BACKGROUND
The Economic Community of West African States (ECOWAS) was created on May 28, 1975 in Lagos, Nigeria. ECOWAS was established to promote cooperation and integration in order to create an economic and monetary union for promoting economic growth and development in West Africa. ECOWAS has encountered many problems in the process of regionally integrating West Africa, including: political instability and lack of good governance that has plagued many member countries; the insufficient diversification of national economies; the absence of reliable infrastructure; and the multiplicity of organizations for regional integration with the same objectives. Several ECOWAS-member countries are currently part of the West African Monetary Union (UEMOA), a regional economic and monetary union which shares a common currency (the CFA Franc). The Francophone-countries of Benin, Burkina Faso, Cote d'Ivoire, Mali, Niger, Senegal and Togo, with Guinea Bissau (Lusophone), comprise UEMOA.

Senegal's President, Abdoulaye Wade, is the current ECOWAS Chairman. President Wade is continuing the process of focusing on regional economic integration. In April 2002, the ECOWAS Council of Ministers (COM) approved a new procedure for the ECOWAS Trade Liberalization Scheme (TLS). The TLS entitles the manufacturers of approved products to customs duty exemption within ECOWAS member states. The new procedure will consist of National Approval Committees, which are to be set up by member states, to handle the approval of products to be granted exemption under TLS. The decision by COM, abrogates the decision of 1988 granting the COM the monopoly for approving applications for such exemptions. It followed the harmonization of the ECOWAS procedure with that of the UEMOA, which already operates under this procedure.

ECOWAS is seeking international support to enable it train and equip the 15 battalions of troops pledged by member states as standby units for its peacekeeping force, ECOMOG. The training of the composite units will facilitate their effectiveness in peacekeeping, humanitarian assistance and other missions for which they could be deployed. ECOMOG forces have been deployed previously in civil conflicts in Sierra Leone and Liberia. Senegal announced in November 2002 that it is to boost its contribution to the ECOWAS military mission to Cote d’Ivoire and provide the Force Commander. Five countries -- Benin, Ghana, Niger, Senegal and Togo -- are contributing the 1,264 troops for the first phase of the mission. The force will take over from French troops who have been monitoring the October 17, 2002 agreement for the cessation of hostilities under an agreement involving ECOWAS, France and the government of Cote d’Ivoire. Nigeria will also participate in the mission and it has pledged to provide medical and signal teams as its contribution. Talks continue with representatives of the Patriotic Movement for Cote d'Ivoire (MPCI), the rebel group which has taken control of several cities in the northern portion of the country.

ECONOMIC OVERVIEW
In 2001, the combined Gross Domestic Product (GDP) for the ECOWAS region was estimated at $75.1 billion . ECOWAS economies are at varying stages of development. Nigeria's economy, the region's largest with a GDP of $39.5 billion, is larger than the combined GDP of the other ECOWAS countries. While the region's economies grew at a combined rate of 3.4% in 2001, the substantial external debt of individual states remains one of the region's greatest challenges. Internal strife has adversely affected economic performance in several states.

Total regional exports, including intra-regional exports, were $26.1 billion in 2001. ECOWAS had a $2.5 billion trade surplus for 2001. The region's major export commodities were energy products (crude oil and refined petroleum products), minerals (gold, diamonds, and bauxite) and agricultural products (cocoa, coffee, groundnuts, and cotton). Overall trade between the United States and ECOWAS countries fell by 11.2% in 2001. U.S. exports to the region grew 23% in 2001, to nearly $1.7 billion. U.S. imports, with Nigerian crude oil accounting for the vast majority, from the region fell by 15.3% in 2001, to $9.6 billion. On December 31, 2002, President Bush approved the designation of 38 sub-Saharan African countries as eligible for tariff preferences under the African Growth and Opportunity Act (AGOA). As required by the legislation, this annual determination signifies which countries are making continued progress toward a market-based economy, the rule of law, free trade, economic policies that will reduce poverty, and protection of worker's rights. Burkina Faso, Liberia and Togo were the only countries in the region not covered by AGOA.

It was announced in November 2002, that the five member states of the proposed second monetary zone have postponed the date for the launching of their common currency, the Eco, from January 1, 2003 to July 1, 2005. The decision to postpone the launching was taken following the inability of the countries to satisfy the four convergence criteria for their economies prior to the introduction. The five states -- The Gambia, Ghana, Guinea, Nigeria and Sierra Leone, -- which signed the 2000 Accra Declaration for the creation of the second monetary zone agreed to reform their economies to meet specific targets prior to the introduction of the Eco. These include a restriction on budget deficit to no more than 4% by 2002, reducing inflation to 5% by 2003, a ceiling on central bank financing of budget deficit to 10% of the previous year’s revenue and a minimum foreign reserve that would support at least six months of imports by 2003. The Eco will circulate simultaneously with the CFA Franc for a specific period prior to the creation of a single currency for West Africa. Liberia, which attended some meetings of the new zone, indicated interest in the membership but it has not signed the Accra Declaration formalizing membership. Cape Verde has attended some meetings of the zone as observer.

ENERGY OVERVIEW
Nigeria is ECOWAS's only net energy exporter, and the size of its exports alone makes the region a net energy exporter. In 2001, the countries of West Africa collectively consumed (see 1.48 quadrillion British thermal units (Btu) of commercial energy (0.4% of total world consumption) and produced 5.70 quadrillion Btu (1.4% of total world production). Also in 2001, the region generated 31.7 million metric tons of carbon emissions (0.5% of the world total). Nigeria accounted for 61.9% (0.92 quadrillion Btu) of energy consumption, 96.3% (5.49 quadrillion Btu) of energy production, and 74.2% (23.52 million metric tons) of the region's carbon emissions.

Commercial energy resources in the region, primarily petroleum and natural gas, are concentrated in coastal and offshore regions. Electricity in West Africa is generated through thermal (58.8% of installed capacity) or hydroelectric (41.2%) resources. Natural gas has the potential to take a more significant role in the region's energy sector as fields in Nigeria, Cote d'Ivoire and Senegal are developed. Due to the region's relatively small urban population (approximately 33.9%) and the lack of infrastructure, access to commercial energy sources is limited.

ELECTRICITY
West Africa's total installed electric generating capacity was 9.4 gigawatts (GW) at the beginning of 2001, the majority of which is thermal . Total electricity generation for the region in 2001 was 33.8 billion kilowatthours (bkwh) , with Nigeria (15.7 bkwh), Ghana (8.8 bkwh) and Cote d'Ivoire (4.6 bkwh) being the largest generators. In 2001, total regional electricity consumption was 31.8 bkwh, led by Nigeria's 14.6 bkwh (45.8%). Ghana (8.8 bkwh, 27.8%), Cote d'Ivoire (3.0 bkwh, 9.4%) and Senegal (1.4 bkwh, 4.4%) were the next largest electricity consumers.

A tender for the privatization of Benin's water and electricity utility, Societe Beninoise d'Electricite et de l'Eau (SBEE)is expected before the end of 2003. Plans call for SBEE to separate its water and electricity operations into two separate companies. As part of the privatization, Benin plans to create an agency for rural electrification that would bring power to areas where it was not economically feasible to extend SBEE's grid.

Hydroelectricity is the primary source of Ghana's power. Ghana's current hydroelectric capacity of 1.072 GW is located at Akosombo (912 MW) and Kpong (160 MW). The Ghanaian government is considering additional hydroelectric projects to be built on a Build Operate Transfer (BOT) financing scheme. The $700-million, Bui hydroelectric project would be located on the Black Volta. The Bui project would have a generation capacity of 400 MW. In addition to increasing the domestic electricity supply, power generated from Bui could be exported to Burkina Faso, Mali and Cote d'Ivoire. A second BOT facility, located on the Pra River, would have a total generating capacity of 125 MW. Recent low rainfall has forced power cuts from Ghana's hydroelectric facilities, similar to the power shortages experienced in 1997/1998.

Ghana plans to reduce its reliance on hydroelectric power by increasing and expanding thermal generating capacity. Current thermal facilities are located at Tema and Takoradi. Additional capacity is planned at Tano (gas-fired barges) and at Tema. VRA and GNPC have constructed transmission lines and substations at Essiama and Elubo in the Western Region to feed the power generated at Tano into the national grid. The VRA is currently in the process of installing 110 MW at the Strategic Reserve Plant (SRP), near the Electricity Company of Ghana (ECG) main substation in Tema. In April 2003, U.S.-based CMS Energy announced that it is planning a $100 million expansion of its thermal power plant at Takoradi. The upgrade would convert the plant from burning crude oil to natural gas which it would receive from Nigeria through the WAGP. CMS Energy has a 90% stake in the Takoradi facility, and the VRA holds the remaining 10%. ECG is responsible for electricity distribution to the Ashanti, Western, Central, Eastern, Greater Accra and Volta regions. VRA is responsible for generation and for the distribution of electricity in the Brong Ahafo, Northern, Upper East and Upper West regions. When the WAGP is completed, VRA plans to convert oil-fired facilities at Takoradi and Tema to natural gas.

A large portion of the Liberia Electricity Corporation's (LEC) generation and distribution infrastructure was damaged or destroyed during the civil war. LEC estimates that it will cost more than $107 million and take over five years to repair the entire electricity generation and distribution system

Sierra Leone's Bumbuna hydroelectric project was nearly complete (85%) when civil war disrupted the construction. The government hopes to restart construction in early 2003, but funding is an issue. The cost of completing the project is estimated at $40.2 million, and the African Development Bank (AfDB) has pledged to provide $8.7 million. Sources for the remaining $31.5 million have yet to be identified.

Guinea is the source of several major West African rivers (including the Gambia and Niger Rivers) and has a hydroelectric potential (technically feasible) estimated at 19,400 Gigawatthours per year (Gwh/yr). Only about 1% of Guinea's technically feasible potential has so far been developed. The 75-MW Garafiri hydroelectric facility, on the Konkoure River, was commissioned in 1999; and an 80-MW project is planned 60 miles (100 km) downstream at Kaleta.

Senegal's Societe Nationale d'Electricite (SENELEC) handles the generation, transmission and distribution of the majority of the country's electricity. The government's ownership in SENELEC was reduced to a 41% share in March 1999, when a consortium comprised of the utilities Hydro-Quebec of Canada and Elyo of France acquired a 34% interest in SENELEC. In 2000, a series of power cuts prompted the government to take back the stake sold to the Franco-Canadian venture. Privatization negotiations with France's Vivendi fell through in February 2001, and government negotiations with U.S.-utility AES Corp ended unsuccessfully in July 2002.

Gambia's National Water and Electricity Company (NAWEC) signed an agreement with South Africa's Eskom in June 2000. Eskom was to acquire a 50% stake in NAWEC and participate in a $75-million investment program to overhaul NAWEC generating plants over the next five years. The agreement, which was to include financing from the World Bank, fell through three months later. In December 2000 the AfDB awarded a $3.8-million loan to finance a rural electrification project in The Gambia. The project consists of construction of six power stations (combined capacity of 6.2 MW), the installation of 141 miles (227 km) of transmission and distribution lines to supply power to 46 towns and villages. The total cost of the rural electrification project is estimated at $19 million, with the additional financing coming from international donors.

Niger is seeking international and multilateral donors to help in the construction of the Kandadji hydroelectric project. Kandadji, first conceived in the mid-1970's, would be located on the Niger River approximately 120 miles (200 km) upstream of Niamey. The 165-MW facility (originally proposed to be 230 MW) is expected to cost $270 million. The government of Niger hopes to begin construction in 2004 and complete it by 2012. Smaller dams on the Niger River at Gambou (122 MW) and Dyodyonga (26 MW) have been considered.

Regional Projects

In October 2000, 14 ECOWAS members signed an agreement to launch a project to boost power supply in the region. The West African Power Pool (WAPP) agreement reaffirmed the decision to develop energy production facilities and interconnect their respective electricity grids. According to the agreement, the WAPP will be accomplished in two phases but is planned to be fully implemented by 2005. The first phase involves countries that are already interconnected, including Nigeria, Benin, Burkina Faso, Cote d'Ivoire, Ghana, Niger and Togo. The second phase involves countries which are yet to have interconnection facilities, which include Guinea, Guinea-Bissau, Liberia, Mali, Senegal, Gambia and Cape Verde. Under the agreement, WAPP is expected to harmonize the regulatory framework that governs the electricity sector in each member country. Nigeria and the AfDB signed a $15.6 million loan agreement in December 2002 for the interconnection of NEPA (Nigerian Electric Power Authority) and Compagnie Electrique du Benin (CEB) networks. CEB is the electricity transmission company for Benin and Togo.

The Organization for the Development of the Senegal River (OMVS), which consists of Mali, Mauritania and Senegal, has constructed two dams. The Diama dam, located in Senegal, was completed in 1986 and its primary function is to stop the upstream encroachment of seawater from the Atlantic Ocean. The Manatali dam, built by the OMVS on the Bafing River, the main tributary of the Senegal River, in Mali, was completed in 1987. The Manatali project was also to include a 200-MW power station and an 800-mile (1,300-km) network of transmission lines to the capitals of Mali (Bamako), Mauritania (Nouakchott) and Senegal (Dakar). Cost overruns, coupled with political and military tensions between Mauritania and Senegal, initially canceled the construction of the power facilities. In March 2000, AfDB approved a $33.5 million loan for the Manatali energy project. The Manatali's generating facilities came online in December 2001, supplying power to Mali's grid. Senegal connected its power grid to Manatali in July 2002 and Nouakchott was connected in November 2002. The OMVS signed a new charter in May 2002 to allocate water resources and hydro-electric power, and approved the restructuring of the Manatali Water Management Company (SOGEM). SOGEM will maintain ownership of infrastructure and equipment at Manatali, but Eskom will handle marketing and distribution of power generated at Manatali.

The AfDB has also issued a $2.13 million grant to finance the study on electricity production and transmission to the member states of the Organization for the Development of the River Gambia (OMVG), a regional organization whose members are the Gambia, Guinea, Guinea Bissau and Senegal. The study aims to strengthen regional integration of OMVG member states in the energy sector, particularly in the electricity sub-sector. A feasibility study of the Sambangalou hydroelectric project on the Gambia River, and the interconnection network project linking the facility to the distribution networks of the four countries will be conducted.

Growing demands for power have prompted Burkina Faso to seek import electricity from neighboring Cote d'Ivoire. A 225-kilovolt (KV) power line, connecting the city of Ferkessedougou in northern Cote d'Ivoire with the Burkinabe capital, Ouagadougou, is expected to begin operations in 2005. Burkina Faso employs diesel generators to produce electricity, but high production costs attributed to fluctuating oil prices prompted the government to begin interconnecting Burkina Faso's grid with that of neighboring countries like Ghana and Cote d'Ivoire to import additional electricity requirements.

Work began in early 2003 on a project to connect portions of Niger to Nigeria's electricity grid. The project involves the construction of three separate networks at an estimated cost of $16 million. The imported power will be much cheaper than the domestically oil-generated electricity currently consumed, and the project will help eliminate several diesel-powered generators.

Sources for this report include: Africa Energy and Mining; Africa News Service; CIA World Factbook 2002; Dow Jones; Economist Intelligence Unit ViewsWire; Factiva; Global Insight; International Monetary Fund; Oil and Gas Journal; Petroleum Intelligence Weekly; Panafrican News Agency; Reuters; U.S. Energy Information Administration; World Bank