods Service (see figure 12, Organization Chart of SONABEL).  - 20 - 3.14 Management of SONABEL is organized around a simple and clear structure comprising two directorates: the Technical Directorate and the Administration and Finance Directorate. 3.15 The Technical Director is responsible for (a) day-to-day operations and subscriber management, and (b) development-related activities. His Directorate comprises six divisions, known as 'services," each divided into several departments. Two departments are under the Technical Director's direct authority. These are the Accident Prevention and Safety Department, which is responsible for laying down and supervising compliance with regulations in these areas, and the Dispatching Department, responsible for distributing power generation among the Ouagadougou thermal power stations and the Kompienga hydroelectric station. FIGURE 8 Organization Chart of the Technical Directorate ! Hydro Generation iad Trnsmission Hydro Gneraion Department Service Hydro Depsament Transmisson Department -- iJTbermal Geoeratlon Four regional Swkedorrjol depztments L General Electricity Department Technail Studie and Mechanical and Hydaulic Depament Diufaowr Works SeIrvice Works Depament Economic and Fuincial Studies Depatment Relay a aMaintenance DeVaimet Tekommundcatiols' Telecommunicatons Department Distribution Four reional operating depatments Scvke Commercial Department Operating Tecbhiques Accident Prevention and Safety uaga Dispatching  - 21 - 3.16 The Hydroelectric Generation and Transmission Service is responsible for operating the Kompienga hydroelectric power station and the 132-kV transmission lines between Kompienga and Ouagadougou. It will similarly be given responsibility for operating the new Bagre Hydroelectric Plant as soon as it comes on stream and is handed over by the Bagre Project Authority. 3.17 The Thermal Generation Service is responsible for operating the thermal generating plants in Ouagadougou, Bobo Dioulasso and the secondary centers. The Service organizes the procurement of fuel oil, DDO, gas oil and lubricants for operation of the diesel plants. It is also responsible for all maintenance work both in the two large centers of Ouagadougou and Bobo Dioulasso and in the secondary centers. The secondary centers normally have a mechanic who is responsible to the chief of the center but is answerable also to the Thermal Generation Service with respect to technical questions. For that purpose the Service has an action team for each group of secondary centers which executes scheduled overhauls and act in cases of serious breakdown. 3.18 The Studies and Works Service is SONABEL's engineering unit. It is responsible for planning future activities and studying and implementing new transmission and distribution projects. It also provides liaison with the consulting engineers used by SONABEL for studies and projects. The Service recently acquired a PC-based information system for the performance of technical analyses and calculations. 3.19 The Relay and Telecommunications Service is responsible for operating and maintaining the auxiliary equipment of the SONABEL plant. It is called on in cases of problems of repair and adjustment of the regulating systems. It is also responsible for maintaining SONABEL's measuring and metering equipment. Its responsibilities also include the communication systems that link the SONABEL centers with the headquarters office and equipping the field personnel with mobile radios. 3.20 The Distribution Service is responsible for customer relations and sale of power to consumers. It is also responsible for establishing necessary extensions of the LV network for consumer connection and for LV network planning. The secondary centers are under the hierarchical jurisdiction of the Distribution Service, which supervises them through the four regional department heads. The Service is responsible for active marketing of electric power, notably in the newly electrified areas of the secondary centers and the suburbs of Ouagadougou, with the aim of increasing the number of consumers connected to the network. This work yields only limited results, however, owing to the low resources available to SONABEL for expansion of the distribution networks, and it appears that electricity demand in the large centers is still not being fully met.  - 22 - FIGURE 9 Organization Chart of the Administration and Finance Directorate Pinimt Mangement and Orders ; S.rI Dopartment Storms Mangemet Depatment NW |c m = Genera and Legl Affairs Department s_ ;kS Vocational Training Depatment |i Huian Resourcs Department Dow Opeahoa Deprtmeut I Acounting Deatme | d Finn" Deprmt CoUection Deatment  - 23 - 3.21 The Director. Administration and Finance is in charge of four divisions or services': Procurement, Administration, Data Processing, and Accounting and Finance. 3.22 The Procurement Service is responsible for ordering spare parts and managing SONABEL's central stores. In the case of calls for bids the Service works in liaison with the Legal Affairs Unit with respect to commercial terms and with the Studies and Works Unit with respect to technical definitions. 3.23 The Production Service's stores are located in the generating stations and belong to the power station. To distinguish among the various suppliers, the power stations possess several different stocks which are separated physically, each with a spare parts stockroom. While this system provides great simplicity of design and good accessibility for operational users, it does not allow coordination among power stations with identical equipment. The authorities should consider improving the system by introducing central stock management. The stock of distribution materials and equipment is kept in a central store in Ouagadougou, located at the Ouaga I power station. Note that SONABEL has achieved a high degree of standardization of equipment in this field. 3.24 The Administration Service is responsible in particular for personnel management, recruitment and training. It is also responsible for SONABEL's automobile fleet and for administrative questions. It is currently starting up a Personnel and Training Master Plan in cooperation with an external consultant. 3.25 The Data Processing Service is responsible for introducing data processing methods into SONABEL's administrative organization. A general plan (Data Processing Master Plan) has been drawn up with the help of a consulting company. The introduction and increasing use of data processing systems in SONABEL's organization conform to the guidelines of the master plan. A number of working groups have been set up to implement the data processing systems. Each group is in charge of a data processing subsection: financial management, customer management, and inventory management. The Service is responsible for setting the specifications of the data processing equipment and software. The SONABEL plan includes equipping Department 1 at Ouagadougou with a UNIX-based central data processing system in 1992, Department 2 at Bobo Dioulasso with an identical system in 1993 and the other departments of the centers during the period 1993-95. It is also planned to network the various centers. 3.26 The Accounting and Finance Service is responsible for accounting and financial matters except for borrowing debt management. Note that no system of independent auditing of SONABEL's accounts and financial statements has so far been instituted. Organization of the secondary centers 3.27 The two regional systems of Ouagadougou and Bobo Dioulasso currently account for about 95 percent of electric power consumption in Burkina Faso. The remaining 5 percent is consumed in the secondary centers, supplied by SONABEL generally by means of a diesel-fired thermal power station and a distribution network. A total of 11 secondary centers are currently supplied in this way, and the Master Plan proposes that 9 secondary centers shall receive consideration.  - 24 - 3.28 The secondary centers are organized under the authority of the Distribution Service. They are grouped into four departments by geographic zone. Each center has a staff ranging from 5 to 8, depending on its capacity: * 1 center chief * 1 mechanic * 1 electrician* * 1 meter reader* * 1 cashier* * 1 laborer * Iguard * These functions are sometimes performed by a single person. The Center Chief is answerable to the Department Head and the latter to the Chief of the Distribution Service, based at Ouagadougou. Maintenance of the power station and the distribution network is performed locally. In the case of large overhauls or breakdowns a mobile team is sent out from headquarters in Ouagadougou. Overhauls are programmed in coordination with the Thermal Generation Service, and a mobile unit of this service may be needed during the overhaul periods. 3.29 The internal electrical installations are carried out by local craftsmen and connections by SONABEL staff. SONABEL staff check the installations and where necessary refuse connection to the network if their quality is not up to standard. Illegal connections are not currently a major problem in Burkina Faso. A few cases have however been reported, mainly at Ouagadougou. The Management Control Unit is responsible for detecting cheating; it uses a team of six inspectors for this purpose, five of whom are located in Ouagadougou. 3.30 The SONABEL instruction and training center provides part of the personnel tramiing, generally that for SONABEL white-collar and blue-ollar staff working in the network facilities. SONABEL does not, however, provide training for skilled electricians who are not its employees. The idea should be considered of SONABEL helping with the training of craftsmen electricians as part of the process of subcontracting the tasks of maintaining and developing distribution networks and connections to the private sector. C. Labor Force and Job Instruction/Training 3.31 In 1992 SONABEL had a total labor force of 1,244 distributed among the following categories: management staff (higher education graduates), supervisory staff (technicians and senior technicians), and operatives, the latter divided into three sub- categories: clerical staff, skilled workers and unskilled workers. Figure 10 depicts the present distribution of the staff and table 13 its historical development.  - 25 - FIGURE 10 Distrubution of Labor Force by Wage Category, 1991 Laborers Managers Supervisors Blue-collar workers w Wht-collar workers 3.32 Analysis of the development of the labor force shows first of all that SONABEL has not achieved the productivity gains to be expected in an electricity company that has posted average annual growth of over 9 percent for the past two decades. The labor force has in fact grown faster than the volume of energy generated and distributed, with the result that total gross output per employee fell from 0. 194 GWh in 1980 to 0.155 GWh in 1991. In comparison, the output figures in the neighboring country of Ghana range from 0. 16 GWh in the northern part of the country (Northern Electricity Department) to 0.5 GWh in the ECG (Electricity Corporation of Ghana) distribution network. In developed countries the figure is 5-6 GWh/employee. This latter figure is of course mentioned only for information since the electricity structures of the developed countries cannot be compared with those of Burkina Faso, where LV consumption is relatively high (about 50 percent of total consumption), with dispersed subscribers, many of whom have low annual consumption levels. FIGURE 1 1 SONABEL: Labor Force Productivity GWh/employee 0 20. 0.18, 0.12t 0.10,~~~~~~~~~~~~~~~~~~~~~~~~~~~ 0 37