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Cablegate: Dr-Based Consortium Presses for Action On Haiti Electricity

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DE RUEHDG #0047/01 0352213
ZNY CCCCC ZZH
R 042213Z FEB 10
FM AMEMBASSY SANTO DOMINGO
TO RUEHC/SECSTATE WASHDC 0708
INFO WHA CENTRAL AMERICAN COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RHMFISS/CDR USSOUTHCOM MIAMI FL
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/USAID WASHDC 0018
RUEHCV/AMEMBASSY CARACAS
RUEHKG/AMEMBASSY KINGSTON
RUEHPU/AMEMBASSY PORT AU PRINCE
RUEHSP/AMEMBASSY PORT OF SPAIN
RUEHUB/USINT HAVANA 0084
RUEHWN/AMEMBASSY BRIDGETOWN

C O N F I D E N T I A L SANTO DOMINGO 000047

SIPDIS

E.O. 12958: DECL: 2020/02/04
TAGS: ENRG EAID EFIN DR HA
SUBJECT: DR-based Consortium Presses for Action on Haiti Electricity
Recovery

CLASSIFIED BY: Jonathan C. Weyer, Economic Unit Chief, DOS, Ecopol;
REASON: 1.4(B), (D)

1. (SBU) Summary: Since the 1/12 earthquake in Haiti, a consortium
of Dominican electricity companies (and D.R.-based international
electricity companies) have been working with Electricite de Haiti
(EDH) to bring the electricity sector in Haiti back on line . The
group, calling itself HEART, has conducted a series of
on-the-ground assessments and worked with EDH to put together a
proposed 90-day budget. Although HEART officials were quick to
caution that the figure may be reduced as a result of private
sector contributions, the USD 83 million price tag has been
described as a "gold-plated wish list." In a 2/2 conference call,
HEART officials pressed the donor community to secure funding as
soon as possible, since they have done all they can without said
funding. The World Bank agreed to host a meeting in Washington on
2/5 to discuss. END SUMMARY.

2. (U) Shortly after the earthquake in Haiti, officials from
Dominican and other D.R.-based international electricity companies
began working with EDH to assess the damage to the grid and to
bring the sector back on line. The group, eventually dubbing
itself HEART, is comprised of several entities, including: CDEEE
(the DR's state-owned electricity authority); the Edes (the three
companies that control electricity distribution in the DR); and AES
Dominicana, CEPM, and EGE Haina (three of the largest generators in
the DR). On the Haitian side, NRECA, a U.S-based association of
electricity cooperatives, began working with EDH to help coordinate
the assessment and establish the budget.

The Budget: USD 83 Million and Rising

3. (U) HEART presented the budget request in a 1/29 conference
call. The USD 83 million budget covers two distinct needs. The
first part details the funds deemed necessary to cover the first 90
days of emergency recovery operations in the metro Port au Prince
(PAP) area, estimated at USD 38 million. It envisions returning
PAP to the 100 mW level, below the estimated pre-quake peak demand
of 160 mW. Areas outside PAP - including the resettlement areas
that are eventually going to need to be connected to the network -
are not covered. The second part covers EDH's operations for the
same 90 day period, expected to exceed USD 45 million. This figure
addresses EDH's needs to run the entire Haitian grid, not just PAP.

4. (SBU) HEART had hoped that donations from the private sector
would reduce the USD 38 million recovery operation figure. During
the 1/29 conference call, a HEART official noted that he would be
speaking with the U.S.-based Edison Institute to see if any of its
affiliated companies would be able to donate equipment and manpower
costs (estimated to exceed USD 6.6 million). However, in the
follow-up 2/2 conference call, the official reported on his
conversation with the Edison Institute, and did not mention an
agreement to forego those costs. Instead, he said that he had
urged the affiliated companies to go to Haiti without payment
guarantees, saying that the details "could be worked out later."
Although the companies agreed to begin making initial preparations,
they stressed three main concerns would have to be addressed fully
before they would participate: 1) the security of their personnel,
preferably to be provided by the U.S. Armed Forces; 2) the payments
of their mobilization costs (including both equipment and
personnel); and 3) the finalization of logistics for room and board
for its personnel. HEART noted that, if donors could cover the
mobilization and logistic costs now (estimated at USD 3.8 million),
operations could begin, while a decision on the equipment and
manpower costs could be worked out later.

5. (U) Furthermore, HEART officials expect that the USD 38 million
figure will grow, not fall. This figure was based on EDH's initial
assessments that all generators were operational. Upon further
inspection, generators producing an estimated 60 mW of electricity
will need to be replaced or repaired, given the discovery of
fractures in their foundations. An engineering study still needs
to be done, but, given that targeted generation is 100 mW,
reconstructing generators that provide 60 percent of the projected
load could increase costs significantly. A HEART official noted
that some additional generating capacity will come online later
this year when E-Power's generators are up and running, though some
doubted whether that could happen by the end of 2010.

The FUNDS: HEART Asks for Money Yesterday

6. (SBU) In the 2/2 conference call, HEART officials pressed hard
for donors to make funds available as soon as possible. The
official leading the call noted that most of the crews that had
gone into Haiti are now demobilizing. He stressed that, even if
all the funding were made available today, it would take seven to
ten days to get teams on the ground with the necessary equipment,
meaning that any delay in funding pushes back the beginning of
recovery operations by weeks. To address the issue, the World Bank
agreed to convene a meeting between HEART and donors in Washington
on 2/5.

The Politics: The "Much More than 60,000 Dollar" Question

7. (C) COMMENT: At this stage, HEART wants the money as soon as
possible, so it can begin mobilizing teams and start the recovery
process, asserting that economic recovery in Haiti cannot truly
begin until the electricity grid is back online. Even after these
issues are resolved, recovery operations face another challenge.
Post is aware that both EGE Haina and CEPM are preparing plans to
run connections into Haiti; on the 1/29 conference call, the head
of CEPM noted that he could have a line in Haiti in 14 months.
Several HEART officials have mentioned their ability to supply
Haiti with electricity for as much as a quarter of the price EDH is
currently paying. If the a connection is approved, most here
assume that competition within HEART for the concession will be
fierce and could endanger any HEART-coordinated recovery efforts.
END COMMENT.

8. MINIMIZE CONSIDERED.
Lambert

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