Mali´s Energy Sector

Mali has no significant fossil fuel reserves and is completely dependent on the import of petroleum products. In 2001, petroleum consumption accounted for around 4 thousand barrels per day (EIA 2002: International Energy Annual)⁶⁴. Compared to the use of primary energy sources, fossil fuel consumption plays only a minor role in the country’s overall energy mix.

Traditional biomass energy sources like fuelwood, charcoal and dung currently account for a

64 Note that the level of fossil fuel consumption in Mali is extremely low compared to western consumption levels. Portugal, Greece and Belgium, for instance, have roughly the same population size as Mali but consume more than 100 times as much fossil fuels. In 2002, petroleum consumption in Portugal accounted for 342, in Greece for 408 and in Belgium for 603 thousand barrels per day.

Chapter 4: Mitigating Energy Import Dependency: Prospects of Renewables staggering 90 percent of household energy consumption. Firewood consumption alone was estimated at six million tones in 2003. Together with the demand for construction timber, this translates into an estimated annual deforestation of around 400 thousand hectares (UNEP 2003b). Due to population growth and high rates of urbanization, the exploitation of biomass energy sources is still on the rise and puts further pressure on the country’s fragile environment. Fuelwood consumption in Mali’s capital Bamako alone is said to have doubled between 1994 and 2000 and now accounts for more than 1.2 million tons per annum (Government of Mali 2003: 9). In August 2004, the Government of Mali imposed a six-month ban on the logging of live trees and the export of charcoal in order to slow down the rapid pace of deforestation and the continued encroachment of the Sahara desert. Since the ban came into effect, fewer supplies have been reaching Mali’s urban centres and the cost of firewood and charcoal in Bamako is said to have increased by 50 percent (IRIN Press Release:

11 August 2004).

Access to grid-connected electricity services is almost entirely confined to urban centres.

Only one percent of the rural population enjoys access to electricity. Rural households in off-grid areas have to resort to kerosene, dry cell and car batteries to meet their lighting and small power needs. Commercial energy use in rural areas entails considerable costs for poor households. Average household expenditures on kerosene range between $4 and $7 per month.

The costs of car batteries, which are only affordable to upper-income rural households, even account for $10 to $15 per month. In comparison, Mali’s annual per capita income averaged

$240 dollar in 2002. The lack of electricity provision has also detrimental consequences for the quality of health and education services. More than half of rural health centres are said to operate without energy access. The same holds true for the great majority of rural schools and literacy centres (GEF 2003:5).

Hydro power generates most of the country’s electricity and is the only renewable energy source (apart from traditional biomass) that is currently exploited on a significant scale.

Mali’s hydroelectric potential is based on the Senegal and Niger river systems and has an estimated total capacity of 1,000 MW of which about one quarter has so far been developed.

Major hydro power stations are located at the Manantali Dam on the Bafing River (the main tributary to the Senegal River) and at the Selingue and Sotuba dams on the Niger River (GEF 2003: 4). The Manantali dam is by far the most important facility with a capacity of 200 MW and constitutes the backbone of Mali’s electricity sector. The $600 million project was

Chapter 4: Mitigating Energy Import Dependency: Prospects of Renewables constructed by the ”Organisation pour la Mise en Valeur du Fleuve Sénégal” (OMVS), a collaboration of Mali, Senegal and Mauritania. Manantali´s power facilities are operating since December 2001 and are connected through a 1,300 km transmission grid to the capitals of Mali (Bamako), Mauritania (Nouakchott) and Senegal (Dakar). Of the total electricity produced at Manantali, 53 percent goes to Mali, 32 percent to Senegal and 15 percent to Mauritania. Since 2002, marketing and power generation is handled by the South African energy company Eskom while the OMVS maintains the ownership of Manatali´s infrastructure and equipment (EIA 2003c: 12). During the last decade, electricity generation from hydropower has fallen from 79 percent in 1989 to 54 percent in 1999. The energy produced at Manatali is likely to reverse the trend towards increased thermal electricity generation in Mali’s energy mix. The latest reported data on electricity production by source from 2001 puts hydro at 58.3 percent and fossil fuel at 41.7 percent (CIA World Factbook 2004).

Until 2001, business development in Mali has been severely hampered by unreliable power supply. The state-owned power company “Energie du Mali” (EDM) was poorly managed and failed to charge cost-covering electricity tariffs. EDM also lacked the financial means to ensure the quality and reliability of energy services and to further expand access to electricity.

Meanwhile, the Government of Mali has taken important steps to increase energy sector efficiency and to extend service coverage. The government’s priority areas for energy sector reform were laid out in a policy statement in November 1999 and comprised the following objectives: (1) increasing the access of energy services to the majority of Mali’s population at an affordable cost; (2) protection of the remaining forest cover through sustainable management of wood energy resources; (3) valorisation of all national energy sources (hydro, solar, wind, and biomass); (4) energy sector liberalization by encouraging participation of private operators and decentralized community initiatives; and (5) strengthening of energy sector institutions in charge of regulating and monitoring sector activities (World Bank 2003:

16). To achieve these objectives, the government adopted a new electricity law and privatised EDM at the end of 2000. The French consortium SAUR International bought a 60 percent stake of EDM. The remainder is hold by the government, company employees and the public.

Before privatisation, most of EDM´s facilities were out-dated or out of function and lowered the company’s production to 50 MW against an installed capacity of around 1,000 MW. With the financial support of the IMF and the World Bank, EDM now aims to modernize its facilities and to increase its subscriber network by 140 percent until the end of 2005

Chapter 4: Mitigating Energy Import Dependency: Prospects of Renewables (Economist Intelligence Unit 2003: 21). Another significant reform step to increase competition and transparency in Mali’s energy sector was the creation of the independent regulatory agency “Commission de Regulation d'Eau et d'Electricite” (CREE). Although conditions for competition on the energy market have improved, EDM has still a de facto monopoly on electricity distribution and generation. In 2002, 118,806 out of 120,228 subscribers were customers of EDM. Only 1,422 subscribers were supplied by decentralized service companies (WTO 2004: 60)