The Caracol Power Utility (CPU) is a rapidly growing electricity provider in Haiti, serving a client base in the Caracol Industrial Park (CIP) and five neighboring communes. Established in 2012, the CPU has become a model for electricity development in Haiti, providing 24-hour electricity to its clients and achieving a high collection rate of 98%. The utility’s growth has been driven by the increasing demand for electricity in the region.
Despite its development successes, the CPU faces significant financial and operational challenges. The utility’s cash flows remain negative due to insufficient tariff levels, which have not been increased since 2009. The CPU must also increase its capacity utilization to achieve economies of scale, currently operating at only half of its 10 MW rated capacity. To address these challenges, the CPU must implement tariff increases and expand its service area to realize economies of scale.
The Government of Haiti (GOH) and USAID have made significant progress in making the CPU a viable electric utility. A financial analysis conducted by NRECA and Deloitte’s detailed financial model suggests that service area expansion and acceptably higher tariffs can produce commercially sufficient returns on investment. The GOH has also expressed support for granting a private partner the rights to expand the service area into additional communes, with Fort Liberté being given priority based on a Deloitte study indicating its economic advantages.
Tariff authority has been granted to USAID, allowing it to set tariff levels in the CPU-served communes, subject to 30 days for the GOH to contest. USAID has assessed various tariff increase options and is expected to propose a tariff increase to the GOH. With tariff increases and service area expansion, it is estimated that current generation capacity will be used by 2020, and capacity may need to increase to 20 MW or more by 2030 to meet electricity demand.
Public-private partnership (PPP) models have been assessed by Deloitte, with recommendations that preference be given to a long-term concession of 30+ years or to a joint venture in which the private partner would hold the dominant share. In both cases, the private partner would be responsible for new and replacement capital investments, ideally without GOH subsidy. However, challenges remain in attracting a private partner with the capacity to invest and the willingness to accept the commercial, legal, and regulatory risks inherent in Haiti.
The next steps will focus on incentivizing investors and developing the PPP and tender structure. This will include consultation with potential private partners, further assessments of constraints in Haitian law on the preferred PPP and tender structures, and continued close collaboration with GOH counterparts. The CPU’s growth and development will depend on the successful implementation of these strategies and the ability to attract a private partner to invest in the utility.
The CPU’s service area expansion and tariff increases will require careful planning and implementation to ensure that the utility can meet the growing demand for electricity in the region. The GOH and USAID will need to work closely together to develop a comprehensive plan for the CPU’s growth and development, including the implementation of PPP models and the attraction of private investment.
The CPU’s growth and development will have significant benefits for the Haitian economy and the communities served by the utility. The provision of reliable and affordable electricity will support economic growth and development, and improve the quality of life for the people of Haiti. The successful implementation of the CPU’s growth and development plan will depend on the ability of the GOH and USAID to work together to address the challenges facing the utility and to attract private investment to support its growth.