R 170848Z JUL 09
FM AMEMBASSY COTONOU
TO SECSTATE WASHDC 1039
INFO ECOWAS COLLECTIVE
MILLENIUM CHALLENGE CORP WASHDC
AMEMBASSY PARIS 
AMEMBASSY DAKAR

UNCLAS COTONOU 000314 
 
 
DEPT FOR AF/E JKNIGHT, AF/EPS, AF/W ACOOK 
DEPT PLEASE PASS USTR (LAGAMA) 
PARIS FOR BKANEDA 
LONDON FOR PLORD 
 
E.O. 12958: N/A 
TAGS: ENRG EAGR EFIN ECON PGOV BN
SUBJECT: GOB INCREASES ELETRICITY AND WATER PRICES 
 
¶1. SUMMARY: On July 2, 2009, the Directors General of the two 
parastatals Benin Electricity Corporation (SBEE) and Benin National 
Water Corporation (SONEB) held a joint press conference to announce 
the increase of electricity and water prices, effective July 2009. 
The electricity price has gone up by 15%. The water price has 
increased by 9% per cubic meter for the second tranche and 58% for 
the third tranche of consumption. The two directors explained that 
the price increase is necessary to prevent the bankruptcy of their 
respective companies and to assure better quality services. In 
addition, Minister Sacca Lafia, the Minister of Energy and Water, 
said the electricity price increase was dictated to SBEE and its 
Togolese counterpart by the Electricity Community of Benin (CEB), an 
electricity provider to Benin and Togo. The price increase was a 
blow to Beninese consumers because it comes amidst power cuts and 
water supply shortages and heavy rain on the southern regions of the 
country. END SUMMARY. 
 
¶2. Godfroy Chekete, the newly appointed Director General of SBEE, 
announced an average increase of 15 CFA Francs (0.3 cent) on the 
Kilowatt hour (KWH) of electricity following the increase of 5 
Francs CFA by its supplier, CEB. The SBEE's 15 Francs CFA increase 
is intended to meet the cost of increased rural electrification (3 
Francs CFA), to adjust to CEB's price increase (5 Francs CFA) and to 
help SBEE improve its financial situation and replace some of its 
faulty electrical equipment. Chekete declared that the GOB should 
have appointed him to file a bankruptcy petition for the company. He 
said the company's debts have reached an unmanageable level. He was 
seconded by the Minister of Energy and Water who mentioned that CEB 
dictated the price increase to SBEE. He stated that the grant of 70 
billion CFA Francs (USD 150 million) the GOB pumped into SBEE in 
late 2006 was not enough to balance the books. It was high time that 
the company charged the market price, he underlined. 
 
¶3. As he assumed office, Chekete warned the public that if SBEE did 
not settle its outstanding debts to CEB amounting to CFA Francs 14.2 
billion (USD 30.2 million) the country might experience a total 
blackout. He added that the bloated payroll of the company was also 
a problem. He deplored that the administrative employees constituted 
the majority of SBEE staff to the detriment of technicians. Chekete 
also complained that the company did not have the required stock of 
meters and other electric material to meet the twenty thousand 
requests for electrical connection still unfulfilled. 
 
¶4. Another difficulty crippling the company's budget is the huge 
cost of electricity production by the thermal plants SBBE acquired 
to fill the gap of power triggered by the reduction of energy supply 
from Ghana and Nigeria.  Chekete noted that the spare parts to 
maintain the plants were prohibitively expensive. SBEE could not 
continue to sell electricity at 18 cents per KWH when production 
cost 22 cents, he underlined. 
 
¶5. The Director General of SONEB, Karim Assouma, announced an 
increase in water services, passing from CFA Francs 415 (88 cents) 
to 453 (96 cents) for the second tranche, and 415 (88 cents) to 658 
(USD 1.4) for the third tranche per cubic meter. Assouma noted that 
the price freeze in 2002 led to the current price being 13 cents 
lower per cubic meter than cost. He also added that the company 
needed to invest CFA Francs 100 billion (about USD 212 million) in 
the extension of the water supply network. 
 
¶6. The increase in electricity and water prices was announced in a 
period where the population was experiencing intermittent power cuts 
and more particularly a total cut of water supply in the 
neighborhoods located in Western Cotonou. Chekete explained that the 
electricity cuts were caused by the heavy down pour of last June on 
the southern part of the country and the theft of electric cables by 
thieves. Assouma explained that SONEB stopped the supply of water 
because the water pumping plant that supplies the West side of 
Cotonou was flooded. It was necessary to turn off the water to avoid 
contamination or electrocution while repairs are made. 
 
¶7. The President of the Benin League for Consumers' Defense (Ligue 
pour la Defense du Consommateur du Benin, LDCB), Romain Houehou 
condemned the unilateral decision by the two companies to increase 
their tariffs. He also denounced the untimely cuts of electricity 
and water, and the suffering endured by the subscribers who have to 
queue for hours to pay their bills. 
 
¶8. COMMENT: Benin's dependence on electricity imports from Ghana and 
Nigeria affects the regular supply of electricity in the country. 
Bad management and subsidized tariffs below cost are also a problem. 
Benin's efforts to create alternative sources of power led to the 
award of a contract to supply an 80 MW gas turbine to a U.S company 
in 2007. The equipment for this turbine plant has not yet been 
shipped to Benin. The water situation is not as severe as the lack 
of power. The increase of water and electricity tariffs was expected 
following the increase of salaries to civil servants and payment of 
bonuses to health workers. SONEB and SBEE are expected to use 
increased revenue to pay off their debts first. END COMMENT. 
 
BOUSTANI