Professor Jutta Bakonyi from our School of Government and International Affairs joins Nasir M. Ali and Ayan Yusuf Ali from the University of Hargeisa to discuss energy development in Somaliland.
Somaliland’s main port, at the city of Berbera, accounted for two-thirds of the country’s revenues in 2020. Over the years, these revenues have mostly gone into the central state coffers, while the development of Berbera has been neglected.
When we visited the city for our research project on port infrastructure, international politics, and everyday life, this neglect was immediately visible. Buildings in the city centre were abandoned and dilapidated. Physical and social infrastructure – ranging from roads, water and electricity to health and schooling – were lacking.
Infrastructure development carries modernity’s promise of progress and development. But it relies on affordable and reliable energy. That is what is lacking for most of Somaliland’s residents. The electricity access rate is estimated at 15%. Eighty percent of the population use biomass fuel, mostly charcoal and firewood, to fulfil their daily energy needs.
The Somaliland government has mainly left the energy market to its own devices. Lack of regulation, and collaboration between the government and private businesses have spawned a monopoly of energy provision in Berbera. This in turn makes electricity unaffordable for most residents.
The uneven development of Berbera city manifests in the contrast between the large amounts of energy consumed by the port and the lack of affordable electricity for most urban dwellers. These inequalities challenge the expectation that Somaliland’s further integration into the globalised chains of production and consumption – through its modern port – will greatly benefit its citizens.
Berbera and other cities in Somaliland need policies that ensure energy becomes affordable for the urban poor. Without such policies, the gap between the rich and the poor is likely to widen further, with access to energy being but one of the indicators of this inequality.
The neglect of Berbera city stands in stark contrast to the modern technologies and equipment at its port. Since 2017 the port has been managed by the Dubai-based logistics giant DP World. The company brought in new transport technologies and modernised the port’s infrastructure to handle containerised trade.
A special economic zone has been established to attract investors. And a transport corridor that links the port with Ethiopia is nearly complete.
A DP World representative explained to us that the port had established its own energy source to meet the huge power demands of the new container terminal. Sudden energy cuts and blackouts would risk damaging the new technologies and undermine the port’s ability to become a global trade hub.
Somaliland’s government acknowledges the lack of reliable energy provision as a major constraint to development. The government plans to ensure that all citizens have access to affordable energy from local and renewable sources by 2030.
This goal is ambitious. Electricity across Somaliland is privatised and relies on fossil fuel, mainly diesel, which is imported from the Arabian peninsula. Energy is, therefore, costly and unsustainable. Somaliland has one of the world’s highest energy prices punctuated with frequent and often long-lasting power cuts.
So far, only limited investments have been made into the generation of clean energy, among them a solar mini grid in Berbera, funded by the Abu Dhabi Fund for Development.
Somaliland withdrew from Somalia in May 1991, after more than two years of civil war. When the country started to build its state apparatus, the private sector was already flourishing. The state relied, to a large extent, on financial support from private businesses. It therefore adopted a policy of minimal government involvement in the economy.
The energy sector, for example, started with private business people who initially used generators for their own consumption. The businesses eventually provided their neighbourhoods with excess energy. Some of these small scale, informal businesses grew into large enterprises which are providing thousands of customers with electricity today.
At least four major energy suppliers are competing for customers in Somaliland’s capital city, Hargeisa.
But in contrast, the market in Berbera is dominated by the Berbera Power House, a private company that has established a monopoly position in the city. With no competition, prices are up, and only the wealthy people can afford electricity in Berbera city.
The concession for DP World was accompanied by expectations of closer cooperation between Somaliland and the United Arab Emirates. The Abu Dhabi Fund for Development, for example, provides financial and technical support for the transport corridor from Berbera to Ethiopia. It has also initiated social projects for the urban poor in Berbera, like building schools and providing green and affordable energy. It financed a 7MW solar power plant which was inaugurated in January 2021.
This was considered a significant step towards providing energy to poorer households and reducing Somaliland’s dependence on fossil fuels.
But immediately after the launch of the project, the Somaliland Ministry of Mines and Energy handed over the solar facility to Berbera Power House. The move further entrenched the company’s electricity monopoly in the city.
During the inauguration of the mini grid solar power plant, the finance minister proposed that electricity prices in Berbera would be reduced to US$0.1 per unit compared to US$0.6 per unit before the investment.
The interviews that we conducted with Berbera city residents in February and March 2023 revealed that electricity prices had not come down. We also found that the reliability of energy services had not improved.
It seems that the company lacks incentives and pressure from the government to improve its services and cut down energy prices. The company refused our requests for interviews.
Currently, a number of international organisations are exploring the potential for green energy in Somaliland and the wider Horn of Africa. These initiatives primarily aim to overcome environmental limits of the globally rising energy demand. Whether they will eventually benefit the population depend, among others, on how they are regulated and governed.
Professor Jutta Bakonyi is Professor in Development and Conflict in our School of Government and International Affairs (SGIA).
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