Côte d’Ivoire targets traditional and renewable energy sources to boost capacity and support rural electrification

Strong economic growth in recent years has driven demand for energy by Côte d’Ivoire’s businesses and residents, leading the country to make substantial efforts to increase its generation capacity, upgrade ageing infrastructure and expand the electricity network. These developments have translated into increased investment from private companies, and the country hopes to continue this trend now that it is aiming to diversify the energy mix, which has traditionally relied on gas-fuelled and hydraulic power plants.

Size & Performance

Côte d’Ivoire boasts a relatively efficient electricity supply. In 2017 the country experienced approximately 23.8 hours of power outage, down from 27.7 hours in 2016, making it one of the most reliable networks in West Africa. “We are very proud of this figure because this is what the consumer really feels,” Serge Ahoussou, head of planning at Société des Energies de Côte d’Ivoire (CI-Energies), the state’s power management agency, told OBG. “In 2011 we were at more than 50 hours, so there has been a clear improvement.”

Electricity demand in Côte d’Ivoire is growing by around 6% per year, and as such, the government is implementing an ambitious $20bn programme between 2016 and 2030 to triple generation capacity from 2016 levels to 6000 MW and improve distribution networks. Domestic sales, which are rising every year, increased from 8420 GWh in 2016 to 8720 GWh in 2017, while the number of clients reached 1.9m, up 16% from the previous year. As demand rises at home, that of neighbouring countries has dropped, leading to a 26% fall in energy exports and a total production decline of 1% to 9950 GWh. This resulted in the sector’s turnover dropping to CFA540bn (€810m) from CFA550bn (€825m) in 2016. The downward trend continued to be observed in the first quarter of 2018, with output falling by 3% year-on-year.

Energy Policy

To meet growing domestic demand, Ivorian authorities are increasing the country’s generation capacity. This is particularly crucial, as the sector went through a decade of under-investment in the early 2000s when the country was embroiled in a political and military crisis. Between 2000 and 2010 the power capacity only increased by 181 MW.

The picture has changed since 2011, though, with the government making energy one of its top priorities in an effort to rebuild the country and spur economic growth. In 2011 the government created CI-Energies to be responsible for planning investments and managing assets on behalf of the state. An electricity code was passed in 2014 liberalising the generation, transmission and distribution of electricity, and granting the sector regulator greater independence.

From 2011 to 2017 investments in the energy sector amounted to CFA7trn (€10.5bn), with a large part coming from the private sector. This boosted the nation’s installed capacity from 1390 MW in 2010 to 2200 MW in 2018. The latest addition to installed capacity is the 275-MW hydroelectric plant in Soubré in the west. The dam, built by China’s Sinohydro for CFA331bn (€496.5m), was completed in October 2017 and has been key to the country’s ambition to boost output and decrease the share of thermal plants in the energy mix.

Energy Policy

As of 2018 Côte d’Ivoire had four thermal plants producing 1300 MW of electricity, or 60% of installed capacity, and seven hydroelectric dams with a combined capacity of 880 MW, or 40% of the mix. The government aims to diversify the energy composition by reducing the use of gas-fuelled plants and increasing the production of renewables. CI-Energies expects generation capacity to increase to at least 5340 MW by 2030, with gas-fuelled plants representing 40% of the total (2140 MW), hydropower 38% (2020 MW), solar 7% (360 MW) and biomass at 2% (139 MW). Coal would account for 13% of the mix, as the government intends to build two coal-powered plants in San Pedro that would together produce some 700 MW. “When it comes to electricity production, the stakes are so high that we need to make sure we have the most secure system possible,” Ahoussou told OBG. “We do not want to be dependent on any one source of production because if there is a default, it would put the whole system at risk.”

Gas-fuelled Energy

Expansions of existing thermal plants have accounted for most of the capacity added in recent years. Three independent power producers (IPPs) are operating in the thermal energy segment: Compagnie Ivoirienne de Production d’É lectricité (CIPREL) is the largest, with a capacity of 556 MW, followed by Azito Energie (440 MW) and Aggreko (210 MW). In an effort to compensate for insufficient gas supply, the IPPs have been transitioning to combined-cycled operations in recent years, while simultaneously undertaking extension projects.

CIPREL, majority owned by French utility group Eranove, began operations in 1995 in the Vridi Industrial Zone in Abidjan. Its plant initially operated with a capacity of 105 MW, and in 2016 a combined-cycle extension was inaugurated. CIPREL plans to expand further with another combined-cycle plant with a capacity of 390 MW. The CFA300bn (€450m) facility would be located in Jacqueville and would raise the country’s generation capacity by almost one-fifth.

Azito Energies, majority owned by UK’s Globeleq, entered the market in 1999 in Abidjan’s Yopougon neighbourhood. In 2015 the facility was converted to a combined-cycle plant, bringing its capacity to 440 MW. An extension of 250-300 MW is ongoing to elevate capacity to about 700 MW, and is set to be completed in 2019. The third IPP, Aggreko, began operations in 2010 and enlarged its plant twice – in 2012 and 2013 – bringing its capacity to 210 MW.

Even with facility expansions, concerns are weighing on the thermal segment: Côte d’Ivoire’s production of natural gas – exclusively used to feed the thermal facilities – is expected to fall dramatically after the year 2024, as gas reserves are depleted. To overcome gaps in supply, the country is boosting oil and gas exploration efforts. It is also building a liquefied natural gas terminal with a 100m cu feet floating storage and re-gasification unit at the Port of Abidjan. The project was awarded in 2016 to a consortium of companies, which was headed by France’s Total.

Hydropower

Hydropower is Côte d’Ivoire’s second-largest source of power, and the government is planning to double the capacity of this segment by 2030. To do so, the state has identified 29 hydroelectric dams to be developed by 2030 (see analysis). Aside from the Soubré dam, the largest in the country, other hydropower facilities include the Taabo hydroelectric plant in central Côte d’Ivoire, with a capacity of 210 MW, and the smaller 174-MW dam of Kossou, 30 km to the north of the capital Yamoussoukro. In the west of the country, the 165-MW Buyo dam was built in 1980, while smaller dams are operational at Ayamé 1 (20 MW), Ayamé 2 (30 MW) and Fayé (5 MW).

Côte d’Ivoire is planning to build other hydroelectric plants on the Sassandra River. China’s Sinohydro began construction of the 112-MW Gribo-Popoli dam in November 2017, and feasibility studies are under way for the Boutoubré and Louga dams. In October 2018 France’s Eiffage was awarded a contract to build the 44-MW Singrobo-Ahouaty dam on the Bandama River. The €110m project will take three years to complete after construction begins in the first half of 2019.

Solar & Biomass

While Côte d’Ivoire is a new participant in the solar power industry, a number of projects are now under way, with the first to come on-line in 2019. The nation’s solar potential is 2-6 KWh per sq metre per day, and the annual potential for photovoltaic installations is 10,300 TWh, according to the Africa-EU Renewable Energy Cooperation Programme. The country’s northern regions have the highest potential for solar power.

In May 2018 the government signed an agreement for the construction of a 25-MW solar plant near the town of Korhogo. The plant, developed by Morocco-based Nova Power for CFA23bn (€34.5m), should be operational in the second quarter of 2019. Additionally, Canadian Solar is planning a 50-MW plant in the Poro region, while another 37.5-MW plant is set to be built in Boundiali. The latter plant in the north – the first big solar park to secure financing in the country – will be funded by Germany’s development bank, KfW Entwicklungsbank, which will provide €36.7m, of which €27m will come from Germany’s Ministry for Economic Cooperation and Development and €9.7 from the EU. Other solar projects are in the works in Ferkéssedougou and in the central town of Daoukro.

Côte d’Ivoire’s plentiful cocoa, palm oil, cotton, coffee and sugar plantations highlight the potential to create energy from biomass. A 46-MW biomass facility using palm oil waste is under construction in Aboisso in the south-east, while an Ivorian company is developing a plant fuelled by cocoa pod waste with capacity of 60-70 MW in the western region of Divo. Two other projects using cocoa and cotton, respectively, are also in the pipeline in Gagnoa (20 MW) and Boundiali (25 MW). “Biomass power plants contribute to the inclusive and decentralised economic development of Côte d’Ivoire, boosting value addition, creating jobs and bringing electricity to cities outside Abidjan,” Mahamane Sow, director-general for EDF Côte d’Ivoire, told OBG.

Distribution

The nation’s distribution network and transmission grids have been affected by years of underinvestment, and infrastructure is struggling to cope with growing needs. “The distribution network is too old and many power lines need to be replaced. It causes significant revenue losses, making it unsustainable in the long term,” Cheikhou Badio, an energy consultant for the Société Africaine d’Ingénierie Financiere, told OBG. In 2017 the average distribution and transmission loss was estimated at 22% of production, compared to 9% in South Africa, according to the Africa-EU Renewables Cooperation Programme.

In July 2018 the government launched an initiative to rehabilitate the electricity grid. The scheme will cost approximately CFA460bn (€690m) – 95% of which is financed by the Export-Import Bank of China. It aims to improve infrastructure, access to electricity and cross-border supply. Under the programme, 11 high-voltage substations will be built, 15 others will be rehabilitated and extended, and 1685 km of high-voltage lines will be constructed.

This builds on previous efforts to improve electricity access. In 2013 the authorities launched the National Rural Electrification Programme to expand electrification to include all villages with at least 500 inhabitants by the end of 2016 and to all municipalities by 2020. “Electrification is an important enabler of socio-economic development of rural areas and their populations,” Hassan Ghandour, director-general of the Société Générale d’Electricité de Luxe, told OBG. With an estimated budget of CFA600bn (€900m), the programme aims to extend electricity coverage to 95% of villages by 2020, compared to 31% in 2009, and provide full electrification by 2025. The emphasis on rural electrification has presented an opportunity for private companies to come together to contribute knowledge and manpower to the government’s goals. “Private companies in the energy sector need to push for an integrated approach to rural areas,” Ben Hassan Ouattara, managing director for Côte d’Ivoire of UK-based Vivo Energy, told OBG. “The off-the-grid market is yet to be explored, and innovation will be key to improving access for isolated populations.”

As of 2017, 4614 out of a total of 8500 localities were electrified, according to CI-Energies. “There has been a lot of improvement since 2010. The government has made an effort to extend the network and provide electricity to villages that were previously in the dark,” Stéphane Dadie, West Africa account and utilities segment manager at France-headquartered Schneider Electric, told OBG. “But there is still a lot to be done, especially given the gap between the situation in Abidjan and the interior parts of the country.”

Tariffs

Legislation was passed in 1985 to open the power sector and allow private companies to operate in electricity generation. Transmission and distribution, however, remained under a state monopoly and have been managed by the Compagnie Ivoirienne d’ Electricité (CIE) since 1990. In 2014 the Electricity Code was implemented to phase out the monopoly of CIE, which is majority owned by Eranove, regarding transmission, distribution and marketing activity.

Despite efforts to liberalise the energy sector and create competition, tariffs have risen. In 2017 the average selling price was CFA69.50 (€0.10) per KWh, up from CFA60.60 (€0.09) in 2013. “The price of electricity in Côte d’Ivoire is one of the highest in West Africa,” Bekou Gontran, director-general of local electrical installation company InstAfric-Elec, told OBG. “However, with CIE’s exclusivity agreement for the distribution of electricity ending in 2020, the general expectation is for the price of electricity to decrease.” At the same time, there are some leaders in the industry who say that it is unlikely CIE’s exclusivity will end and expect the contract to be extended.

The decision to end CIE’s control of the market was announced with further reforms in 2016, when the sector recorded a net profit of CFA3bn (€4.5m), according to the World Bank.

Imports & Exports

In 2017 Côte d’Ivoire’s electricity exports dropped by 25%, from 1636 GWh to 1247 GWh, after several countries moved to reduce their purchases. During the same period, imports rose from 12.2 GWh to 21.4 GWh. Nevertheless, Côte d’Ivoire remains a net electricity exporter and has the largest electrical system in the UEMOA.

As a participant in the West African Power Pool, an ECOWAS body established to promote integration of the region’s power systems and develop a fully fledged regional electricity market, Côte d’Ivoire has been supplying electricity to Ghana, Mali, Burkina Faso, Togo and Benin. The Côte d’Ivoire-Liberia-Sierra Leone-Guinea Interconnection Project – a 1300-km, high-voltage transmission line – is currently being built and is set to boost the nation’s exports once complete. “One of our priorities is to be an electricity hub in West Africa, and thereby supply power to all of our neighbours. We are already doing this, but we want to go further,” Ahoussou told OBG. “There is a regional electricity market being created, and this means that we will also be able to increase our imports. We will certainly remain a net exporter, but we need to import electricity during peak periods because it is cheaper than what we are able to produce at home ourselves.”

Oil & Gas Value Chains

Côte d’Ivoire also has a domestic hydrocarbons industry. As of December 2017 the country’s sedimentary basin was divided into 48 blocks: seven onshore; 35 offshore, categorised as shallow to deep; and six offshore deemed as ultra-deep. There were four oil and gas fields in operation and more than 20 others are under exploration.

The Ivorian Refining Company (Société Ivoirienne de Raffinage, SIR) both refines domestic crude oil and imports crude from other countries, mostly Nigeria. SIR also has the exclusive right to import refined petroleum products for the domestic and international market. Exports to other nations are handled by SIR and commercialised by the Petroleum Product Management Company of Côte d’Ivoire (Société de Gestion des Stocks Pétroliers de Côte d‘Ivoire, Gestoci). Côte d’Ivoire has four storage facilities for liquid petroleum products. Gestoci, operating under the state-owned oil producer Société Nationale d’Opérations Pétrolière de la Côte d’Ivoire (Petroci), handles two units, located in the Vridi oil terminal at the Port of Abidjan and in Yamoussoukro. Total, Vivo Energy, Libya Oil, Corlay and Petro Ivoire operate with Shell-Vridi and AOT.

The transport of petroleum products is mostly done via tankers. There is a 378-km pipeline between Abidjan and Bouaké, although only the Abidjan-Yamoussoukro section has been in operation since 2013.

Production

Côte d’Ivoire has estimated oil reserves of 100m barrels and gas reserves of 1trn cu feet. Canadian Natural Resources operates the country’s two largest oilfields, Baobab and Espoir. Situated 25 km off the coast in block CI-40, Baobab has been in operation since 2005 and produced 8m barrels of oil in 2017. Espoir, located 60 km from Abidjan in block CI-26, came on-line in 2002 and had output of 4m barrels in 2017. Petroci has a majority stake in the Lion and Panthère fields in block CI-11, which mostly produce natural gas. The fields produced 7.3bn cu feet in 2017. The Foxtrot field in block CI-27, operated by Foxtrot International, produces most of the country’s gas, with output of 52.2bn cu feet in 2017. In 2016 the authorities announced they would increase crude oil production to 200,000 barrels per day (bpd) by 2020. However, output fell by 19% in 2017, from an average of 42,300 bpd in 2016 to 34,000 bpd in 2017. The drop was reportedly caused by the natural depletion of existing fields, as well as production interruptions at the Espoir and Baobab fields during maintenance and labour strikes. Production continued to drop in the first quarter of 2018, with output averaging 31,900 bpd.

Rising oil prices offset the decline in production in 2017, with Côte d’Ivoire’s revenues from sales of crude oil rising by 2.2% that year. Between January and March 2018 revenues also expanded by 4.2%. However, the slump in prices observed since October 2018 will likely affect overall revenue for 2018. For the Ivorian consumer, rising international prices translated into higher costs at the pumps, with rates increasing three times in under six months in 2018.

Natural gas production, meanwhile, more than doubled between 2016 and 2017, from 100m standard cu feet per day (scfd) to 216m scfd, according to Thierry Tanoh, the former minister of petroleum, energy and renewable energies. This stemmed from government initiatives to expand exploration and production to meet the growing needs of the economy.

Exploration

With exploration stagnating in recent years, the government has worked to revive interest from the private sector. In 2017 Tanoh said that Côte d’Ivoire will boost its oil and gas output to diversify the economy, which is largely dominated by agriculture. Gas is also essential to feed the country’s thermal energy plants. The 2012 Petroleum Code strengthened the exploration and production scheme, emphasised transparency in the extractive industries and strengthened environmental protections. This has made the sector more investor-friendly and accountable.

More recently, Côte d’Ivoire revised its block map, redrawing some blocks to make them bigger and more attractive to investors. The number of blocks thus decreased from 61 in January 2017 to 48 at the end of the year. Côte d’Ivoire also carried out an extensive roadshow from Paris to Cape Town in 2017, and as a result, signed 13 production-sharing contracts that year, up from two in 2016. Two deals were struck with Italian company Eni, six with London-based Tullow Oil, and five with BP and Kosmos.

Foreign Direct Investment

Of the 13 deals made in 2017, 10 were signed after a ruling in September that year from the International Tribunal for the Law of the Sea on a decade-old maritime dispute between Côte d’Ivoire and Ghana, which gave companies more confidence to invest in exploration near the border between the two countries. “Côte d’Ivoire is very attractive, especially near the border with Ghana. Ghana’s potential is known, so many investors think there is no reason that the Ivorian side is not rich, too,” Badio told OBG. “Resolving the dispute with Ghana has put an end to a lot of uncertainties.”

Additional blocks were awarded during 2018, with Tullow Oil signing another two and Dubai-based Dragon Oil obtaining use of the CI-24 block. International media reported in November 2018 that the government was in discussions regarding deals of four other blocks with Eni and Total. Also in late 2018, Geneva-based Vitol was in negotiations with the authorities to launch operations at the Gazelle field of the offshore CI-202 block.

Refining

In 2017 SIR produced 3m tonnes of petroleum products, including diesel, kerosene, butane gas and fuel oil, up 5.5% on 2016. While the company can refine 3.8m tonnes per year, the processing capacity of crude oil was reduced in 2017 after a fire damaged a hydrocracker early that year, decreasing the amount of imported crude oil and forcing SIR to purchase semi-processed products. A new hydrocracker is expected to be operational in 2019. Driven by rising demand, imports of liquefied petroleum gas increased from 247,700 tonnes in 2016 to 297,500 tonnes in 2017.

For a number of years, SIR has been facing headwinds from the drop in oil prices, high operational costs and increased competition from refineries in Asia, resulting in an increase in debt. In 2018 the government announced it would seek funds from syndicated loans with commercial and development banks to restructure part of the refinery’s debt of CFA388bn (€582m). In August of that year the government announced it would provide a state guarantee to the loans and adopted a new tax aimed at supporting the refinery’s development. The funds will come as the financial situation of SIR improved significantly on its own due to strong sales, according to the IMF. Exports of petroleum products rose from 1.2m tonnes in 2016 to 1.24m tonnes in 2017, and SIR turned a profit in 2017 after posting a loss in 2016.

Consumption

The number of petrol stations has increased throughout the country in recent years to reach 864 in 2017. Shell’s Vivo and Total dominate the market with 204 and 154 stations, respectively. Abidjan accounts for 35% of the total number of stations, but the network is growing in the interior of the country. “The middle class is growing in Abidjan and public transportation is not completely efficient, so more and more people are buying cars,” Hilaire Sié, general secretary of the Association des Petroliers de Côte d’Ivoire, told OBG. “In the interior, some towns still do not have any service stations, especially in the north. With the return to political stability, companies are deploying their networks again.” Consumption of liquid petroleum products rose by 24% between 2015 and 2017, from 1.6m tonnes to 2m tonnes.

For gas, the government subsidises small bottles to encourage residents to cook with gas instead of coal. Cooking with gas can help reduce deforestation and pollution, and is safer for consumption. Coupled with a rising urban population, the policy resulted in a boom in butane gas consumption over the past five years, leading the authorities to increase imports. Purchases from abroad more than doubled between 2012 and 2017, rising from 154,900 tonnes to 319,500 tonnes. Bottles of 6 kg and 12 kg, mostly used by households, account for 85% of demand.

Water

Access to potable water, meanwhile, has increased in recent years. In 2017 some 3.7m people had access to drinking water, up from 3m in 2012. Advances, however, are slowing, as Côte d’Ivoire struggles with drought. Regular water supply trickled to a halt in cities such as Bouaké in mid-2018, with officials pointing to a climate change-related drought as the cause. “The main threat to rendering drinkable water accessible to all is climate change,” Ibrahima Berthé, director-general of the National Office of Drinking Water, told OBG. “By its very nature, we cannot control it and we live under threats such as droughts or natural disasters that could damage infrastructure. However, the government is making major efforts to improve the country’s resilience to such hazards.”

Outlook

With the IMF forecasting annual economic growth of 7% in the years to 2024, demand for electricity will continue to increase, presenting significant opportunities for investment in power generation and infrastructure upgrades. The government’s push into renewables could reshape the energy mix, reduce reliance on gas-fired energy and reinforce the country’s regional leadership. However, ensuring the right contractual procedures to attract new IPPs in these segments will be essential to make the transition possible. Moreover, despite falling crude output since 2017 and the expected depletion of gas reserves, renewed interest for oil and gas exploration could help reposition the country on the map of hydrocarbon producers.

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The Report: Cote d’Ivoire 2019

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