Mali: International Monetary Fund Pushes Mali to Cut Fossil Fuel Subsidies

Photo: United Nations Environment Programme
Solar power panels generate energy for a local administrative building in Liberia.

Bamako — The International Monetary Fund has asked Mali to reduce its fossil fuel subsidies during negotiations on financial assistance to the West African state. But Malians fear such a move could result in costlier electricity and rising poverty.

"They already increased the price of electricity in March, and people didn't protest because we were under a state of emergency. If we have to support another increase, people won't accept that," said Amadou Coulibaly, a high-school teacher in Bamako. Prices rose by 3 to 5 percent for individual consumers in March, and by 7 percent for public authorities and businesses.

Mali needs financial support for its economic recovery following a conflict sparked by a rebel insurgency that ended earlier this year after military intervention by France.

The Malian government has requested access to the rapid credit facility of the International Monetary Fund (IMF). In return, the IMF wants Mali to cut its fossil fuel subsidies, shifting the economy onto a more sustainable path, the fund's mission chief for Mali, Christian Josz, told journalists in Bamako in October.

Prior to the current negotiations - which are due to continue until the end of this year - the IMF helped Mali with a similar loan in the wake of the 2012 military coup triggered by an uprising in the north by Tuareg rebels. In January 2013, the IMF approved lending of $18.4 million to support macroeconomic stability and growth, as France's air force halted an advance south by Islamist groups that had hijacked the insurgency.

When electricity prices rose two months later, people didn't know it was related to the IMF loan, Coulibaly said. "I understand that the price rise is necessary for the survival of EDM (the state power company), but my fear is that electricity is becoming unaffordable for most of us," he said.

POWER FIRM STRUGGLING

The Malian government commission that regulates electricity and water said the tariff rises were aimed at alleviating the government's fossil fuel bill. It channels about $80 million into fossil fuel subsidies each year.

"In past years, the price of fossil fuels constantly increased on the international market while the electricity price (in Mali) didn't change since 2009," Moctar Toure, head of the commission, said in October.

According to Toure, the national electricity company is struggling to deal with regular power cuts and owes billions of West African CFA francs to local banks. The IMF recommended that the government should offset costly fossil fuel subsidies through revising up electricity tariffs, Toure said.

The government has been trying to promote renewable energy technologies since 2007, hoping they will reach 15 percent of the total national energy supply by 2020. While hydropower generates a large proportion of Mali's electricity, weaning the population off wood and charcoal - cheap and common sources of fuel for cooking and other domestic uses - is proving hard.

In October, the government held a preparatory workshop under an international programme to expand renewable energy take-up in low-income countries, backed by the multilateral Strategic Climate Fund. Mali was selected as a pioneer country for the scheme because of its critical climate-related challenges, including drought, the government said.

NOT ENOUGH HYDRO

According to Mali's energy minister, Frankaly Keita, a shortage of rainfall and rising temperatures are exacerbating land degradation - hitting production of power and food - while the energy needs of a growing population are expanding.

"The rising price of fossil fuel energy contributes to increasing locals' poverty," said Keita, adding that Mali is putting its faith in renewables. Clean energy, especially solar and hydropower, has been identified as a national priority, with the aim of cutting poverty and boosting sustainable development through public-private investment partnerships.

"The country's plan to develop green electricity is getting the backing of financial partners, as the World Bank has agreed to help fund the programme of investments in renewable energies," said Kalifa Samake, an economist based in Bamako.

As Mali is a land-locked country with no fossil fuel resources, its supplies come from neighbouring countries like Ivory Coast, Benin and Senegal. Imports almost doubled in a decade, with prices jumping 17 percent a year, according to a 2006 government report.

Most of the country's electricity supply is produced by a shared dam on the River Senegal in Mali, which also provides power to three neighbouring countries, including Mauritania and Senegal.

As this renewable energy source is no longer sufficient to meet demand in Mali, the national electricity company is investing in hybrid power plants using both solar energy and fossil fuels, said Thiona Mathieu Kone, EDM's communication officer.

"This will allow us to expand electricity even in remote small towns," Kone said, adding that these plants can be located in more isolated areas and hooked up to the national grid.

Soumaila T. Diarra is a freelance journalist based in Bamako with an interest in environmental issues.

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