Re: Electricity: Munger offers a paper

[Robert Corbett <bcorbett@netcom.com>]

From: AMBER L MUNGER <AMBERLY@prodigy.net>

This is a copy of a paper that I wrote on electricity for a class called
"Energy and Society."  I used a lot of posts from Corbettland in the paper
and I thought that it might be of interest to you.  It is rather lengthy but
it addresses a good deal of the questions reguarding electricity that
several list members have asked.


Amber Lynn Munger
Energy and Society

The Politics of Electricity
In Third World Haiti

Introduction

An electricity crisis is currently antagonizing the situation of political
instability in the Haitian capital city of Port-au-Prince which has been
experiencing extended blackouts and widespread power outages. In the city
whose population estimates are in excess of one million electricity has
become more scarce than ever. Recent episodes of violence have erupted, as
residents have become frustrated with the current crisis.
Matters involving the nature and scope of electricity programs affect some
of the most basic problems facing Haiti today, including the balance between
the public and private sectors and the widening gap between rich and poor
(Flavin, 1986). This paper attempts to illustrate the complexity of issues
involving electricity as well as the extent to which these issues have
contributed to the developmental stagnation of the country?s economy.  The
objective of this paper is to examine the interrelationships between
society, politics and the generation and consumption of electricity in the
country of Haiti.


Electricity in Haiti
 In 1997, the Department of the State recorded Haiti?s installed electric
power capacity to be approximately 223 mw (178 mw for Port-au-Prince; 45 mw
for the rest of the country). Peak demand in Port-au-Prince was recorded at
100 mw. Estimates of private electric generator capacity were about 75-100
mw.  Since electricity demand in Haiti is limited by availability, potential
demand in the capital could be in excess of 200 mw (Department of the State,
1997).
 Currently, Haiti has been experiencing extreme power shortages due to
problems with Port-au-Prince?s primary source of electric power, the Peligre
hydro-electric plant.  In November of 1998, a transformer broke down at the
Peligre dam.  According to the director of EdH, Claude Elisma, the French
company hired to complete repairs by December had been unsuccessful in their
efforts to fix the malfunctioning transformer. Peligre was completely shut
down when a second transformer broke down in February leaving Port-au-Prince
in the midst of a widespread power outage.  Electric power became so scarce
that even the Port-au-Prince airport experienced power outages.  Without
runway lights, planes arriving in the evening were forced to land in the
Dominican Republic (Haiti Progres, March 3, 1999).
The situation has not yet been resolved.  Finance Minister Fred Joseph said
a new transformer purchased for $876,000 is expected to arrive by ship from
Chicago soon and be operational in mid-May (Reuters, April 1,1999).  In the
mean time, the government of Haiti must purchase more petroleum in order to
compensate for the power loss at Peligre, which translates to a substantial
increase in inflation.

The Haitian Electric Company
Electricite d?Haiti (EdH) is the national electric company run by the
government of Haiti.  EdH was created in 1971 to oversee the hydroelectric
plant at Peligre, and was responsible for the operation of Haiti?s power
system.  Given the centralized nature of the Duvalier government in the
1980s, the president served as the head of the EdH and decisions made
concerning energy management were largely influenced by the politics of the
day. The applications employed by the Haitian government were inefficient
and scattered.  Electricity production was concentrated in isolated patches
and provincial towns remained unconnected from power links supplied to the
capital.  Lack of maintenance, water scarcity in the dry season, the
deteriorating condition of production and transmission equipment and
accelerated siltation all contributed in reducing the productivity of the
hydroelectric dams.  Simultaneously, foreign exchange shortages caused
supplies of imported petroleum to fluctuate.  Rationing of electricity began
in the 1980s and the now familiar blackouts began to occur.  EdH charged the
highest rates in the Caribbean in the 1980s making electricity essentially
unavailable to all but the wealthiest Haitians (Haggerty, 1991).  At the
fall of the Duvalier regime in 1986, only about ten percent of Haitians had
access to electricity.
The situation of EdH has progressively gotten worse over the years. EdH
currently fails to meet Haiti?s demand for electricity while contributing
substantially to the country?s budget deficit. In 1994, IMF estimates reveal
that EdH spent over 1.5 million while taking in only $925,000.  In 1996, the
Director of Caribbean/Latin American Action found that while providing
electricity for as little as 5 hours per day, the operation of EdH cost the
government of Haiti between $20-40 million per year (Johnson, 1996).  Claude
Regis of EdH confirmed that the situation remains relatively the same in
1999 with EdH presently running at an annual loss of 55 percent which
equates to about $33 million in lost revenue (Reuters, April 1, 1999).
Analysts say that until Haiti improves its electricity services as well as
other elements of its infrastructure foreign investment that precipitates
economic development is unlikely to occur (De Cordoba, 1996).

The Economics of Electricity
Several factors are responsible for the economic failure of EdH, which is
currently neither profitable nor capable of meeting Haiti?s electricity
demands.  Most of the problems are due to the fact that only about half of
the electricity produced is actually billed for (Weisbrot, 1997).  Many of
the existing meters that are in place are inoperable and EdH possesses
neither the organization nor the funds required to repair the meters.  In
many cases meters are completely absent and only flat fees are charged
regardless of consumption. The effects of insufficient metering are
two-fold.  In addition to the lack of payment for services, the absence of a
functioning metering system makes it impossible for EdH to predict
consumption.  This results in constant system overloads which produce the
blackouts that have become typical throughout the country (Doerrer, 1996).
The major factor accounting for un-billed electricity consumption in Haiti
is theft. The practice of attaching illegal hook ups to either the electric
company?s lines or the lines of a legitimate customer is so common in Haiti
that it was given the title ?cumberland? after the American who originally
installed electricity in Haiti during the first American Occupation. By the
late 1980s as many as one in four urban residents
reportedly engaged in hooking up cumberlands (Haggerty, 1991).  However,
electricity theft has often resulted in severe consequences.  Reports
indicate that in 1995, foreign police were frequently called upon to
investigate deaths and pick up the bodies of people who were electrocuted
attempting to install or detach their cumberlands (Laleau, 1999).
Recent efforts to deter theft have been minimal at best.  This is largely
because enforcement relies on the Haitian National Police which have been
corrupt, dysfunctional or, at least, inconsistent at any given time since
the establishment of the police force.  A Haitian resident gave the
following synopsis of the present situation in January of 1999:

?A couple months ago, EdH and the police started arresting those who are
stealing electricity.  In the beginning you could see everyone scrambling to
tear down their illegal lines.  Then, after a month or so, you would see
people each night after dark attaching their illegal lines and each morning
taking them down. Now, no one cares anymore because EdH and the police are
no longer out?I guess it was a short-lived effort? (Clement, 1999).

 Another contributing factor to EdH?s deteriorating financial status is the
non-payment of funds.  EdH receives payment for less than 25% of the
electricity it generates. Much of the unpaid electricity goes to established
businesses and residences (Weisbrot, 1997).  Many among the Haitian elite
feel no obligation to pay their bills as there is no mechanism in place that
would force them to do so.  Instead, their homes and factories are run free
from electric bills.  Unfortunately, the remaining unpaid balance ultimately
comes out of the pocket of the poor when aid money is used to finance
electricity production.






Politics and Privatization

?The Haitian economy is a politicized one.  Politics tends to take
precedence over economics in the allocation of resources and the signals
emitted from the polity have usually been motivated by a desire to maximize
the private incomes of the ruling cliques than by a desire for efficiency,
growth and development? (Silie et al, 1998).

The current Haitian governmental crisis, which has left Haiti without a
functioning parliament, has resulted in the loss of millions of dollars in
foreign aid.  According to Claude Regis of EdH, the political instability
has directly affected EdH by making loans to improve service inaccessible
(Reuters, 1999).
In recent years, the politics involved in the internal affairs of EdH have
been demonstrated in conflict between the state and the electrical workers
union (Creole acronym FESTREDH).  In 1997 the mass firing of FESTREDH?s
leadership and more than 200 electrical workers were sanctioned by the
Haitian government.  FESTREDH members claim that efforts to dismantle the
union of EdH were the response of the Haitian government to the unions stand
against privatization.  The union opposes privatization because they feel
that electricity will be made unavailable to the poor under such
circumstances (Haiti Progres, March 4, 1997).  Although nearly 70 percent of
Haiti?s population live in rural areas, electricity programs in Haiti focus
on providing power to cities for industry (Haiti Facts and Figures, 1999).
A monopoly would receive no benefits from continuing to provide power for
the poor and would be unlikely to further efforts to bring power to rural
areas.



 The privatization of state run companies is the most controversial debate
in Haiti today and the basis on which many present day political parties
have formed.  Though the issue involves ownership of eight different Haitian
enterprises, the sale of the electric company is the most controversial.
Among those who support privatization efforts are the United States
Government, many Haitian factory owners and members of the Haitian elite.
United States Representative John Conyers states: ?We?re talking about
electricity that only operates at specific periods during the day, so that
they need help at every level?and it is our hope that privatization,
modernization, whatever you want to call it, will improve the efficiency and
the productivity of the electricity on the island, telecommunications, and
other basic infrastructures? (Conyers, 1997).
 All in Haiti are in agreement that current public enterprises are in need
of reform.  Those favoring privatization feel that if foreign operators are
allowed to intervene and take over the state run enterprises, the
inefficiencies of Haiti?s public service institutions can be corrected
(Silie et al., 1998).  The interests of American companies in privatization
of the electric company could provide a much needed boost to the Haitian
economy especially considering that a significant amount of capitol would
initially be invested to provide necessary amounts of electricity. At the
same time, U.S. government officials interpret the Haitian government?s
reluctance to sell out to American firms as intransigent considering the
desperate nature of the current situation (Sullivan, 1997).
 Much of the push for privatization stems from the notion that the
dependable distribution of electricity to the Port-au-Prince area as well as
other infrastructure improvements will attract industry and thus, improve
Haiti?s deteriorating economic status.  The current industry in
Port-au-Prince is comprised of foreign assembly factories that exploit Haiti
?s cheap labor force while failing to enhance Haiti?s overall, long term
economic status.
 Those opposed to the issue feel that privatization of the electric company
would subject Haiti?s markets to exploitation by a private monopoly which
would be able to charge inflated prices.  Since Haiti currently lacks the
regulatory structure to keep its own government-run institutions in check it
is unlikely that the government would ultimately be able to oversee the
effective management of a private industry.
 Additionally, most of the problems faced by the electric company are a
result of electricity theft and non payment of funds.  These are enforcement
issues that lie within the state and its police force.  Privatization would
not solve these problems (Weisbrot, 1997).
 Among the strongest arguments against privatization is the need to develop
an overall development strategy for Haiti?s future. Camille Chalmers,
Executive Secretary of the Haitian Platform for Alternative Development
(1997) argues that a privately owned company would not be interested in
developing the use of alternative energy practices which would make Haiti
less dependent on petroleum and could simultaneously address Haiti?s erosion
problem by reducing charcoal consumption.  Development initiatives such as
rural electrification for agro-processing industries and employment in the
countryside would not factor in to the investment or pricing policies
employed by a foreign monopoly (Weisbrot, 1997).  Additionally, studies have
shown that general services provided to the public have worsened after
privatization of state institutions in Latin American countries (Chalmers,
1997).
In any case, much of the Haitian governments decision making ability is
restricted in the sense that any reform action taken requires funding.  The
US government provides the majority of aid money coming into Haiti.  Action
taken by the Haitian government is largely influenced if not dictated by the
amount of funds available to finance reforms. This interference of the US in
the internal affairs of the Haitian nation is a complicated issue which has
its roots in the Monroe Doctrine.  While this factor plays an important role
in the debate concerning privatization, further exploration of this issue is
beyond the scope of this paper.

The Impact of Electricity on Haitian Civil Society
Electric power has had an extensive impact on Haitian life throughout the
country. Both urban and provincial residents have expressed anger often
resulting in violence over the issues involving electricity.  In 1995-96,
members working with MICIVIH reported several peasant protests in the rural
Les Cayes region over the unavailability of access to electricity in the
area (Laleau, 1999).
In January of 1996, protests over electric power distribution resulted in
two deaths and several casualties.  Violent confrontations with police broke
out when farmers in the Artibonite river valley constructed barricades to
block the national road.  The rice growers were demanding the electricity
distribution necessary to pump the irrigation water for the rice fields
(Chanel, 1996).
The Civil Affairs team in Haiti reported early this year that anti
government manifestations broke out in the Delmas area of Port-au-Prince in
response to extended periods of widespread power outages (Doerrer, 1999).
More recently, the constant blackouts plaguing Port-au-Prince have been
credited with intensifying the climate of political instability that has
swept over the nation.  In the period between February 26 to March 1, six
shooting murders had taken place in the capital, one of which was a
politically motivated murder.  The recent wave of violence has come to be
known by Haitians as ?the insecurity? (Haiti Progres, March 3, 1999).  The
latest transformer breakdown at Peligre has left Port-au-Prince?s poor
without power, exacerbating tension levels and creating further animosity
for the politically unstable government.
The overwhelming demand for electricity by Haiti?s poor is not unprecedented
nor is it specific to the country of Haiti.  Studies have shown that the
arrival of electricity in small villages can drastically alter the lives of
rural people by exposing them to the outside world. According to surveys,
many people have regarded the introduction of electricity as a turning point
in their lives (Flavin, 1986).
A recent article released by CNN described the efforts of students in
Port-au-Prince to continue their studies during the electricity crisis:

??a dozen students sat along the high metal face surrounding the palace,
reading under the bright lights.  Nearby, another hundred or so students
paced up and down the Champs de Mars, the city?s central square, circling
beneath street lamps and reciting softly from books? (Reuters, April 1,
1999).

It has been found, as noted by Barnes (1984), that electricity enables
children to study in the evenings, therefore promoting literacy.  In Haiti,
illiteracy levels have been estimated to be between 60-70% (Country
profiles, 1999) making electricity an invaluable empowerment tool for Haiti?
s poor.


Conclusion
The mismanagement of the Haitian government enterprise, Electricite d?Haiti,
began during the Duvalier regime and has become less dependable over the
years. The current situation of extended blackouts in the city of
Port-au-Prince, whose population estimates exceed 1 million have intensified
the situation of political instability that the nation is currently faced
with. The debate over the means by which electricity generation and other
infrastructural improvements are to be made draws the dividing line on which
political parties are situated.  As a result of the bipolar approaches to
this fundamental issue in Haitian politics, the current government has been
in a state of paralysis for the last two years.  The dysfunctional nature of
the government has in turn prevented the allocation of funds necessary to
resolve Haiti?s current electricity crisis engaging Haiti?s economy in a
downward spiral.
Whether the EdH is placed under private ownership or remains a state owned
enterprise, it is clear that major reforms are necessary. It should be
recognized that the real potential of electricity in Haiti lies in
stimulating long term economic development through employment of an overall
development strategy (Flavin, 1986).  Any attempt made at reform of the
Haitian National Electric Company must include such a strategy if long term
economic improvements are to be made.










References

Barnes, D.F.  ?Electricity?s Effect on Rural Life in Developing Nations,?
paper prepared
For the United Nations University and the International Development Research
Center, Ottawa, September 1984.

Benson, Anne LeGrace Gupton.  Re: Electricity in Haiti.  Personal e-mail;
January 23,
1999.

Chalmers, Camille.  ?Haiti?s Latest Coup: structural adjustment and the
struggle for
democracy, an interview with Camille Chalmers.?  Multinational Monitor, May
1997.

Chanel, Ives Marie.  ?Haiti: le riz a cote de ses pompes.? SYFIA N88; May
1996.

Clement, Cara.  Electricity: Clement tells the story from inside Haiti.
Personal e-mail,
January 21, 1999.

Conyers, John, Jr.  ?Press conference with Represe4ntative John Conyers,
 Jr.?  Federal
Information Systems Corporation, July 2, 1997.

Country Profiles: Haiti.  Europa World Year Book; FAO Production Yearbook;
The
World Factbook; 1999.

De Cordoba, Jose.  ?Politics Bog Down Privatization in Haiti .  Wall Street
Journal; New
York; Jan 11, 1996.

Department of the State, ?Country Commercial Guide: Haiti.?  U.S. & Foreign
Commercial Service for the Fiscal Year 1998, 1997.

Doerrer, Eric A.  ?Operational vignette: Civil Affairs in Haiti.?  Military
Review; Fort
Leavenworth; Mar/Apr 1996.

Haggerty, R.A.  ?Dominican Republic and Haiti: country studies.? U.S.
Government
Printing Office, Washington, 1991.

Haiti Progres: Le Journal Qui Offre Une Alternative. ?Negotiations Breakdown
After
New Assassination.? This Week in Haiti; March 3-9, 1999.

Johnson, Peter B.  ?Prepared Testimony of Peter B. Johnson Executive
Director
Caribbean/Latin American Action Before the House International Relations
Committee Western Hemisphere Subcommittee.?  Federal Information Systems,
February 28, 1996.

Silie, Ruben and Lundahl, Mats.  ?Economic Reform in Haiti: past failures
and future
successes??  Comparative Economic Studies, Spring 1998.

Sullivan, Joseph.  ?Capitol Hill Hearing with Defense Department Personnel.?
Federal
Information Systems Corporation, May 14, 1997.

Reuters.  ?Without Power, Haitians Search for Light.?
http://cnn.com/WORLD/americas;
 April, 1, 1999.

Weisbrot, Mark.  ?Structural Adjustment in Haiti.?  Monthly Review; New
York; Jan
1997.



-----Original Message-----
From: Robert Corbett <bcorbett@netcom.com>
To: Bob Corbett <bcorbett@netcom.com>
Date: Thursday, June 24, 1999 2:25 PM
Subject: Electricity: Vedrine comments


>
>From: Emmanuel W.Vedrine <evedrine@hotmail.com>
>
>"Maybe Haiti could become a new "Silicon Valley" if there were a
>reliable source of electricity and education"
>
>Oops! The "electricity problem" reappear in Corbettland. Guess what! What
is
>the source of this problem? Money or Politics? Let's see how smart
>Corbetters will handle this essay question. Anyway let me give them some
>hints from a credible Haitian engineer (in Haiti). This is his word: "Less
>than 10 million (US $) can solve this problem for ever".
>
>Good luck with the essay!
>
>EV
>
>
>_______________________________________________________________
>Get Free Email and Do More On The Web. Visit http://www.msn.com
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