Somaliland Central

 Demand Sectors

Overview Energy use in Somaliland is extremely low by world standards. It is currently estimated at 200 to 280 kgoe per capita per year and is mainly dominated by biomass based fuels. At household level, biomass fuels constitute approximately 90% of the gross energy consumption.

The main commercial fuel used is imported petroleum and electricity. Establishments in the Service Sectors and Commercial Enterprises consume an average of energy of 8.6 toe monthly (103 toe annually), out of which 76% is attributed to petroleum and electricity (generated from diesel). This does not include energy for transportation purposes.

Industrial, Service, and Commercial Energy Establishments in the Service Sectors and Commercial Enterprises consume an average of energy of 8.6 toe monthly (103 toe annually), out of which 76% is attributed to petroleum and electricity (generated from diesel). However, this does not include energy for transportation purposes. Approximately 96% of the firms consume electricity, mainly sourced from local private electric companies.

Supply sectors

Electricity sub-sector Somaliland has an estimated installed capacity of 77 MW, out of which less than 7% is attributed to the public electricity agency. Only 44% of installed capacity is actually realised. This could be attributed to poor servicing, inefficient production, aging generators and idle capacity. 

Power is mainly generated for selling, though 44% of generation is for own consumption, only selling off extra power that would otherwise go to waste once own demand is fully met. These include big hotels and telecommunication companies.

Varieties of diesel generators are used in electricity production in the country. Most firms prefer Perkins generators (57%), Deutz (46%), Cummins (21%) and Caterpillar (21%). Approximately 87% of the generators are purchased as second hand (used generators) as opposed to 13% purchased as branded new.

Diesel is the main fuel used in electricity generation in Somaliland. Electricity producers consume an average of 78.15 barrels per month in electricity production. This translates to an average cost of US$ 12,977 spent monthly. The fuel is mainly purchased locally from distributors.

The average electricity consumption per capita in Sub-Saharan Africa, excluding South Africa is 126kWh. Somaliland compares well with Ethiopia, whose per capita consumption is 24kWh, Eritrea 44kWh and Sudan per capita consumption is 49kWh, but way below the average sub-Saharan consumption.

Other Renewable Energy: In view of the scarcity of easily exploitable conventional energy resources, wind and solar could contribute to meeting local energy requirements. Data on wind and solar potential while inadequate do indicate that wind resource is among the largest in Africa particularly in the coastal areas where wind speeds average 6-7m/s (World Bank, 1985).

MAIN POLICY GOALS AND BROAD OBJECTIVES

The key issues identified define the current situation in Somaliland’s energy sector. The main challenges in the energy sector include the following: a) Rebuilding the energy infrastructure in the country. b) Mobilizing requisite financial resources for operation, maintenance and    expansion of energy carriers and providers. c) Protecting the environment. d) Ensuring security of supply through diversification of energy sources and   promotion of energy efficiency and conservation. e) Developing and promoting private sector capacity to deliver services in a market   driven environment. f) Perceived risks and rising energy demand. g) Improving corporate governance and accountability by private sector. h) Enhancing legal, regulatory and institutional frameworks to create both consumer   and investor confidence.

Strategies

1. i) Government shall identify and remove bottlenecks barriers and limitations to power generation, transmission, and distribution in order to address the demand at national level.
2. i) Government and private sector to establish efficient and improved performance mechanisms to ensure that the installed capacity estimated at 77 megawatts is  regulated and coordinated in ways that eliminate waste incurred from excessive   idle capacity and power losses.
3. ii) Government to establish a regulatory framework that includes affordability, safety, good quality of power and efficient service provision of power.

iii) Government to work collaboratively with the private sector to establish mechanisms that would make the sub-sector competitive and attract investment through eliminating unreliable power supply, low capacity utilisation (currently below 44%), availability factor, deficient maintenance, poor procurement of spare parts, poor safety records, high transmission and distribution losses.

1. iv) Government, financing institutions, donors to establish incentives to enable private sector investment to serve rural as well as urban population, through access to loans on concessionary terms, financial provisions, government guarantees and smart subsidies to facilitate infrastructure investment. v) Government and donors to establish a Rural Electrification Strategy and plan to enable:
2. Capacity building of private sector in the development and operation of isolated power supply systems, especially solar PV, wind systems and others.
3. Enable development of rural electrification schemes carried out on demand basis as well as with incentives to private energy suppliers to reach rural areas

Salt

At a first glance, Somaliland’s potential as a centre of commercial salt production is impressive: an extensive coastline, abundant heat, and exposure to direct sunlight. A vast potential market resides across the border in Ethiopia. Yet at present, Somaliland imports its own salt from Yemen, and local production is minimal.

One of the few sources of locally produced salt is located at Toqoshi, on the coast near the border with Djibouti. Toqoshi’s population has a long tradition of producing salt from round pits several meters deep, where fresh and salt water meet and form a quality crystal. “We have the best salt in the world,” claims one of the local leaders. On many occasions, during Siyaad’s regime, we participated in different international shows, and every time our salt became number one. All we need is a market, because we have the potential to meet any demand. Before the civil war, our salt used to reach as far as Sanaag, Togdheer, Ethiopia, and Djibouti.

During the civil conflict there was a break [in supply], so other sources were introduced, such as Yemen. We have no resources to compete with them. Now there is ample opportunity in Ethiopia due to the war with Eritrea, but unfortunately we don’t have the means and resources to bring our product to the Ethiopian market.

Such optimism may be slightly misplaced. Salt production is highly competitive, and there are other production centres in the region. But it is clearly a sector that deserves closer examination before it is either embraced or discarded.

Socio-Economic Environment: The population of Somaliland in 2009 was estimated at 3.85 million according to the Ministry of National Planning and Development (Somaliland in Figures, 2011). About 55% of the people are nomadic pastoralists and 45% are urban and rural dwellers. Somaliland is predominantly a nomadic pastoral community and traditionally the major livelihood is livestock husbandry, which is the main source of food and income for 70% of the population including rural pastoral and urban communities. Crop production ranks second to livestock.

There are three main sources of revenue in Somaliland today:  livestock, agriculture and remittance from the diaspora. Livestock is the backbone of the Somaliland region’s economy. Sheep, camel and cattle are shipped from the Berbera port and sent to Gulf Arab countries, such as Saudi Arabia. Less than 10% of land area is estimated to be is suitable for permanent agriculture. It is mainly found in the northwest regions, where high rainfall and fertile soils are both common. The major crops include maize, sugarcane, sorghum millet, and cotton. Wood collection for charcoal production is also very frequent and occurs almost in all Somaliland. Charcoal production is for both local household consumption and income generation through sales in the local markets and for export outside Somaliland.

Lack of access as a result of poor infrastructure, particularly roads, is inhibiting socio-economic development in the region. Access to health and education in Somaliland is generally limited. Somaliland is facing rapid urbanization, which is creating another vulnerable group – the urban poor. This group includes destitute pastoralists, economic migrants and people who are unable to make ends meet through lack of livelihood opportunities. Private sector business remains relatively limited so there are few employment opportunities.

Internally Displaced Persons (IDPs) and returnees occupy the major towns. It is estimated that up to 100,000 IDPs are languishing in IDP settlements in the major towns of Somaliland with contaminated water and no sanitation facilities, lack of access to basic social services, rampant disease and regular outbreaks of fire/arson. However, there is an active inter-agency IDP working group consisting of UN agencies, NGOs and local partners who are providing assistance to the Somaliland authorities on the provision of humanitarian assistance to IDPs, as well looking at the implementation of longer term responses which focus on IDP reintegration.