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SPECIAL REPORT: High electricity bills, monopoly keep Somalia’s poor in the dark

While there’s no apparent alternatives for the dominant electricity cartels, with some operating without licenses, many in the Somali capital have complained that the high electricity costs are creating opportunities for utilities to shade regulations in their favor.

By Judy Maina, judy.maina@alleastafrica.com

NAIROBI – The collapse of Somalia’s central government in 1991 has led to the destruction of the country’s energy sector thus leaving the war-weary residents of the capital Mogadishu at the mercy of privately-owned companies providing electricity services which is five times more expensive than in Kenya, and 10 times more expensive than in the U.S.

With no energy regulation policies and strong institutions that can break up the powerful energy monopolies that control the market, consumers are unlikely to get relief from the heavy cost burden they have to bear that left many in dark.

But, as Somalia’s economy continues to reel from the effects of over two decades of conflict, analysts have identified the supply of an affordable power to the growing population as the biggest challenge the current government will face.

While there’s no apparent alternative for the dominant electricity cartels, with some operating without licenses, many in the Somali capital have complained that the pricy electricity costs are creating opportunities for utilities to shade regulations in their favor.

Lack of alternative and well-regulated power supply are exceptionally frustrating for many for the 4 million Mogadishu residents too.

“It’s basically a deep-rooted monopolies and crony capitalism at its most flagrant.” said Mohamed Saeed, an energy expert in Mogadishu.

MARKET PREPOTENTS

Somalia which is currently undergoing a remarkable transformation but the post-war economy remains fragile. Access to clean modern energy in the capital where hundreds of thousands of people have no electricity remains a major challenge in efforts to tackle poverty.

Despite having several electricity suppliers, one company has emerged the dominant force in Mogadishu in recent years, thanks to a multimillion dollars investment that enabled for it to push most of its competitors out of the market thus merging others into its network.

But, despite proving a more sufficient power supply than others, the entry of the market by BECO which boasts a 14 MW power generation capacity hasn’t helped the city’s residents that accused it of overcharging consumers and inflating bills either.

Protests by the company’s disgruntled clients appear to be coming into the open in recent weeks, with many took to the social media in a desperate attempt to draw attention to inconsistent bills and fluctuating power costs by the company.

“BECO; with this poor service and domination by you– you are only showing us that money talks,” Tweeted one of the company’s service consumers.

“You’re hurting a lot more than you may help. This is literally an exploitation.”

With no customer care hotline to contact the company for complaints, others have likened the problem of the skyrocketing electricity prices to the challenges posed by the security and political crisis that donors believe are delaying the country’s rebuilding process.

“If you have power problems – all you can do is to complain to yourself helplessly,” says Mohamed Yasin, a Mogadishu resident.

“May Allah help us.”

Meanwhile, the energy provider was on the receiving end of angry customers who lodged complaints against irregular bills and inflated prices in recent weeks, as some started posting copies of their electricity bills on the social media.

According to economists, the time is ripe for the Somali government to push to reduce some of the highest electricity costs in the world by enforcing energy laws and regulations to end the energy scarcity which could stunt the economic growth

However, finding an immediate response to address the problem appears to be unlikely to yield any tangible result due to the rampant corruption in the country where officials are dominated by the industries they’d have to regulate.

“When the regulators who would provide licenses and regulate the energy sector are so vulnerable to bribery by electricity distributors and retailers trying to push away any possible competition to their businesses could improve the quality of services, you’re up the creek.” says Najib Ali, a university professor in Mogadishu.

Ali says that, BECO which wields financial muscle does simply dictate the market prices, including targeted rate decrease against potential rivals in an attempt to push smaller new fragile retail providers out of the market and went bankrupt.

POVERTY FUELING

Now, the electricity companies that exist are all privately owned. Most of them don’t have licenses and operate without paying taxes.

The individual companies also blatantly deny the customers’ accusations that they are being overcharged. But, the control of the cost is out of the hands of the poor, while the benefits are mostly in the hands of business cartels.

HIGH ELECTRICTY BILLS vs UNEMPLOYMENT

Electricity is a luxury because most of the country’s working population is jobless. According to the U.N., more than half of the country’s population (those between the ages of 15 and 64), is unemployed; the unemployment rate for youth is 67 percent.

In addition, 40 percent of Somalia’s population also lives below the poverty line. Many simply cannot afford electricity, and it is hard for businesses to make money and develop without affordable electricity prices.

POSSIBLE SOLUTIONS

The government of Somalia has developed a ten-year energy plan to improve the electricity sector, which will cost a total of US$ 803 million. It will involve the construction of new power plants and transmission lines that will boost electricity access in towns and homes, costing an average of US$ 0.50 per unit, according to a report by the news site, Geeska Afrika.

Some of the money will go towards funding training programs and will also provide alternative cooking solutions from charcoal use. The ultimate goal is to increase Somalia’s power capacity, and diversity the energy alternatives including solar and wind energy. This has the potential to lead to significant economic growth.

The government must also prioritize and improve the basic economic structure and poor social services, which could tackle the high unemployment rates among the younger generation.

POWER SURGE LOSSES

At least ten fire incidents have been reported cross the Somali capital in recent weeks, razing large buildings, shops and food stores.

The cause of the fire incidents remain unclear but the city’s residents blamed an electrical fault and power surge. Officials reported a huge loss of properties due to the fire, which sent plumes of smoke into the air.

BECO remains to be the main and dominant electricity supplier for the city which is recovering from decades of civil unrest.

NO OPTION

Somalia, with a population of 15,468,880 million strong, is largely served by the sole distributor while an advanced economy such as Finland has about 80 electricity distributors who serve a population of only 5.5 million people.

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