VZCZCXRO2589
PP RUEHKN RUEHKR RUEHMJ
DE RUEHKN #0130/01 2790444
ZNR UUUUU ZZH
P R 060444Z OCT 09
FM AMEMBASSY KOLONIA
TO RUEHC/SECSTATE WASHDC PRIORITY 2370
INFO RUEHKR/AMEMBASSY KOROR 0351
RUEHMJ/AMEMBASSY MAJURO 0463
RHHJJPI/PACOM IDHS HONOLULU HI
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RUEHKN/AMEMBASSY KOLONIA 2738

UNCLAS SECTION 01 OF 02 KOLONIA 000130 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ENRG PGOV FM
SUBJECT: FSM ATTEMPTING TO ESTABLISH NATIONAL ENERGY PLAN 
 
¶1.  (SBU) SUMMARY:  The FSM National Government, through the 
offices of Research and Development, submitted a national Draft 
Energy Policy to each state on July 21.  By Mid-September a 
number of the agencies and personnel responsible for 
implementation still had not seen the draft plan.  Although 
there is general agreement in the FSM that energy issues are a 
major concern, some government officials question the viability 
of a national plan for four states that have divergent needs and 
resources.  End Summary. 
 
Draft Policy 
------------ 
 
¶2.  (SBU) After extensive consultations with representatives 
from the four states and various national offices, President 
Emanuel Mori sent a national Draft Energy Policy to the four 
governors on July 21 for comment.  The President's cover letter 
asks the governors to comment on the plan with a particular 
focus on their state plans.  The goal is to submit the one 
larger plan to the national congress for funding.  The 
President, however, gives no timeline for the review.  At least 
one state plan references actions scheduled to start in April 
¶2008.  (Note:  As of September 28, states have not yet responded 
to the request for comments.  Therefore all timelines, not based 
on donor plans, in the draft policy are already out-of-date. 
End Note.) 
 
¶3.  (SBU) The national Draft Energy Policy sets the goal that 
"by the year 2020 the share of renewable energy sources would be 
at least 30% of energy production while the efficiency should 
improve with 50%."  For details on how to reach those goals the 
draft document attaches draft action plans from each state.  The 
four states not only submitted different goals, but have 
different foci on how to attain their own goals. 
 
The States 
---------- 
 
¶4.  (SBU) Pohnpei's original plan calls for a 42% reduction in 
diesel power generation by 2013.  The primary focus in achieving 
that goal is through rehabilitating the Nanpil River Hydropower 
Plan.  Pohnpei is also hoping to achieve some of its goals 
through stand alone solar home systems and banning the import of 
"non-energy efficient lights, appliances..."  Kosrae, meanwhile 
lists gradually increasing its power grid's capacity to absorb 
energy from photovoltaic sources as its first goal.  The second 
goal, however, is to meet all of Kosrae's power demands within 
six years with a sea wave power plant. 
 
¶5.  (SBU) Yap state meanwhile has set itself a goal of creating 
75% of its power through renewable energy by 2020.  As with 
Kosrae, the immediate focus is to upgrade the states capacity to 
use solar energy.  Yap is also focusing on possible wind energy, 
including multiple windfarms.  For Chuuk state the broad goal is 
to supplement conventional energy with alternative sources by 
50% within one year.  Part of the goal is for Chuuk state 
facilities to rely 100% on alternative energy sources. 
 
¶6.  (SBU) At the end of August, Pohnpei State Senator Stevick 
Edwin told Econ/ConOff that the national initiative comes from 
the national Office of Resources and Development and three 
representatives from each state.  Edwin added that as the 
state's energy chair he is also looking at the national plan. 
Edwin commented that his primary concern is how the national 
government plans to support or implement the four distinct plans 
developed by the states.  The relationship between the states 
and the national government is generally unclear and the draft 
energy policy does not clarify the relationship. 
 
¶7.  (SBU) Although transmitted from the President to Kosrae in 
July, Kosrae Utilities Authority General Manager Fred Skilling 
still had not seen the draft plan by mid-September.  Skilling 
told Econ/ConOff that it is not uncommon for communication from 
the national government to languish on someone's desk for 
extended periods of time before it gets to the recipient. 
Skilling commented that he would not be surprised if the 
document was stuck in the Governor's office. 
 
Donor Roles 
----------- 
 
¶8.  (SBU) In separate meetings, both Japanese Economic Officer 
Mariko Arada and Chinese First Secretary for Business Bai Xia 
agreed that it is encouraging that the national government is 
taking a proactive position on energy matters.  Both added 
concerns, however, on actual follow through.  Chinese Third 
Secretary for Business Xu Quing stressed that it is unclear how 
the national government can pull together the disparate and at 
times competing interests of the four states.  During a 
 
KOLONIA 00000130  002 OF 002 
 
 
September 30 meeting Australian Deputy Chief of Mission Janet 
Whitaker concurred with that general assessment, saying the 
national government is still trying to define its role in each 
of the states and adding one more issue does not necessarily 
help. 
 
¶9.  (SBU) China and Japan have contributed funding for various 
one-time projects such as solar powered street lighting around 
government housing in the capital, Palikir.  Arada added that 
national government representatives have complained that the 
lights, particularly the Chinese funded lights, no longer work. 
Arada argued that the light failures are not due to poor 
installation or design, but rather due to the lack of cleaning 
or maintenance of the photovoltaic cells. 
 
¶10.  (SBU) FSM Resources and Development, Division of Energy 
Assistant Secretary Hubert Yamada stated that for outer islands 
in Yap, Pohnpei, and Chuuk, the FSM is reliant on European Union 
funding and expertise to install solar powered lighting (Kosrae 
has no outer islands).  Yamada further acknowledged that the FSM 
will need substantial donor assistance to meet their alternative 
energy goals.  For example, Pohnpei is seeking funding through 
the Department of Interior to rehabilitate the Nanpil hydropower 
plant.  Yap is looking at wind power, but is currently only at 
the discussion phase pending review from outside experts. 
 
PetroCorps Plans 
---------------- 
 
¶11.  (SBU) The four state plans of action on energy policies all 
call for reductions in the use of fuel and increased fuel 
efficiencies, which by definition affects FSM's sole fuel 
provider, FSM PetroCorps.  PetroCorps was established as a 
semi-autonomous fuel provider by the national government.  Yet 
on August 24 PetroCorps Commercial Manager Madderson Ramon told 
Econ/ConOff that PetroCorps wants to be part of any plans on FSM 
energy policy.  Currently it is not.  Ramon commented that 
despite not formally taking part in the current discussions, 
PetroCorps recognizes current energy trends and has identified 
its own mission as expanding beyond fuel to become a "total 
energy company." 
 
¶12.  (SBU) For the near-term, PetroCorps is reviewing two 
possible means to reduce energy costs for FSM consumers. 
According to Ramon, it is possible to cut diesel fuel with 5% 
coconut oil and still attain suitable power generation.  His 
company is looking for suitable and reliable sources of coconut 
oil within the FSM.  In a strict cost cutting initiative, 
PetroCorps is also reviewing the possibility of bulk purchases 
by working with representative from Saipan and the Marshal 
Islands.  By September 20, both ideas were still in their 
earliest stages of possible development. 
 
Comment 
------- 
 
¶13.  (SBU) There is a consensus within the FSM that high fuel 
prices negatively impact the FSM economy.  The more fuel that is 
imported, the more funds go out to pay for transportation and 
energy costs.  There is also general consensus that developing a 
coherent energy plan is in the FSM's best interest.  The 
difficulty, however, is those current plans rely almost 
exclusively on donor support, save for those of PetroCorps. 
Within the FSM, what that support should look like is not clear. 
 Each state is pursuing different goals.  The only common 
strategy is to request assistance from the EU for solar power on 
outer islands.  Perhaps the best role for the national 
government is not to try to coordinate a national energy policy; 
rather it can assist in reaching out to the donor community -- 
if it can overcome the perception that it favors one state over 
the others.  End Comment. 
DOUGLASSWD