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Veolia wins contract to manage Guinea's state power firm
Antoine Frerot, chief executive officer of French utility group Veolia, delivers a speech during the 2010 first half results presentation in Paris, August 6, 2010. PHOTO BY REUTERS/Benoit Tessier
19/06/2015
CONAKRY (Reuters) - France's Veolia has won a contract to manage Guinea's struggling state-owned power firm, a government document showed, in a deal expected to unlock more than $1 billion in investment.
Years of mismanagement of Electricite de Guinee (EdG) has crippled the West African country's power network and only 20 percent of people have electricity access, World Bank data shows.
The four-year contract, won via tender, will allow for a planned $1.3 billion investment, according to the document from the energy ministry seen by Reuters.
"The private investor (Veolia) will put in place their management team and will recruit Guineans into deputy positions," the document said.
"The funding needs were mainly covered by the state budget and the contributions of foreign donors," it added, referring to the $1.3 billion.
A local official for Veolia confirmed the deal and said it would be effective from Friday. An official in the energy ministry said that three companies had bid for the contract.
In a sign of EdG's past difficulties, an audit showed that the company had wasted 25 million euros ($28 million) between July 2011 and April 2013 by overpaying for equipment and machinery.
A lack of investment in new power production means Guinea only has 200 MW of power production, sourced from thermal and hydro plants, and blackouts are common.
The lack of a reliable network has acted as a deterrent for mining investors in Guinea which has among the largest bauxite and iron ore reserves in the world.
Guinea and China Water Electric began building a 240 MW Kaleta hydroelectric dam about 150 kilometres from the capital in 2012 which is expected to help improve power supplies.
West Africa's regional body will pool resources to establish an electricity market aimed at improving supplies across the 15 states, officials attending the ECOWAS meeting said this week.
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