VZCZCXRO3093
RR RUEHMA RUEHPA
DE RUEHMV #0136/01 0321454
ZNR UUUUU ZZH
R 011452Z FEB 10
FM AMEMBASSY MONROVIA
TO RUEHC/SECSTATE WASHDC 0023
INFO ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 MONROVIA 000136 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ASEC ECON ENRG LI
SUBJECT: OIL SHORTAGE HITS LIBERIA 
 
REF: 09 MONROVIA 662 
 
¶1. (SBU) SUMMARY:  Oil importers were forced to impose rations 
January 15 and gas stations temporarily shut down January 24, after 
an oil refinery in Cote d'Ivoire that supplies the majority of 
Liberia's oil unexpectedly malfunctioned and ceased exports.  The 
state-owned Liberia Petroleum Refining Company (LPRC) maintains 
strategic reserves, but its storage infrastructure is so limited 
that emergency stockpiles of oil, diesel and kerosene were depleted 
within a week.  Imports from alternative refineries in Europe and 
South Africa have resumed, but supply lines will remain precarious 
until the Ivorian refinery restarts operations April 30.  That a 
single technical glitch could disrupt fuel delivery in a country 
that depends upon oil imports for all electrification and business 
operations underscores the limitations on Liberia's infrastructure, 
the absence of emergency preparedness procedures, and the weakness 
of an undiversified reliance upon foreign oil.  The development of 
domestic renewable energy sources is the only assurance of 
Liberia's long-term energy security.  END SUMMARY. 
 
 
 
¶2. (SBU) T. Nelson Williams, Acting Managing Director of the LPRC, 
explained that on January 1, the Refining Corporation of Cote 
d'Ivoire, where Liberia's nine oil importers purchase 90 percent of 
their fuel, informed the LPRC that it had suffered unexpected 
systems failure and could not deliver a promised shipment.  The 
LPRC, a state-owned enterprise that manages the oil jetty and tank 
farm where importers store gas, diesel fuel and kerosene, sold fuel 
to importers from its modest strategic reserves while importers 
commissioned new supplies from refineries in Spain and South 
Africa.  As stocks depleted, importers began rationing sales to 
consumers.  On January 15, Total Liberia, the owner of the majority 
of gas stations in Monrovia, limited sales to USD 10 per customer. 
On January 24, Total closed its seven stations until late 
afternoon, when it could finally replenish stocks.  In fact, the 
LPRC received its first alternate shipment from Spain January 20, 
but a pipe at Liberia's 1950's-era oil jetty suffered a chronic 
rupture, which delayed offloading until January 24.  Fortunately, 
Liberia averted a shortage of diesel fuel (and ensured that 
electricity remained running) because several shipments from Europe 
arrived in early January.  Diesel importers have since secured 
additional long-term contracts with European suppliers through 
April 30. 
 
 
 
¶3. (SBU) Walter Brudermann, marketing manager at Total, observed 
that Liberia suffers from an undiversified supply chain, a 
dilapidated oil jetty, and insufficient strategic reserves, all of 
which imperil continuous fuel delivery.  In a country that relies 
upon diesel fuel imports for all electricity, Brudermann warned 
that a longer delay in imports could cripple businesses and plunge 
Monrovia into the dark. 
 
 
 
¶4. (SBU) Williams acknowledged the shortcomings in the LPRC 
infrastructure and emphasized the urgent need to invest in 
facilities to ensure oil imports.  He said the LPRC will begin 
negotiations this month with UK-based Motherwell Bridge to renovate 
both the tank farm and the oil jetty, at a cost of USD 22.4 million 
and USD 10 million, respectively.  After HIPC Completion Point, he 
anticipates the LPRC will be able to finance the projects from 
future revenues, with only minimal recourse to borrowing.  With the 
new tank farm, the LPRC's strategic reserves will increase from 30 
days to six months.  Further, in anticipation of a donor-funded 10 
Megawatt generator run on heavy fuel oil that is expected to come 
online this year, the LPRC will add a fourth pipe for heavy fuel 
oil. 
 
 
 
¶5. (SBU) COMMENT: It appears that the shortages are for technical 
reasons, and not financial.  While the state-owned LPRC controls 
the import of petroleum products, the products are purchased by 
private entities at market prices.  However, that a series of minor 
misfortunes -- a disrupted supply line, a leaky pipe -- could 
disrupt all fuel delivery underscores the fragility of Liberia's 
energy security and the shortcomings of reliance upon imported 
fuel.  Diesel-powered generators remain the only source of 
electrification in Liberia.  Even in the medium-term, donor and 
private investor plans to provide heavy fuel oil facilities to 
power Monrovia's nascent electricity grid could be constrained by 
the absence of an HFO pipeline at the LPRC.  Further, the LPRC may 
prove unable to implement its optimistic renovation plans, given 
the state-owned enterprise's track record of mismanagement and 
 
MONROVIA 00000136  002 OF 002 
 
 
fiscal profligacy.  LPRC's efforts to bring in a sole-source 
bidder, Zakhem International Construction, to refurbish the jetty 
have been mired in legal wrangling and accusations of corruption, 
leading to the departure of LPRC head Harry Greaves (reftel). 
While the LPRC and oil importers seem to have cobbled together a 
short-term solution, the recent energy shortage reinforces the 
importance of a comprehensive energy policy that incorporates 
domestic, renewable fuel sources and relies less upon imported oil. 
ROBINSON