THE ELUSIVE ELECTRON: ELECTRICITY THEFT AND GOVERNMENT FAILURE IN HAITI

Haiti has the lowest coverage of electricity in the Western Hemisphere, with only 37.9% of the population having regular access.[i] The energy sector in Haiti is broken by any modern standard, with frequent interruptions in service making it impossible to rely on the public utility to provide enough power to even maintain a freezer to preserve food. Something relatively unique to Haiti, however, is the rampant theft of electricity, with half of all residents being connected to the grid illegally; a problem that a public utility rarely has to contend with.[ii]

It is concluded that these problems stem from a failure of the government of Haiti: a complete lack of the institutional capacity needed to provide a public utility to the country. This problem results in much of the population, including hospitals and other major institutions, relying on generators which are highly inefficient, negatively affect the environment, and make the country as a whole more susceptible to volatile oil prices. Moreover, a decrepit electricity generation and distribution network creates the conditions that allow for 54% of the electricity that is distributed to be stolen or lost, while the world average is only 8%.[iii]

ANALYSIS

INSTITUTIONAL WEAKNESS

            Not only contained within the energy sector, the Haitian government can be characterized by an astonishing lack of institutional capacity. This is largely because Haitian politics have historically been so unstable, with coups being a regular occurrence and widespread corruption being an accepted part of every day life. Dictators have regularly stolen millions of dollars from the Haitian treasury, straining the Haitian fiscal situation even more than it already is. Thus, one can see that government failure in the energy sector is not unique in the context of the broader governmental apparatus. Insofar as this is true, the shortcomings of Haiti’s past have largely shaped the present, and Haiti is still playing catch-up to the rest of the world. Institutional weakness as it pertains to the energy sector is as follows:

  • Loss of technical know-how: In 2005, the Secretary for Energy, Mines, and Telecommunications (SEEMT) was eliminated, with the Ministry of Public Works, Transport, and Communications (MTPTC), as well as the Bureau of Mines and Energy (BME) supposedly taking its place. The SEEMT was previously tasked with the creation of energy policy, enhancing the electrical grid, and maintaining current systems, thus, the SEEMT worked in a policy and technical capacity. Because there was no effort on the part of the Haitian government to integrate some of the human capital possessed within the SEEMT with the institutions that were assuming its responsibilities, a great deal of technical know-how was lost in the transition.[iv] The has led to a total and complete failure of the MTPTC to manage and maintain electrical infrastructure, much less advance and improve it.
  • Diffusion of responsibilities: There is no institution or agency tasked with regulating the energy sector in Haiti, ironically creating a problem that government, by its very definition, is supposed to solve. In theory, the MTPTC and BME both work with the state-owned electric utility Electricité d’Haïti (EDH) to advance national energy policy, but progress has been excruciatingly slow due to the fragmentation of responsibility. MTPTC, BME, and EDH have been working on a national energy policy since 2006, releasing a draft in 2012, but have not yet implemented any of it.[v]

 

RELIANCE ON TIMBER

Because the Haitian economy is so under-developed, with a GDP (PPP) per capita of only $1,800, real GDP growth rates of less than 2%, an unemployment rate of over 40%, and a fiscal budget deficit, nearly everyone in Haiti uses wood or charcoal for lighting and cooking. Those that are well off will instead use diesel generators as they cannot rely on a constant source of electricity from EDH.[vi]

  • Public health: 77% of energy usage in Haiti comes from the use of wood and charcoal for primary energy use, while accounting for 93% of the fuel used for household cooking.[vii] Like many other developing nations that use similar fuels, this has serious public health implications, as these fuels are often used indoors and emit harmful respirable toxins.
  • Environmental impact: The reliance on wood and charcoal fuels has resulted in a tremendous demand for timber in Haiti. Due to the relative size of the population to the country’s land area, this demand has caused complete deforestation of the entire country. Deforestation at this scale also creates a cascade of other problems, e.g. the displacement of topsoil from higher elevations to waterways which reduces agricultural output and has been documented to reduce certain river flows (and thereby impacting drinking water sources) by 80%.[viii] This is an unsustainable practice, and at this point, it will take decades to restore the environmental damage that has already been inflicted on the Haitian landscape.

 

THEFT OF ELECTRICITY

            Lastly, perhaps Haiti’s most obviously apparent problem in the energy sector is the widespread theft of electricity, with an estimated 54% of all electricity produced being stolen or lost in transmission. The root causes that create the conditions for rampant theft are EDH’s inability to bill and collect payments, an unregulated electrical infrastructure that has been cobbled together and not maintained, and a lack of commercial customers that shifts the revenue burden to those that are poorest.

  • Billing and collections: EDH, consistently suffering from the institutional capacity problems that also afflict the wider Haitian government, has shown a consistent inability to implement efficient billing and collection practices. Underscoring inefficient bureaucratic procedures are a lack of electricity meters that would otherwise determine how much to bill each customer. A recent USAID project installed proper connections and meters to over 8,000 households, and found that collection rates improved from 25% to above 90%.[ix] A central principle to collecting payment is first ensuring that the customer and utility can agree on the level of service consumption.
  • Poor infrastructure: The electrical infrastructure of Haiti is severely under-maintained. This is most easily attributed to a lack of financial resources, a lack of technical know-how, and a complete lack of regulation of the infrastructure itself. Because the energy grid is so frequently down (with most customers only receiving around ten hours of electricity per day[x]), this provides ample time for individuals to make illegal connections to distribution systems, as a majority of the time there is no associated danger. Moreover, a dilapidated grid that provides such poor service has the effect of creating a culture of non-payment, as consumers don’t feel like they are receiving a quality of service that would justify compensation.
  • Inflated prices: As previously mentioned, because businesses and organizations cannot rely on EDH to provide electricity around-the-clock, these organizations turn to diesel generators for their energy needs. The effect that this has on the economics of the public utility are far more impactful than one may initially assume. These firms are the would-be customers that would be best positioned to actually pay for the electricity service, but in their absence, the burden to pay falls on those with the least amount of resources. This means that the final cost of electricity is shaped by a customer base in which many aren’t paying, incentivizing EDH to raise their prices in an attempt to recoup the lost revenue from customers that are In sum, this artificially increases electricity prices, leading to a situation where electricity costs as much as $0.34/kWh in Haiti; far more than nearly every other country on Earth, and about triple the costs that one would encounter in the contiguous United States.[xi] This further incentivizes theft of electricity.

 

CONCLUSION

It is well documented that widespread, reliable access to electricity is a key for economic growth, thus, if the nation of Haiti ever wishes to become a legitimate player in the global economy, it must first solve this fundamental problem of electricity generation, distribution, and access. It is concluded here that the government of Haiti has failed in its totality for decades to build the institutional capacity needed in order to accomplish these goals, and the spillover effects include but are not limited to a failure to produce any national energy policy or decide who is to regulate the sector, widespread reliance on charcoal and generators for cooking and lighting that have detrimental public health implications, deforestation of the entire country, artificially and insurmountably high electricity prices for consumers, an exacerbated fiscal deficit due to EDH subsidies to recoup lost revenue, and the extremely prevalent theft of electricity. These findings show that, despite the efforts of numerous countries to aid the people of Haiti in ways that increase the resilience and efficiency of their electrical grid, the ultimate responsibility to advance the cause of the Haitian people falls squarely on their own government.

 

ENDNOTES

[i]    The World Bank. Access to electricity (% of population). 2012. 1 March 2017.

<http://data.worldbank.org/indicator/EG.ELC.ACCS.ZS&gt;.

[ii]   USAID. Haiti Energy Fact Sheet – January 2016. Fact Sheet. Washington: USAID, 2016.

[iii]  The World Bank. World Development Indicators: Power and Communications. 2014. 27

February 2017. <http://wdi.worldbank.org/table/5.11&gt;.

[iv]   The World Bank. Project Information Document: Haiti Electricity Loss Reduction Project.

Report. Washington: The World Bank, 2006.

[v]   Energy Transition Initiative. Energy Snapshot: Haiti. Report. U.S. Department of Energy. Washington: U.S. Department of Energy, 2015.

[vi]   U.S. Central Intelligence Agency. The World Factbook: Haiti. 2017. 2 March 2017.

<https://www.cia.gov/library/publications/the-world-factbook/geos/ha.html&gt;.

[vii]   Worldwatch Institute. Haiti Sustainable Energy Roadmap. Report. Washington: Worldwatch

Institute, 2014.

[viii]   McClintock, Nathan. Agroforestry and Sustainable Resource Conservation in Haiti. Case

Study. North Carolina State University. Raleigh: NC State, 2004.

[ix]   USAID. Haiti Energy Fact Sheet – January 2016.

[x]   Worldwatch Institute. Haiti Sustainable Energy Roadmap.

[xi]   Friedman, Lisa. Can Haiti Chart a Better Energy Future? 17 April 2013. 3 March 2017.

<https://www.scientificamerican.com/article/can-haiti-chart-a-better-energy-future/&gt;.

 

 

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