By Andre Paultre and Sarah Marsh
PORT-AU-PRINCE (Reuters) - Rene Max Auguste says demand for solar panels at his store in the Haitian capital, Port au Prince, has soared over the past two years. The reason? The state power utility's inability to guarantee electricity, he says.
In a country where most survive on less than $3 per day, customers in Auguste's shop typically opt for small systems that enable them to charge their phone and perhaps a lamp.
"The situation is a failure of the state: a failure of the elite for the past 30 years," says Auguste. "The situation is going to stay as it is. Or it's going to get worse."
President Jovenel Moise took office three years ago promising to bring around-the-clock power to the poorest nation in the Americas. Instead, amid political turmoil and unrest, he has presided over the worst power outages in more than a decade.
Generation at Haiti's hydroelectric and diesel and heavy fuel oil-powered thermal plants was down to 94 MW in August, less than half its installed capacity, according to state electricity utility EDH, and less than one-fortieth of the capacity of neighboring Dominican Republic, which has roughly the same population of 11 million.
Only around one-third of Haitian households are connected to the grid, most of them in towns, according to analyst estimates. Those who are suffer frequent blackouts, living with power for just a few hours per day.
Moise blames the blackouts largely on sabotage by unnamed vested interests, whom he accuses of also fomenting anti-government protests last year to prevent reform.
Critics say he is scapegoating others for the government's mismanagement of the already dysfunctional sector.
The situation was exacerbated in July, after Moise appointed Michel Presume, who is known for his privatization of various Haitian industries, to overhaul EDH. That prompted a damaging strike at the state utility.
Employees besieged its headquarters and refused to maintain or fix broken machinery, leaving areas of Port-au-Prince without lights for weeks on end.
There are some signs of change. Haiti's National Regulatory Authority for Energy, ANARSE, has issued tenders for private operators to take over regional grids and develop microgrids for rural communities, with a focus on gas-powered and solar projects.
Moise has also negotiated a $150 million deal with Taiwan for an overhaul of the national grid, due to start this week, Minister of Public Works Nader Joiseus told Reuters.
Two multimillion dollar deals to install 55.5MW of gas electricity with General Electric <GE.N> and 130MW of solar electricity with Turkey are also in the works, he said.
But the key challenge remains EDH, which until recently monopolized generation and distribution. The company consumes around $200 million a year in subsidies, equivalent to 10% of government expenditure.
It loses an estimated 70% of power due to technical losses, clients who do not pay, and people who connect illegally, according to a study by Limestone Analytics.
"This company is practically bankrupt and cannot see to its own basic needs, like the maintenance of its power stations," Presume told Reuters. He said he aims to raise revenues by installing prepaid systems and increasing the number of clients.
"It needs to act like a commercial company and actually turn a profit," he said.
CHARCOAL IRONS, CLOSED FACTORIES
With Haiti struggling to recover from the effects of a devastating 2010 earthquake, the lack of power depresses living standards and is one of the main obstacles to economic development, Haitian economist Etzer Emile said.
Haiti needs to increase its generation eight-fold to meet the needs of its population, ANARSE estimates.
"We use candles and a little kerosene lamp," said Midrenne Lubin, 50, a cleaner who uses a charcoal iron to press her clothes and waits until after dawn to leave for work. "Bandits attack in the darkness."
Businesses, hospitals and wealthier households have installed generators to become self-reliant. More than 70% of power consumed in Haiti is produced by small-scale diesel-fueled generators, according to an April IMF report.
But diesel can also be scarce. Two textile-exporting factories were forced to shut down for around a week last month due to diesel shortages, an industry source said.
Woodburning and charcoal remain Haiti's primary source of energy, the IMF wrote.
That contributes to deforestation, aggravating Haiti's vulnerability to the Caribbean's annual hurricane season by heightening the chance of mudslides and flooding. At least 31 people were killed in Haiti by Tropical Storm Laura last month.
EDH says the current decline in power supply is partly due to the use of bad quality heavy fuel, which it says was imported in April via the state agency Bureau de Monétisation des Programmes d'Aide au Développement, or BMPAD, that damaged multiple power plants.
BMPAD did not respond to multiple requests for comment. Joiseus said an investigation was ongoing but the plants should be able to treat the fuel.
A series of blackouts also occurred in April last year after a dispute between U.S. energy trader Novum and the BMPAD over overdue payments led to a shortage of fuel.
Then in November they occurred again after the state took over power plants previously run by private power provider Société Générale d’Énergie SA (Sogener). Authorities said the takeover was due to Sogener overbilling and other issues.
Stanley Gaston, a Sogener lawyer, said Moise singled out the company because its management is linked to the opposition.
The state takeover did not allow for an orderly handover of skills, he said.
These altercations have likely dampened appetite for future much-needed private investment, analysts say. ANARSE did not reply to request for comment on whether it had receive any acceptable bids for auctions that had an end-2019 deadline.
The temptation for the government will be to simply add more generation capacity on credit to resolve the short-term problem, with an eye on elections, warned Rene Jean-Jumeau, a former Minister Delegate for Energy.
But if EDH does not truly reform, then those new plants will also require extra subsidies and fall into disrepair, said Jumeau, now director of the Haitian Energy Institute.
"I'm waiting to see if Presume can give the results no-one else has been able to," he said.
(Reporting by Andre Paultre in Port-au-Prince and Sarah Marsh in Havana; Editing by Daniel Flynn and Rosalba O'Brien)