Somaliland: Rise in Electrical Rate & Government Response

It is shocking to hear the statement made by the head of Government Agency for Power and Energy – Ahmed Adarteh – regarding the dispute with private power companies operating in Somaliland

First and foremost, the measure of shutting down the power supply in the late night hours (from 11 PM to 4 AM) as proposed by the power generating companies is the only possible option at their disposal given the global high oil prices.

The government should have engaged in further discussions on the current crisis of electricity rate hike with the power providers rather threatening them and rejecting their proposal outright.

In reality, Somaliland people are facing tough economic problems that warrant practical and rational compromises but not polarizing remarks. The unexpected sudden increase in fuel prices calls realistic solutions from all stakeholders in this crisis – the Government authorities , private power suppling companies and the consumers.

Possible Short Term Solutions

• lowering taxes imposed on fuel import and/or
  , if possible, introducing temporary government subsidy for the fuel used by power companies to generate energy.
• Launch Nationwide Power Conservation Campaign that promotes public awareness towards encouraging to reduce power usage – shutting down some bulbs and devices while not in use.
• In checking power consumption, the price per unit for high users should be increased while lowering the price for household residential, where three tier prices might be introduced:

1. Tier one – from 6pm to 20pm having the cheapest rate
2. Tier two – day time rate having second cheaper rate
3. Tier three – late night rate from 11pm to 4am having the pricy rate

• Public and private hospitals should be encouraged to use private generators during this power crises.

Long Term Solution:

On the long term, Somaliland government can embark on adopting one of the following scenarios to strictly monitor and control the pricing and services of power companies:

A. Power companies should be required to produce an audited Financial Statements on semi annual basis. Independent external auditors should be employed in doing this. It can also be utilized by the biggest international auditors firms that operate in Djibouti and Ethiopia. The availability of audited financial statements will help the government in the assessment of the actual costs of generating the power and profits of the power companies making out of that, which will in turn facilitate the setting of fair power rates that would be passed on to the consumers.

B. Another possible option available to the government is to takeover the task of Power Genration and outsource the service of supplying and distributing to the private companies.

Finally the Somaliland government should seek foreign aid from friendly the nations in Arabian Gulf in the form of discounted pricing for oil imports.

 

Author

Hassan Abdi Yussuf

Riyadh, Saudi Arabia