Electricidade e Aguas de Guinea-Bissau

concluded

In July 1991, a consortium consisting of Electricite de France (EdF) and Lyonnaise des Eaux (LYSA, later renamed Suez in March of 2001) signed a performance-based management contract with the government of Guinea-Bissau to operate and manage power generation, transmission, and distribution services as well as the water services run by Electricade e Aguas de Guinea-Bissau (EAGB), the state utility and asset holding company. The length of the contract was 2.5-years with a 2-year extension, at which point the contract was to be rebid. The contract specified that 75% of the remuneration was guaranteed, but that the remaining 25% was based on performance. EAGB had an installed capacity of 10.4-MW with an operational capacity estimated at 8.8-MW. This contract remained in effect until July 30, 1997, when it was concluded and the state, through EAGB, reassumed operational control of the utility. There were some improvements in the company's administration, maintenance and distribution, but the performance of EAGB under the contractual arrangement with EDF/LYSA was, on the whole, less than satisfactory. There was very little investment in the sectors over the five years of the contract. Production and distribution of both water and electricity remained far below demand and were of deteriorating quality. There were enormous losses in both sectors due to fraud and technical problems. The tariff adjustments were not coherent with inflation or the cost of fuel. The Government was in arrears in paying its bills to the utility. Weak commercial management combined with poor personnel management had only added to the problems of the utility. Poor quality services had exacerbated poor revenue collection systems, with the result that EAGB was undergoing a severe cash flow crisis.