VZCZCXRO6153
PP RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHDR #0108/01 0350918
ZNR UUUUU ZZH
P 040918Z FEB 10
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC PRIORITY 9355
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHBS/AMEMBASSY BRUSSELS 1437
RUEHMS/AMEMBASSY MUSCAT 0226
RUEHJB/AMEMBASSY BUJUMBURA 3159
RUEHKM/AMEMBASSY KAMPALA 0132
RUEHLGB/AMEMBASSY KIGALI 1636
RUEHNR/AMEMBASSY NAIROBI 1604
RUEHNY/AMEMBASSY OSLO 0024
RUEHDS/USMISSION USAU ADDIS ABABA
RHMFISS/CDR USAFRICOM STUTTGART GE
RHMFIUU/CJTF HOA//J3
RUEAIIA/CIA WASHINGTON DC
RUEHLMC/MCC WASHINGTON DC
RUEHPH/CDC ATLANTA GA

UNCLAS SECTION 01 OF 04 DAR ES SALAAM 000108 
 
DEPARTMENT FOR AF/E JTREADWELL; INR/RAA: FEHERENRIECH 
STATE PASS TO USAID, USTDA 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG ECON ETRD MCC PGOV EPET EAID TZ
SUBJECT: ZANZIBAR ENERGY CRISIS: Z-BAR GOVT LIKELY TO ASK USG 
TO SHIP EMERGENCY GENERATORS BY AIR FROM BRUSSELS 
 
REFS: (A) Dar es Salaam 38, (B) 09 Dar es Salaam 871 and (C) 
08 Dar es Salaam 839, (D) Dar es Salaam 107 
 
DAR ES SAL 00000108  001.2 OF 004 
 
 
(U) 1. SUMMARY: The USG should expect a formal request from the 
Zanzibar Government (SMZ) seeking assistance for air transport 
of up to 32 Caterpillar-brand diesel generator units currently 
located in Belgium.  Several donors have pledged to provide 
support for the purchase of these units.  The SMZ says that it 
will pay for their ongoing fuel, operation and maintenance.  We 
strongly support this anticipated request to preserve our health 
sector gains and support recent concrete steps toward political 
reconciliation on the isles. END SUMMARY. 
 
(U) 2. On January 21, MCC Resident Country Director attended a 
meeting of the Zanzibar Government (SMZ).  In attendance were 
the Minister of Finance, Principal Secretary of the 
Ministry of Energy, Lands, Water and Public Works, 
representatives from the Zanzibar Electricity Company (ZECO) 
and a member of the Tanzanian Union Government's 
(GOT) Ministry of Energy and Minerals.  There was also a 
consultant from Norplan, funded by the Norwegian government to 
provide technical assistance in the energy sector to ZECO and 
Zanzibar.   The purpose of the meeting was to discuss and take 
action on a letter sent to the Norwegian Embassy asking Norway 
"and other development partners" for assistance with their 
current power crisis. 
 
BACKGROUND 
 
(U) 3. Prior to this meeting, the Norwegian-financed consultant 
Norplan had presented the SMZ with a variety of options to 
partially address the current power crisis (ref A).  Norplan 
recommended, and the RGOZ subsequently agreed to pursue, the 
purchase of up to 32 diesel generator units to be supplied by 
a Belgium-based company called "Mantrac" that will produce 
26.5 MW of emergency/back-up power. 
 
(U) 4. Meanwhile, ZECO continues to pursue an attempted repair of 
the current submarine cable, and still hopes to have the 
repair completed and the cable re-energized "by the end of 
February."   Although there is reasonable chance that the 
planned repair will work, there also is significant chance 
that it will not, especially given the overall age and 
existing state of the cable.  Even if it is successfully re- 
energized, the cable would not be able to work at its previous 
full capacity (40-45 MWs) and instead could be run at best at 
20MWs to 30MWs. Thus, there would still be a need for power 
shedding/power rationing in Zanzibar, even in the best case 
scenario.  There also is no guarantee that it would not break 
down again sometime in the near future.  The new 100 MW 
submarine cable being financing by MCC is not expected to come 
online and be operational until late in CY 2012.  Thus, there 
was the perceived strong need to provide additional power on 
an emergency basis as soon as possible. 
 
MODALITIES OF ASSISTANCE 
 
(U) 5. At the donor's meeting, the SMZ was keen to demonstrate 
that it has the necessary legal authority and emergency 
contracting procedures in place to handle donor funds. 
Because donors generally have formal relations only with the 
GoT, i.e. the mainland Union government, rather than with the 
SMZ, this was problematic for some donors.  DFID, for example, 
said it would need to conduct some form of due diligence on 
the SMZ before it could give money directly as part of a 
"basket."  Norway explained that it had already established a 
Project Implementation Unit (PIU) for its rural 
electrification projects on Zanzibar and its soon-to-be 
completed submarine power cable to Pemba.  Although 
technically within the SMZ, it was structurally autonomous. 
DFID and other donors such as SIDA then agreed that they should 
be able to make their contributions via this PIU.   JICA said 
that they could not contribute cash to such a PIU since their 
 
DAR ES SAL 00000108  002.2 OF 004 
 
 
aid was generally tied, with strict "buy Japanese" requirements, 
but that they might be able to supply individual consultants to 
work in such a PIU as needed. 
 
THE PROPOSAL 
 
(U) 6. Discussion then turned to the SMZ proposal, which was based 
on the Norplan recommendation.  The SMZ proposal called for a 
total of USD 19 million to purchase 32 diesel generator units 
from Mantrac.   (0.8 MWs per unit X 32 = 25.6 MW of power). 
There were many questions regarding the numbers set forth in 
the SMZ proposal, and the need for more details, more 
justification of claimed costs, etc.   The SMZ agreed to send 
a revised and expanded version, together with a Gant chart 
that showed detailed timelines for purchase, shipment, 
construction of the small civil works necessary to install the 
new diesels, etc., as soon as possible.   Donors also demanded 
some information from the SMZ on their priorities regarding 
planned uses of the emergency power, given that power shedding 
and rationing would be needed even if the current cable comes 
back on line. 
 
INTERNATIONAL FUNDING PLEDGES 
 
(U) 7. The SMZ asked donors what they could provide.  The 
representative from the GoT was asked to speak first, but all 
he said was that, GoT's Minister of Energy "will continue to 
make a follow-up" with the GoT Ministry of Finance and 
Economic Affairs.  The GoT was unable and/or unwilling to give 
and any indication on potential orders of magnitude for GoT 
contributions.  Foreign donors, however, offered the 
following: 
 
--DFID: 2 million pounds, which equals approx USD 3 million. 
--SIDA: will contribute only "if there were a substantial 
financing gap" and only if a few million were missing to 
bridge a final purchase, with a limit of  USD 4.0 to 4.5 
million. 
--JICA: No information available at this time. 
--Norway: USD 4 million. 
 
TOTAL: USD 11 million, which roughly equals the estimated cost 
of the 32 units from Mantrac at USD 11.7 million. 
 
(U) 8. SMZ estimates the cost of fuel, operation and maintenance 
will be USD 44 million from installation until the MCC cable 
comes online.  The SMZ stated in its letter to Norway that it 
is willing and able to shoulder this.  The donors were 
generally very positive, but also made clear that all such 
pledges were conditioned on further info from the SMZ and 
various internal approvals. 
 
U.S. ASKED ABOUT PROVIDING AIR SHIPMENT 
 
(U) 9. MCC Director made the point that the USG, through MCC, was 
providing the long term solution to the power question by 
supplying the new 100 MW cable.  Bids were already in process 
even before the latest crisis, and were due very soon. 
Moreover, we already had made informal inquiries about the 
possibility of emergency assistance as soon as the crisis hit. 
The MCC Director explained, however, that USAID's OFDA 
emergency funds were normally used for hurricanes and floods, 
etc., not problems of the sort that Zanzibar was facing. 
Given the recent disaster in Haiti, most eyes in Washington 
(and budgets) were understandably focused there.  The Japanese 
made a similar point, stating somewhat more bluntly that 
"Japan provides emergency assistance for natural but not man- 
made disasters." 
 
(U) 10. Given the USG's well-known reluctance to contribute to 
basket funding such as that under discussion by the other 
donor partners, MCC Director was specifically asked whether 
the USG could provide any assistance with transporting the 
 
DAR ES SAL 00000108  003.2 OF 004 
 
 
diesel units to be purchased. When pressed, MCC Director said 
that we would need to see much more detailed information as to 
exactly what type of power units, what size and weight, etc., 
before the question could even be asked.    The SMZ was quick 
to respond that it would supply all such information as 
rapidly as possible and make a formal request.  It has yet to 
do so. 
 
CURRENT STATE-OF-PLAY 
 
(SBU) 11. SMZ signed a letter of acceptance with Mantrac for the 
generators January 29, and the full contract will be signed 
February 2.  Total price at the time of signing went up to 
USD 12.985 million, including installation costs.  The SMZ 
says it had to sign the contract first and then go to donors 
later because Mantrac was going to reallocate the generators 
to Haiti.  This demonstrates the dire straights the SMZ sees 
itself in. 
 
OTHER DELIVERY ALTERNATIVES 
 
(U) 12. Some limited information on estimated transport costs and 
times was included in the Norplan report and discussed at the 
meeting. These alternatives were: 
 
-- (1) Via Commercial Air.  Estimated cost of USD 5 million and 
transport times of 14 days (10 days to Dar and 4 days to Zanzibar, 
based on the assumptions that the machines are too big or heavy 
for direct flight to Zanzibar); 
 
-- (2) Via "normal" commercial ship, i.e. with other cargo and 
transport around Cape of Good Hope.   Estimated cost of USD 
0.2 million and 4-5 weeks once loaded at port. 
 
-- (3) Via "charter" ship. Estimated cost of USD 0.5 million 
and 6 weeks. 
 
(U) 13. There is a clear desire on the part of the SMZ to get the 
diesels operational as soon as possible, given the ongoing 
problems and damage to eth Zanzibar economy.  Other donors 
were very supportive of the SMZ position and also would like 
to see such a USG contribution. 
 
COMMENT:  U.S. Mission Dar es Salaam Supports this Imminent Request 
 
(SBU) 14. The Tanzania Union Government has not and will not take an 
official position on this request.  Power is not a "Union 
competency" and so the Union Government will not put the Zanzibar 
Government's request in perspective with competing mainland priorities 
(such as responding to road and rail damage in central Tanzania due to 
recent flooding).  As regards non-Union issues, mainland Tanzania and 
Zanzibar might as well be two different countries as far as both Union 
and Zanzibar officials are concerned. 
 
(SBU) 15.  We support this request for the following reasons: 
 
-- Continued lack of distributed electrical power in Zanzibar's main 
island of Unguja puts at risk our considerable health sector 
achievements there and introduces new health vulnerabilities due to lac 
of fresh water and insufficient power supply to healthcare facilities. 
 For example, household spraying to prevent malaria has been 
indefinitely delayed due to lack of power and fresh water.  Our 
anti-malaria successes in Zanzibar have drawn worldwide attention.  Thi 
delay risks retrogression in our fight against malaria deaths on the 
island. 
 
-- Zanzibar's political leadership, both in government and 
opposition, have recently taken concrete steps to achieve a settlement 
ending decades of bitter, violent politics (ref D).  The Zanzibar 
parliament's unanimous vote in favor of the settlement presents an 
historic opportunity for the people of Zanzibar to overcome these 
debilitating divisions.  The Union government, as well as the USG at th 
highest level and other prominent donor governments, have long 
 
DAR ES SAL 00000108  004.2 OF 004 
 
 
championed such a settlement.  Support for Zanzibar in this hour of nee 
makes a strong statement that constructive politics attracts favorable 
responses from the USG. 
 
-- If we transport the generators the public image will be of 
American generators (Caterpillar brand) flown in on American aircraft t 
assist the people of Zanzibar.  This will be the public image despite 
the fact that other donors fund the actual purchase of the machines. 
American influence will further rise in the isles at a particularly key 
moment as the power-sharing deal is implemented. 
 
LENHARDT