VZCZCXRO3570
RR RUEHMA RUEHPA
DE RUEHMV #0894/01 3451125
ZNR UUUUU ZZH
R 111125Z DEC 09
FM AMEMBASSY MONROVIA
TO RUEHC/SECSTATE WASHDC 1499
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHNY/AMEMBASSY OSLO 0120
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF JUSTICE WASHINGTON DC
RHEHAAA/NSC WASHDC

UNCLAS SECTION 01 OF 02 MONROVIA 000894 
 
SENSITIVE 
SIPDIS 
 
E.O.12958: N/A 
TAGS: ECON EINV EGAR ENRG LI
SUBJECT: FATE OF BUCHANAN RENEWABLES REMAINS UNCERTAIN AS GOL WAVERS 
OVER SUSTAINABILITY ISSUES 
 
REF:  MONROVIA 725 
 
¶1. (SBU) SUMMARY:  While President Sirleaf feels tremendous 
political pressure to expand electric services in Monrovia, 
fulfilling public promises to secure 10 megawatts of power in the 
capital by the end of 2010, her energy advisors have been unable to 
proffer the definitive guidance that would enable the GOL to 
construct a coherent energy plan to move forward.  The President 
summoned donors to a November 27 "emergency" meeting to make a final 
decision on whether to proceed with Buchanan Renewables' plan for a 
35 megawatt power plant for greater Monrovia.  However, the Cabinet 
shrank from any decision,Qggesting that they could not evaluate 
the deal until BR produces a feasibility study.  The chronic 
postponement underlines the paucity of GOL capacity to deal 
effectively with policy issues and its tendency to focus on 
short-term politically-motivated thinking that has stymied progress 
toward power generation since 2006.  END SUMMARY. 
 
¶2. (SBU) The President called key donors, including the Ambassador, 
World Bank Country Director Ohene Nyanin, European Commission Chief 
of Operations Martin Jenner, and Counselor to the Norwegian Embassy 
Thorvald Boye, to an emergency meeting November 27 to decide whether 
to move forward with BR's plans for a Overseas Private Investment 
Corporation (OPIC)-funded 35-megawatt power plant fueled by rubber 
wood chips.  The majority of the President's economic management 
team was present, including Minister of Finance Augustine Ngafuan, 
Chairman of the National Investment Commission Richard Tolbert, 
Minister of Lands, Mines and Energy Eugene Shannon, Presidential 
Energy Advisor Chris Neyor, Acting Chairman of the Liberia 
Electricity Corporation Joseph Mayah, and Minister without Portfolio 
Natty B. Davis. 
 
¶3. (SBU) The President thanked donors for their ongoing support to 
the energy sector, and explained that she hoped to clarify the GOL's 
progress toward electrification of Monrovia before she appeared 
before the opening session of the National Legislature in late 
January to give her State of the Union speech.  She emphasized her 
wish to fulfill a public commitment to secure 10 to 12 MW of power 
for the greater Monrovia area before the end of 2010, and asked her 
energy advisors to work strategically toward that goal. 
 
¶4. (SBU) In October, at the behest of the GOL, a USAID-funded 
analyst reviewed in detail the terms of the BR power agreement. 
Following negotiations, BR agreed to reduce the cost of its power 
from 23 to 19 cents per kilowatt-hour.  The GOL insisted its final 
offer entails a tariff of 18 cents and a change in the mechanism by 
which BR is paid from the escrow account, eliminating a right of 
priority payment that would disadvantage 
future competing Independent Power Providers.  The GOL also warned 
that BR should expect no further tax breaks.  The President called 
upon donors and her Cabinet to evaluate these terms and proffer 
definitive guidance on whether proceeding with the deal was in 
Liberia's long-term economic interests. 
 
¶5. (SBU) Despite the meeting's stated agenda, an increasingly 
exasperated President indulged Neyor and Shannon in a discursive, 
two-hour discussion of long-term plans for rural electrification, 
hydroelectric energy and the rehabilitation of the Mt. Coffee 
hydroelectric facility, and the prospects for solar power.  Neyor 
assured the President that numerous investors and donors, including 
the Japan International Cooperation Agency, Contour Global and 
Ormeco International have independently expressed interest in 
constructing a 10 MW heavy-fuel oil generator on Bushrod Island in 
Monrovia, and that the GOL could fulfill its end-2010 timeline. 
[Note: Both investors have privately told Econoffs that they 
continue to watch the BR deal carefully, and if Liberia breaches its 
contract, they may be loath to pursue further investment.  End 
Note.] 
 
¶6. (SBU) When discussion did turn to BR, the President asked the 
donors to share their frank opinions.  Both the Ambassador and World 
Bank Country Director Nyanin declined to comment specifically on the 
BR deal, referring instead to the independent report sponsored by 
the International Finance Corporation and the Government of Norway, 
which outlined some shortcomings and areas for further consideration 
(reftel).  The Ambassador emphasized that ultimate decision-making 
authority rested with the GOL, and donors would not presume to 
interfere with negotiations between the government and a private 
company.  She noted that while donors are committed to supporting 
the GOL goal of securing 10 MW of power for Monrovia by the end of 
next year, she urged the GOL to devise a long-term energy policy, 
warning that politically-motivated quick fixes are unlikely to 
engender comprehensive electrification. 
 
¶7. (SBU) To the surprise of other donors, who had agreed to convey a 
 
MONROVIA 00000894  002 OF 002 
 
 
unified message to the President, Boye said the GON would require 
further scrutiny of the BR deal before it could commit a promised 
USD 30 million over five years to support the LEC management 
contract and the expansion of the Monrovia distribution network.  He 
urged the GOL to demand a feasibility study that would explore the 
viability of the LEC if it were to purchase power primarily from BR, 
and assess the project's impact on both the rubber sector and the 
environment. 
 
¶8. (SBU) The President's advisors immediately seized upon the 
perceived need for a feasibility study and urged the donors to send 
a technical consultant immediately who could review it and advise. 
The President, alarmed by the suggestion that the sole-source BR 
deal might not comply with Liberia's procurement laws, acceded to 
the delay, but urged her team to ensure BR produced the feasibility 
study as soon as possible so she could make a final decision. 
 
¶9. (SBU) In a subsequent meeting that day, the Ambassador and Nyanin 
worried the feasibility study may constitute a delay tactic, and 
agreed that it was unlikely to produce any revelations not already 
contained in the fifty-page IFC/GON report or unearthed by the USAID 
analyst.  Nyanin offered to fund a short-term technical consultant 
to produce the feasibility study in early 2010, but noted that to 
satisfy Liberia's need for a coherent energy generation plan, donors 
must consider funding an energy task force composed of a lawyer, an 
engineer and an economist who would work with the GOL to create the 
institutional structure upon which a sound long-term strategy could 
be founded. 
 
¶10. (SBU) COMMENT: Neither political pressure nor urgent social and 
economic need for electrification could compel the Cabinet to make a 
decision without recourse to donor guidance.  Liberian energy 
policy, without the animating force of an assertive personality or 
strong policy-making institutions, lacks strategic direction; it has 
evolved little since 2006.  The current predicament arose because of 
the GOL's desperation to quickly expand generation capacity, its 
weak negotiating skills and insufficient due diligence.  The 
President herself confessed they accepted OPIC's financial support 
for BRE as a substitute for their own independent assessment. 
Whatever the merits or shortcomings of the BR deal, the GOL cannot 
use the lack of a feasibility study to once again abdicate 
responsibility for decision-making.  The GON has pressed for a 
feasibility study since the release of its joint IFC report in 
September, so Boye's intervention was intellectually consistent, if 
perhaps tactically unwise.  His advocacy may permit the GOL to use 
the GON as a scapegoat for its own delayed verdict. 
 
¶11. (SBU) COMMENT CONTINUED: If the GOL ultimately abandons the BR 
power project, it needs to think carefully about a default public 
relations strategy.  Given the project's novelty and scope, foreign 
investors in various sectors have been eyeing BR's challenges as an 
augur of the setbacks and unforeseen expenses they could expect to 
confront in their own negotiations with the GOL.  BR is a savvy 
manager of its own public image.  If the GOL is to check the exodus 
of anxious foreign investors, it must cautiously rationalize why an 
OPIC-funded, legislatively ratified deal was not in the best 
interests of Liberia, how its demise did not constitute a breach of 
contract, and why other investors need not fear a similar fate. 
 
THOMAS-GREENFIELD