Benin Energy Situation

Energy situation

Benin’s energy balance of 2006 shows that 59.4 % of the total energy consumption derives from biomass, whereas only 2 % derive from electricity and 38.4 % from oil products. The country solely depends on imports to satisfy its petroleum product demand, while 85% of its electricity consumption is answered by imports from Ghana, Cote d’Ivoire and Nigeria. Households account for 48% of the country’s total electricity consumption followed by the institutional sector and the industrial sector, which account for 32% and 24% respectively. Although in the five past years the final total energy consumption has perceptibly increased, the structure of final energy consumption has not changed.

Major challenges:

The energy sector is under constant pressure from different challenges. However, main issues in the energy sector are as follows:

• Non-sustainable use of biomass: Around 80% of the population depends on the use of biomass for cooking needs. While consumption has increased between 1997 and 2002 at an annual rate of 5 %, forest areas were reduced by 39 %. This results in a massive degradation of forest resources.
•  Low access rate to electricity in rural areas: while the national power board SBEE has increased the electrification rate in urban areas from 20 to 52.4 % since 1990, only 2 % of rural areas are connected to the grid. At the same time, around 60% of the population lives in rural areas.
•  Electricity generation constraints: Since early 2007, Benin has been going through an energy crisis due to curtailed supply from its neighbors Ghana and Cote d’Ivoire. Lack of operational capacity at the distribution utility SBEE did reinforce the crisis. Following a brief recovery at the end of 2007 after the rainy season, in mid-2008 Benin was again subject to energy shortages. However, the long term stability in the target region is assured. The reasons are ongoing investments in transmission lines interconnecting North and South Benin, Benin and Togo as well as Benin and Nigeria and the intended extension of generation capacities conducted by Compagnie Electrique du Bénin (CEB).

Main actors

There are four main actors in the electricity sector:

•  Communaute Electrique du Benin (CEB): CEB is a bipartite utility supplying electricity to national distribution utilities in Benin and Togo (around 85% of generation capacity).
• Societe Beninoise d’Energie Electrique (SBEE): Responsible for electricity distribution and local generation through diesel generators (around 13% of generation capacity).
•  Agence Beninoise d’Electrification Rurale et de Maitrise d’Energie (ABERME): responsible for rural energy supply (established in 2004).
• Ministere de l'Energie et de L'Eau (MEE): responsible for the national energy policy and coordination of the activities in the energy sector.

Policy framework

In order to tackle the challenges in the energy sector the government of Benin has formulated the Policy and Strategy Document for the Development of the Electricity Sector that provides the long term vision and the strategy of the country by 2025. The overall energy strategy can be summarised as follows: (i) strengthening the legal and institutional framework; (ii) ensuring reliable electricity supply to support economic activities and achieve the national energy security and an efficient energy delivery system with an optimal energy resource mix; (iii) increasing energy access to population through new power generation plants, regional interconnection and rural electrification; (iv) promoting private investments in the power sector by creating the enabling market environment for private sector participation; and (v) promoting energy efficiency in all sector.

Regarding rural electrification, it aims at providing 150 villages p.a. with access to electricity in order to achieve a rural electrification rate of 30–40 % by 2015. Furthermore, promoting the dissemination of improved stoves and other renewable domestic energy sources are additional objectives of the strategy to tackle the energy challenges in rural areas.

In the run of the energy sector reform, which gained considerable momentum in recent months (mainly due to growing World Bank interest in the sector), the establishment of a Rural Electrification Fund is being discussed. It shall incorporate a concession model with minimum subsidy bidding. The Fund is intended to bundle investments of donor agencies designated to rural electrification. Rural regions covered by the SBEE grid will also be concessioned (15 concessions in total). However, basic features of this instrument are yet unclear such as regulation, payment authorisation and tariffing. Experiences in Senegal and Mali, furthermore, expose a very limited interest of private enterprises to compete for such funds. Concerning the national and even regional private sector, the mobilisation of financial resources is less an impediment than lacking capacities to implement privately run electricity concessions in Benin.

The reform process goes along with a shift in responsibilities for rural electrification from SBEE to ABERME. It is, furthermore, planned to split up SBEE into an asset management and a distribution management company.

Key problems hampering access to electricity

Although the Government of Benin clearly defined a strategy for rural electrification, the objective of achieving a rural electrification rate of 40% in 2015 is highly ambitious due to the following reasons:

SBEE is far from being capable of achieving these goals due to insufficient financial capacities: SBEE’s indebtedness is 9 times as high as its turnover and financial losses are increasing continuously, since the supply costs per kWh exceed the retail price; not only but mainly in areas provided by diesel generators.

In addition to the financial bottleneck, one important reason is the lack of knowledge about low-cost alternatives to the business as usual scenario of grid extension. This scenario was designed originally for urban areas based on high technical “EDF” standards that are inappropriate for rural areas.

Furthermore, for political reasons, SBEE focuses on the extension of the grid to previously non-electrified regions, instead of increasing the number of connected households in proximity to the grid.

Although some responsibilities for rural electrification have been shifted to ABERME, the agency proved to be incapable of driving the electrification process. Lack of capacity is the main reason, especially the lack of engineering expertise.