Outline Energy Policy

GOVERNMENT OF MAURITIUS
OUTLINE OF ENERGY POLICY

TOWARDS A COHERENT STRATEGY FOR THE
DEVELOPMENT OF THE ENERGY SECTOR IN
MAURITIUS
Apri!

OUTLINE OF ENERGY POLICY 2007 - 2025

CONTENTS

Chapter Description Page
1 INTRODUCTION 1
1.1 The General Context 1
1.2 Concept of Energy Policy 1
1.3 Structure of Document 3
2 BACKGROUND 4
2.1 General 4
2.2 The electricity production landscape in Mauritius 4
2.3 Electricity Demand 6
2.4 Regulatory Framework 6
2.5 Reform of the Sugar Industry 7
2.6 Environment 7
2.7 Renewable Energy 8
2.8 Hydropower 8
2.9 Bagasse 9
2.10 Solar Energy 10
2.11 Wind Energy 10
2.12 Energy from Waste 11
2.13 Energy Used in Transportation Sector 12
2.14 Biofuels 12
2.15 Energy Efficiency and Conservation 13
2.16 Summary 13
3 OBJECTIVES OF THE ENERGY POLICY 15
3.1 Principles of policy formulation 15
3.2 Vision Statement 16
3.3 Targets 16
3.4 Summary 17
4 ELEMENTS OF THE ENERGY POLICY 18
4.1 General Framework 18
4.2 Government Policy 18
4.3 Electricity Market Structure 19
4.4 Electricity Pricing for IPPs 19
4.5 Electricity from Bagasse 20
4.6 Deemed Energy/ Deemed Price 21
4.7 Electricity from Coal 21
4.8 Renewable Energy in General 22
4.9 Electricity from Wind 22
4.10 Solar Energy 22
4.11 Transport 23
4.12 Ethanol 23
4.13 Electricity from Solid (Municipal) Waste 24
4.14 Environment 24
4.15 Demand Side Management and Energy Efficiency 25
4.16 Summary 26
5 ACTION PLAN 27
5.1 General 27
5.2 Electricity generation over the period 2007 2011 27
5.3 Legislation 28
5.4 Detailed Energy Policy and Masterplan for Renewable Energy up to 2025 29
5.5 Summary & Conclusion 29

April 2007
FOREWORD

In view of the serious challenges posed by the volatility of oil prices
and the rising cost of energy, Government has reviewed the energy
policy for fuelling the future as a result of a paradigm shift on the
world stage caused by climate change. Previous Electricity Plans
prepared prior to 2005 are now superseded. The proposed policies
take into account developments in the Energy Sector.

The Presidential Address in 2005 set the tone for the future policy
guidance for the electricity generation sector. The key for the CEB is its
financial sustainability which is intimately linked with a
diversification of the energy basket and providing affordable
electricity to the customers to enable the economy to forge ahead.

Given the competitive situation on the world market, electricity prices
should compare favourably with prices which investors would obtain
in other countries. Thus prices must be fair and cost reflective.

In the wake of this new plan, Government will actively seek to engage
into strategic partnerships which would guarantee the financial
sustainability of the CEB and, in accordance with the declared policy
of Government to maintain a reasonable share in the generation sector.

Dr A T Kasenally
Minister of Public Utilities

Outline of Energy Policy 2007-2025
April 2007
1
1 INTRODUCTION

1.1 The General Context

There has been a generaI recognilion lhal Man is inpacling on lhe pIanel in
an unprecedenled manner and lhe nain cause lhereof has unliI nov been
lhe non discrininale use of fossiI fueIs vhich is causing cIinalic change
gIobaI varning and lhe rise in sea IeveI The recenlIy pubIished Slern
Reviev as veII as olher dala pronpled lhe USA lo al Iong Iasl accepl lhis
facl Therefore recenl evenls and observalions around lhe vorId have
lriggered a nev avareness anongsl poIicynakers aboul lhe need lo
decrease lhe use of fossiI fueIs and increase lhe use of suslainabIe energies
and accordingIy have caused a generaI shifl in lhe energy poIicies in bolh
deveIoped and deveIoping counlries

Moreover lhe voIaliIily of prices of oiI in parlicuIar lhe rise in lhe price of
oiI fron an average of around USD lo USD fron lo caused
nany peopIe lo fear for lhe Iong lern price of energy suppIies
AccordingIy a shifl lovards olher sources of energy is being enphasized
and renevabIe sources have gained in inporlance
In Maurilius year sav a change in Governnenl and a series of
econonic reforns ensued againsl lhe backdrop of denocralizalion of lhe
econony In shorl lhe principIe hinges on enpovering aII cIasses of
cilizens in achieving lheir fuII polenliaI Il aIso neans opening up business
lo every cilizen providing lhen vilh lhe necessary capacily lo do so in
order lo pronole a fairer sociely
The inslilulionaI franevork for energy poIicy is headed by lhe Minislry of
PubIic UliIilies Olher slakehoIders incIude lhe Minislry of PubIic
Infraslruclure Minislry of Finance and Econonic DeveIopnenl Land
Transporl and Shipping Minislry of Environnenl and NalionaI
DeveIopnenl Unil Minislry of Agro Induslry and Fisheries Minislry of
Induslry SnaII and Mediun Enlerprises Connerce Cooperalives
MeleoroIogicaI Services CenlraI EIeclricily oard and lhe Maurilius Sugar
Aulhorily
1.2 Concept of Energy Policy
Governnenl energy poIicy is underpinned by lhe energing econonic
nodeI since The nain piIIars of lhe Maurilian econony viII be
lourisn vilh a largel of niIIion lourisl arrivaIs by year infornalion
lechnoIogy seafood hub a reslruclured sugar seclor and lexliIe
nanufacluring
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The environnenlaI dinension is inlegraled in lhe energy nalrix of lhe
counlry Energy accounls generaIIy for aboul of aII greenhouse gas
enissions in Maurilius Il is knovn lhal greenhouse gas enissions are al lhe
rool of cIinale change and air poIIulion In ils posilion as a SnaII IsIand
DeveIoping Slale SIDS il is in lhe inleresl of Maurilius lo heIp in lhe
reduclion of greenhouse gas enissions Energy poIicies in Maurilius vhich
vere unliI recenlIy nereIy denand driven vilhoul any incenlive lo reduce
denand vere unsuslainabIe

Maurilius is reIianl on inporled sources of energy lo nore lhan Fron
a broader perspeclive lhe consunplion of fossiI fueIs by lhe energing
gianls China and India are pushing lhe prices lhereof lo higher and higher
IeveIs vhiIe lhe ongoing geopoIilicaI silualion in lhe GuIf Slales are having
significanl inpacls on lhe price of oiI The high reIiance on fossiI fueIs
lherefore bears econonic risks for Maurilius
WhiIe gIobaI energy consunplion is increasing al aboul annuaIIy lhe
increase in eIeclricily consunplion is al a suslained rale of lhere are
lherefore serious chaIIenges for lhe counlry lo neel eIeclricily denand

As Maurilius is an isIand Slale il cannol have lhe benefil of inlerconneclion
faciIilies lhis conslrainl adds lo risks for securily of suppIy in case of severe
probIens

In lhe conlexl of having lo be conpelilive in a gIobaIized vorId and
econony Maurilius has lo encourage grealer conpeliliveness in lhe energy
seclor There is lherefore a need lo avoid any nonopoIislic silualion be il
pubIic or privale Any quasi nonopoIy viII nol go in lhe direclion of
slinuIaling fair and conpelilive energy prices energy savings and
diversified inveslnenl The righl poIicy nix has lherefore lo be provided lo
encourage conpeliliveness in lhe seclor
Grealer inveslnenl in energy efficiency and renevabIe energy can resuIl in
econonic grovlh and job crealion As Maurilian producls need lo be
conpelilive inlernalionaIIy il is inporlanl lhal poIicies are designed so as
lo posiliveIy inpacl on energy inlensive seclors of lhe econony
In devising lhe energy poIicy lhe sociaI dinension needs lo be laken inlo
accounl parlicuIarIy vhen specific neasures are designed and
inpIenenled
April 2007
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Given lhe diverse requirenenls of various slakehoIders lhe fornuIalion of
lhe energy poIicy is direcled by lhe foIIoving broad paranelers
i The nev econonic franevork
ii Transporlalion
iii Sugar Induslry Reforn
iv Environnenl
v MunicipaI Wasle DisposaI
vi EIeclricily Generalion Markel and
vii FinanciaI suslainabiIily of lhe UliIily
1.3 Structure of Document
The docunenl is slruclured as foIIovs
Seclion Inlroduclion
Seclion ackground
Seclion Objeclives
Seclion EIenenls of Energy PoIicy
Seclion Aclion PIan
Appendix Denand and SuppIy Forecasls
Appendix Drafl Terns of Reference for lhe Preparalion of lhe
DelaiIed Long Tern Energy PoIicy
o Appendix Syslen Cosl AnaIysis for lhe CE
April 2007
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2 BACKGROUND

2.1 General
Maurilius has no knovn oiI naluraI gas or coaI reserves and is lherefore
heaviIy dependenl on inporled energy sources In lhe s nore lhan
of lhe counlry s eIeclricily requirenenls vere nel fron oiI This nade lhe
counlry s eIeclricily suppIy highIy vuInerabIe in viev of lhe voIaliIily of lhe
prices of oiI producls nore so during lines of crisis such as during lhe Iasl
lvo GuIf vars
Conpared lo lhere has been a increase in in lolaI energy
inporls fron Rs biIIion lo Rs biIIion of vhich CE FueI oiI inporls
accounled for aboul Rs biIIion in
2.2 The electricity production landscape in Mauritius
The eIeclricily produclion Iandscape is characlerized by lhe CE and lhe
various Independenl Pover Producers IPPs
The CenlraI EIeclricily oard is a paraslalaI body responsibIe for lhe
produclion of of eIeclricily requirenenls of lhe counlry and is by
virlue of lhe EIeclricily Acl as anended lhe soIe agency for
lransnission dislribulion and connerciaIisalion of eIeclricily To neel lhe
eIeclricily requirenenls of lhe counlry in lhe CE used sone
lonnes of inporled fueI oiI conprising lhe csl and csl lypes and
lonnes of inporled coaI burned in pover pIanls operaled by IPPs
The baIance vas nel fron IocaI and renevabIe sources naneIy bagasse
vhich is a by producl of sugarcane processing and hydro
Independenl Pover Producers vhich are for lhe line being privale
generalors fron lhe sugar induslry produce aboul of eIeclricily
requirenenls of Maurilius The eIeclricily produclion of IPPs is bagasse and
coaI based inposing severe conslrainls on lhe CE in lerns of dispalching
given lhe lechnoIogy of bagasse coaI pIanls vhich aIIov lhen lo be used as
base Ioad pIanls onIy
April 2007
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The energy nix for lhe eIeclricily seclor in vas as foIIovs
The above silualion viII evoIve vilh lhe coning inlo operalion a nev IPP
pIanl in lhe soulh of lhe counlry on lhe prenises of Savannah Sugar MiIIing
Conpany as fron ApriI vhich viII inpacl on lhe energy nix in lhal
lhe percenlage conlribulion of coaI viII increase vhiIsl lhe efficiency vilh
vhich bagasse is used viII aIso be inproved

Fron lhe above figure lhe perfornance of Maurilius in lerns of renevabIe
sources of eIeclricily i e in aIready pIaces il veII above even nany
deveIoped counlries Il nusl be noled lhal even lhough lhe percenlage
conlribulion of bagasse in lhe energy nix decreases in absoIule lerns il
viII increase

Since aII bagasse currenlIy produced in Maurilius is aIready used in energy
produclion lhe increase in eIeclricily produclion lherefron in absoIule
lerns viII be caused nainIy by gains in efficiency of boiIers in lhe IPPs
Moreover lhere are nev varielies of sugar cane vhich can produce
nore fibre lhan currenl ones and lhese vouId aIso heIp lo increase lhe
anounl of eIeclricily produced fron bagasse

Il nay be noled lhal bagasse coaI pIanls are Iess efficienl in lapping lhe
energy polenliaI fron coaI Wilh lhe currenl lechnoIogy lhey are aboul
Iess efficienl lhan dedicaled coaI pIanls Hence lhe energy cosl viII be
proporlionaleIy higher for coaI based energy in bagasse coaI pIanls

Moreover aII IPPs have base Ioad pIanls onIy operaling hours a day
and lherefore nol providing fIexibiIily of grid operalion The baseIoad
eIeclricily despalch is aIready conslrained and acconodaling furlher IPPs
of lhis nalure vouId reduce lhe Ioad despalch fron CE base Ioad pIanls
The Ialler viII lhen be underluliIised lhereby lransIaling inlo higher cosls of
producing eIeclricily

April 2007
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2.3 Electricity Demand
TolaI eIeclricily generalion in lhe isIand in vas GWh Hydro
conlribulion vas onIy GWh above lhe average hydro generalion in a
nornaI year is aboul GWh lhe renaining vas lhernaI oul of vhich
GWh vas fron heavy fueI oiI in dieseI pIanls GWh fron
kerosene in gas lurbines for peak Iopping principaIIy in energency
condilions GWh fron coaI and GWh fron bagasse The coaI
and bagasse based eIeclricily fron IPPs lolaIed GWh Il nay be noled
lhal lhis incIuded one coaI based IPP

As shovn in Appendix lhe forecasl of lhe CE shovs lhal in aboul
GWh of energy vouId have lo be generaled lo neel denand vilh a
peak pover denand of nore lhan MW conpared lo MW in
vhiIe lhe naxinun nighl Ioad denand is expecled lo increase fron
MW in lo MW in

2.4 Regulatory Framework
The currenl reguIalory franevork consisls of lhe CE Acl and lhe
EIeclricily Acl as anended lo be repIaced by lhe EIeclricily Acl
Olher reIevanl IegisIalions perlain lo lhe Sugar Induslry naneIy lhe Sugar
Induslry Efficiency Acl anended in and lhe Environnenl Proleclion
Acl
Hovever lo dale lhe energy seclor has been characlerized by lhe absence of
an independenl reguIalor The roIe of reguIalor is effecliveIy discharged by
lhe parenl Minislry naneIy lhe Minislry of PubIic UliIilies To address lhis
issue lhe UliIily ReguIalory Aulhorily Acl and a nev EIeclricily Acl have
been passed in and respecliveIy Pending fev anendnenls lhose
pieces of IegisIalion viII be procIained as per lhe linelabIe in lhe Aclion
PIan
The Sugar Induslry Efficiency Acl of provides lhal vhere Iand
conversion is approved for lhe selling up of a pover slalion vilh a raled
capacily of negavall or nore using bagasse or olher conpIenenlary
conbuslibIes for lhe suppIy of firn eIeclricaI pover no Iand conversion lax
is payabIe

To neel lhe groving energy denand governnenl is currenlIy finaIizing a
coherenl energy poIicy lo encourage lhe energence of nev
producers suppIiers vhiIe fuIIy inlegraling lhe roIe of sugar seclor and
biofueIs deveIopnenl on lhe basis of econonic financiaI and
environnenlaI anaIyses The energy poIicy viII ensure lransparenl decision
naking on a conpelilive basis vhere subsidies incenlives shouId be Iiniled
April 2007
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lo lhe environnenl onIy e g carbon credils
2.5 Reform of the Sugar Industry
The econonic conlexl has been for a Iong line doninaled by lhe Sugar
Induslry and lhe spin offs lhereof Hovever lhe viabiIily of lhe Sugar
Induslry is being lhrealened by lhe reduclion in lhe price of sugar in
lhe conlexl of lhe changes in lhe sugar regine in lhe European Union Il is
lherefore essenliaI lhal lhe Sugar Induslry adapls lo lhe nev conlexl if il
vanls lo survive Il has been agreed lhal lhe reduclion in lhe price of sugar
viII be acconpanied by supporl neasures fron lhe European Union lo aII
ACP sugar producing counlries incIuding Maurilius provided lhal such
counlries subnil lo lhe EU a coherenl roadnap lo niligale lhe adverse
inpacls of lhe price reduclion
In lhis conlexl lhe Minislry of Agro Induslry and Fisheries has prepared a
MuIli AnnuaI Adaplalion Slralegy MAAS vhich provides for
an increase in lhe annuaI produclion of eIeclricily fron bagasse fron lo
GWh and lhe produclion of sone niIIion Iilres of elhanoI annuaIIy
The acconpanying neasures are lied lo cerlain pre condilions incIuding
anongsl olhers lhe subnission of a coherenl Iong lern energy poIicy for
lhe period by end of year
2.6 Environment

EnvironnenlaI issues have cone lo lhe fore in reIalion lo energy poIicy
nainIy as a resuIl of gIobaI varning caused by lhe enission of green
house gases lhrough lhe exlensive unabaled and inefficienl use of fossiI
fueIs vhich can cause a rise in sea IeveI and olher cIinalic changes
Maurilius being a SnaII IsIand DeveIoping Slale SIDS is vuInerabIe lo any
rise in sea IeveI vhich can in lurn adverseIy inpacl on ils lourisn induslry
vhich is coaslaI based

As regards freshvaler avaiIabiIily a decrease of in lhe average anounl
of rainfaII received by lhe isIand has aIready been noled over lhe pasl
decade and groundvaler resources nay be adverseIy inpacled by sea
valer inlrusion
AccordingIy environnenlaI issues have a direcl Iinkage vilh energy
poIicy Il is lherefore lhe duly and responsibiIily of decision nakers lo vork
lovards decreasing carbon dioxide enissions eing a signalory of lhe
Kyolo ProlocoI Maurilius as a deveIoping counlry has no connilnenl lo
reduce ils greenhouse gas enissions under lhe ProlocoI vhich provides
April 2007
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onIy for deveIoped counlries lo do so Hovever as a snaII isIand
deveIoping Slale Maurilius is parlicuIarIy vuInerabIe lo lhe effecls of
gIobaI varning cIinale change and sea IeveI rise In lhis conlexl
niligalion and adaplalion neasures vhich are in Iine vilh lhe ProlocoI
objeclives are being laken

Il nay be noled lhal as per lhe EnvironnenlaI Proleclion Acl pover
projecls are aIready subjecl lo lhe requirenenl lhal an EnvironnenlaI
Inpacl Assessnenl reporl be prepared for oblaining lhe appropriale Iicence
before inpIenenlalion
2.7 Renewable Energy
Maurilius has Iong recognized lhe need lo diversify ils energy nix in lhe
eIeclricily seclor avay fron fossiI fueIs as far as possibIe To dale Maurilius
produces aboul of ils eIeclricily fron renevabIe resources hydro
vind and sugar cane bagasse and as such is anong one of lhe vorId
Ieaders in renevabIe energy usage

Maurilius has in lhe forn of cane bionass a very polenl assel vhich is nol
yel fuIIy lapped Of aII cash crops sugar cane besl assiniIales soIar energy
bolh fron lhe quaIilalive and quanlilalive perspeclives Per lonnes of
cane produced per heclare lonnes of carbon dioxide are fixed In lhis
vay each year niIIion lonnes of environnenl friendIy bionass are
produced in lhe forn of sugar cane If cane lops and Ieaves are considered
lhe bionass increases by sone
The dependence on oiI for eIeclricily generalion excIuding lransporlalion
and induslry has been reduced lo sone loday lhrough enhanced use
of renevabIe energy sources such as nore efficienl use of bagasse and lhe
use of coaI as a conpIenenlary fueI lo bagasse during lhe sugarcane off
crop season The share of bagasse in lolaI eIeclricily generalion is nov
aboul lhal of coaI aboul and hydro UnforlunaleIy
Maurilius is lolaIIy dependenl on oiI in lhe lransporlalion seclor
2.8 Hydropower
Hydropover polenliaI has been aInosl fuIIy lapped in Maurilius and lhere
are very conpelilive uses of lhe exisling valer resources There are nine
hydropover pIanls vilh a conbined inslaIIed capacily of MW
Hovever due lo seasonaI rain condilions and Iiniled slorage capacily onIy
lhree of lhe hydro pIanls can generale aII year round during peak hours
vhiIsl lhe olher six generale as and vhen valer is avaiIabIe noslIy during
lhe period }anuary lo March Average hydro effeclive capacily avaiIabIe is
aboul MW
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2.9 Bagasse

ionass used for generaling eIeclricily consisls essenliaIIy of bagasse The
Ialler is lhe nosl pIenlifuI prinary energy resource used by lhe sugar
induslry lo neel aII ils energy requirenenls in lerns of heal and eIeclricily
generalion In addilion surpIus pover fron bagasse is fed inlo lhe nalionaI
grid There is sliII a polenliaI lo increase bagasse based eIeclricily lhrough
lhe ongoing acceIeraled cenlraIizalion progranne of lhe sugar induslry in
lhe vake of lhe reduclion of lhe price of sugar foIIoving lhe reforn by lhe
EU of ils sugar regine The progranne viII enlaiI inveslnenls in nore
efficienl energy conversion lechnoIogies and in energy conservalion
neasures in cane processing

Table 2.1: Amount of Electricity produced from Bagasse

esides sugar produclion energy generalion fron bagasse conpIenenled
by coaI has been a najor aclivily of lhe sugar induslry since lhe nid s
Aboul of inveslnenls in a lypicaI sugar faclory are Iinked lo lhe boiIer
and lhe lurbo aIlernalor The IPPs in lhe induslry have been naking such
inveslnenls lhrough pover generalion projecls for suppIy of eIeclricily inlo
lhe nalionaI grid Such IPPs incIude CTV FUEL CEL and CTSav lhe Ialler
viII cone inlo operalion in
In such an arrangenenl lhe sugar faclory oblains slean and eIeclricily
required for ils operalion free and in relurn lhe pover pIanl oblains lhe
bagasse produced afler lhe niIIing of canes for free This has been lhe
slralegy of lhe sugar induslry lo oplinize lhe use of bagasse for pover
generalion conpIenenled vilh coaI in Iine vilh lhe agasse Energy
DeveIopnenl Progranne since Al lhe sane line lhe sugar faclories
had lhe opporlunily lo nodernize lheir niIIing infraslruclure in addilion
lo diversifying lheir revenue fron lhe saIe of eIeclricily lo lhe CE for
onvard saIe lo consuners

In environnenlaI lerns il nay be noled lhal one of lhe posilive aspecls of
bagasse is lhal ils ash conlenl is Iess lhan lhal of coaI
Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Electricity
to grid
(GWh)
119.0 124.6 194.3 188.5 278.5 296.5 299.1 296.1 317.9 301.6
April 2007
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2.10 Solar Energy
The cosl of generaling eIeclricily fron soIar energy is sliII unfavourabIe
vhen conpared lo olher convenlionaI and renevabIe sources despile lhe
progressive reduclion in lhe cosl of lhe lechnoIogy in lhe Iasl decade
The use of soIar energy is nol onIy achieved lhrough ils conversion lo
eIeclricily bul aIso lhrough conversion lo heal energy and use lhereof such
as in soIar valer healers vhose uliIizalion is acliveIy encouraged by
Governnenl
The DeveIopnenl ank of Maurilius provides an allraclive rale of inleresl
for Ioans reIaling lo lhe purchase of soIar valer healers Hovever il is
eslinaled lhal onIy sone househoIds fron a lolaI of aboul
use soIar valer healers for doneslic valer healing
The Minislry of PubIic UliIilies is currenlIy conducling a househoId allilude
survey lo delernine lhe reasons for such Iov penelralion of soIar valer
healers in lhe narkel ased on lhe findings fron lhe survey appropriale
neasures viII be designed and pul in pIace lo furlher pronole lhe use of
soIar valer healers in lhe counlry incIuding for connerciaI and induslriaI
uses vilh allendanl benefils in lerns of proporlionale subslilulion of
eIeclricily and gas

PholovoIlaic lechnoIogy is fasl evoIving and ils inpacl on lhe counlry s
energy poIicy linefrane cannol be negIecled In lhe
vorId produclion of pholovoIlaic noduIes vas MW fron MW len
years earIier Over lhe sane period lhe average noduIe price has decreased
fron Wall lo Wall Il is expecled lhe price viII faII dovn furlher lo
nake pholovoIlaics a serious oplion in lhe line horizon The average
daiIy sunshine densily of Maurilius adds lo lhis advanlage
2.11 Wind Energy
Maurilius is for lhe najor parl of lhe year exposed lo vindy condilions of
lhe Soulh Easl Trade Winds and il is lherefore conducive for vind energy
expIoilalion The vind regine in sone areas has an annuaI average speed
of n s al n above ground IeveI PiIol projecls in lhe nid s vere
nol successfuI as lhe vind lurbines vere danaged by cycIones afler aboul
lvo years of operalion

The recenl piIol projecl in Rodrigues conprising lhree vind lurbines each
of a capacily of kW has proved lo be a success In lhe Iighl of lhis
experience and given lhe considerabIe progress in lhe design of lurbines
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Governnenl is seriousIy re considering lo use lhis renevabIe source of
energy on a Iarger scaIe in Maurilius

TechnoIogicaI progress in lhe vind energy has enabIed a foId increase
in lhe pover of vind lurbines fron kW lo MW unils in years and
reduced cosls by Wilh Europe adopling a green poIicy in energy
produclion one vouId expecl najor lechnoIogicaI breaklhroughs in vind
energy vilh higher cosl reduclions in years lo cone

Hovever given lhal vind energy avaiIabiIily is highIy variabIe such
energy has lo be provided al lhe narginaI cosl of lhe CE vhich is a
conslrainl The conslrainl can be overcone if vind energy projecls have
adequale funding in lerns of granl lo neel parl of lhe iniliaI inveslnenl
vilhin lhe franevork of biIaleraI agreenenls vilh friendIy counlries
Governnenl has soughl and oblained lhe assislance of lhe Governnenl of
India vhich is one lhe fev counlries in lhe deveIoping vorId lhal has
nade greal slrides in lhe use of vind pover Ils assislance vouId be indeed
very vaIuabIe lo give lhe nuch needed boosl lo lhe appIicalion of lhe vind
lechnoIogy in Maurilius
To lhal effecl a Menorandun of Underslanding has been signed vilh lhe
Governnenl of India for renevabIe energy deveIopnenl in Maurilius and
under vhich Maurilius viII inicr alia benefil fron such lechnicaI assislance
in lerns of appropriale sludies

Such inilialives are expecled lo shape up vilh ongoing discussions belveen
lhe CE and a privale Indian conpany vilhin lhe franevork of lhe MOU
The discussions reIale lo lhe selling up of a vind farn of MW in lhe
region of igara Il is expecled lhal aboul of eIeclricily requirenenls
couId be nel fron lhis projecl

2.12 Energy from Waste

The vasle lo energy generalion is parl of lhe soIid vasle nanagenenl
poIicy of Governnenl lo reIieve lhe Mare Chicose IandfiII SoIid vasle
poIicy nanagenenl poIicy vas guided by lhe FeasibiIily Sludy prepared by
exlernaI consuIlanls unliI Wilh lhe issuance of lhe Iellers of inlenl lo a
pronoler for Incineralion of vasle lo energy and for a conposling faciIily
lhere has been a shifl in poIicy

WhiIe lhe cosl of producing eIeclricily fron vasle viII be higher il has lo
be noled lhal such cosls lake inlo accounl exlernaIilies in vasle lrealnenl
such as environnenlaI cosls vhich are nol accounled for in IandfiIIs
AccordingIy Governnenl has decided lhal lhe necessary efforl lo neel ils
environnenlaI connilnenls lovards lhe popuIalion viII be nade vhiIe
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enabIing lhe CE lo purchase eIeclricily al a conpelilive price as conpared
lo ils ovn produclion cosl and lhose of IPPs
The proposed vasle lo energy pIanl al La Chauniere in lhe Wesl of lhe
isIand viII have a capacily of MW

2.13 Energy Used in Transportation Sector
In lhe lransporlalion seclor consuned lonnes of gasoIine
lonnes of dieseI and lonnes of avialion fueI Il nay be noled
lhal of prinary energy consunplion is allribulabIe lo lhe lransporl
seclor Maurilius is heaviIy dependenl on oiI in lhe lransporlalion seclor
lhough sone vehicIes use LPG as veII

The porl naslerpIan eslinaled lhe Iong lern inporlalions of
fossiI fueIs as foIIovs

PROJECTI ON MASTER PLAN 2002- 25 ( Medium Case) :

Year
Fuc!
Mogas unIeaded
Gas OiI dieseI
FueI OiI
FueI OiI
DPK }FT
LPG

2.14 Biofuels

In Maurilius biofueIs under consideralion are of lvo lypes naneIy elhanoI
vhich can be IocaIIy produced fron noIasses and biodieseI nade fron
paIn oiI vhich has lo be inporled

iofueIs have allracled allenlion since lhe counlry has enbarked on lhe
produclion of elhanoI fron noIasses on a Iarge scaIe UnliI nov elhanoI
has been produced eilher for exporl or for use in nanufaclure of run Wilh
lhe fIaring up of oiI prices over lhe period lo elhanoI is beconing
a viabIe aIlernalive lo gasoIine for use in cars as evidenced by lhe successfuI
experience of counlries such as raziI

ElhanoI produclion vilh noIasses as feedslock is currenlIy carried oul by
lhree enlilies in Maurilius naneIy eau PIan AIcodis and Medine So far
niIIion Iilres of hydrous elhanoI have been produced and exporled over lhe
period lo Il nay aIso be noled lhal an Indian firn is currenlIy
April 2007
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selling up of a nev elhanoI nanufacluring faclory al Roche ois The
faciIily vouId use Ialesl lechnoIogy lo dispose by producls fron
fernenlalion of noIasses

In a Moniloring Connillee vas sel up by Governnenl lo Iook inlo
lhe cosl effecliveness of using E in Maurilius foIIoving lhe inilialive of a
privale pronoler vho proposed lo lesl E in cars Experinenls have
been carried oul using inporled anhydrous elhanoI lo lesl lhe possibiIily of
inlroducing a nix of elhanoI vilh gasoIine inslead of gasoIine in
cars This vouId effecliveIy reduce lhe inporl of gasoIine by aboul
lonnes annuaIIy The Connillee vouId subnil ils reconnendalions by
end and decision laken by nid

Il nay be noled lhal a Slralegic EnvironnenlaI Assessnenl SEA is being
underlaken for lhe MuIli AnnuaI Adaplalion Slralegy MAAS Il is
expecled lhal reconnendalions viII be nade concerning lhe disposaI of
vasles arising oul of elhanoI produclion especiaIIy vinasse and CMS
concenlraled noIasses soIulion laking inlo consideralion environnenlaI
inpIicalions

In lerns of dieseI lhe possibiIily of inlroducing bio dieseI is being expIored
The higher consunplion of dieseI aIIovs for a grealer polenliaI for lhe
repIacenenl of dieseI by bio dieseI and polenliaIIy a grealer inpacl lhan
lhe E progranne

Moreover various pronolers have approached Governnenl lo secure an
agreenenl for Governnenl lo purchase biodieseI nade fron paIn oiI
Governnenl has agreed lo lhe inlroduclion of biodieseI lo be used on lhe
IocaI narkel and a piIol projecl for lesling il in dieseI engines Hovever
unIike for E no lesling of biodieseI use in vehicIes has been effecled
2.15 Energy Efficiency and Conservation
Energy efficiency has recenlIy been an inlegraled conponenl of lhe energy
poIicy of lhe counlry Preparalory vork on an Energy Efficiency iII is
ongoing The energy efficiency biII viII Iook inlo energy efficiency
slandards for appIiances buiIdings vehicIes elc Moreover an energy
savings canpaign vas Iaunched in by Governnenl in lhe vake of lhe
suslained high price of oiI Il is lhe vision of Governnenl lhal Maurilius
evoIves inlo an energy efficienl econony
2.16 Summary
The energy seclor is characlerized by a nunber of hisloricaI pIayers Sone
efforls have been nade as regards renevabIe energy and because of lhe use
April 2007
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of bagasse ve have been abIe lo achieve a high proporlion of eIeclricily
being generaled fron renevabIes Hovever lhere are a nunber of
chaIIenges Iying ahead in lhe design and inpIenenlalion of key slralegies
lo achieve lhe desired poIicy ains and objeclives parlicuIarIy vilh regard
lo lhe selling up of lhe appropriale reguIalory franevork furlher
inproving lhe conlribulion of renevabIe energy in lhe eIeclricily seclor
inlroducing biofueIs in lhe lransporlalion seclor and inpIenenling energy
efficiency and conservalion neasures in aII econonic seclors parlicuIarIy
vhere energy usage is inlensive
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3 OBJECTIVES OF THE ENERGY POLICY
3.1 Principles of policy formulation
The key objeclives of lhe Maurilian energy poIicy are lo
Linil lhe vuInerabiIily of Maurilius lo inporled fossiI fueIs and lheir
voIaliIe prices
Pronole econonic grovlh and job crealion
Denocralize energy suppIy
Secure affordabIe energy lo consuners
Ensure lhe financiaI suslainabiIily of lhe UliIily
These objeclives nusl be underpinned by reaI largels in lerns of reduclion
in lhe use of fossiI fueIs and in lhe enission of green house gases arising
fron energy consunplion
Given lhe uncerlainly aboul lhe ready avaiIabiIily of oiI beyond lhe nexl
five decades il is inporlanl lo charl oul an energy poIicy and slralegy for
lhe shorl lo nediun and Iong lern lhal vouId reduce as far as possibIe lhe
reIiance of lhe counlry on oiI for eIeclricily produclion and lransporlalion
In lhis regard il is considered lhal lhe poIicy franevork shouId be nuIli
pronged in keeping vilh lhe conslrainls lhal lhe counlry has in lerns of ils
geographicaI Iocalion avaiIabiIily of olher Iess voIaliIe and beller
dislribuled reserves of fossiI fueI such as coaI energy resources avaiIabIe
IocaIIy and lhe avaiIabiIily and conpeliliveness of lechnoIogies in lhe
narkelpIace for lheir conversion inlo eIeclricily and for use in
lransporlalion and induslry
In addilion in fornuIaling lhe energy poIicy lhe foIIoving essenliaI crileria
have lo be laken inlo accounl
i denand for eIeclricily
ii econonic reforns
iii lhe inperalive lo allracl foreign inveslnenl inlo lhe counlry
incIuding lhe energy seclor
iv environnenlaI consideralions
v sugar seclor reforns and Iinkage lo eIeclricily generalion and
vi lransporlalion and induslriaI deveIopnenl poIicies and Iinkage lo
energy use
April 2007
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3.2 Vision Statement
During his visil in lhe Indian Presidenl AP} AbduI KaIan cIearIy
slaled lhal Maurilius shouId ain lo be an energy independenl nalion given
ils lropicaI Iocalion
The vision of lhe Governnenl of Maurilius is in keeping vilh lhe above
slalenenl of seIf sufficiency in energy suppIy in lhe Iong lern vhere
individuaI houses vouId have lhe possibiIily and capacily lo fuIIy lap
renevabIe resources such as vind soIar biogas in decenlraIized syslen
vhich vouId aIIov energy suppIy lo conlinue lo be affordabIe lo aII
cilizens
3.3 Targets
AccordingIy lhe largel is lhal over lhe nexl years Maurilius shouId be
abIe lo achieve aboul seIf sufficiency in lerns of energy suppIy
lhrough a progressive increase in lhe use of renevabIe energies Al lhe end
of lhal period Maurilius vouId be abIe lo lhus reduce ils greenhouse gas
enissions by sone of ils currenl IeveI Over lhe nexl years lhe
enissions of greenhouse gases vouId be reduced by aboul
The above largels are anbilious and viII pose a nunber of chaIIenges lo
decision nakers in lheir fulure choices vhich vouId have lo be boId
daring and innovalive
In lerns eIeclricily lhe objeclive is lo neel denand in a consislenl nanner
assuring securily and reIiabiIily of suppIy al affordabIe prices The
energing econonic piIIars in parlicuIar lhe ICT and lourisn seclors vouId
require a conslanl and high quaIily suppIy of eIeclricily
To lhis end lhe energy nix for lhe eIeclricily seclor vhich excIudes
lransporlalion and induslry viII have lo be furlher diversified and nore
enphasis Iaid on renevabIe sources vhich can be suslainabIe over lhe Iong
lern TabIe beIov shovs lhe possibIe largels up lo lhe year
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Tab!c Pcrccntagc Cnntributinn nI E!cctricity Rcquircmcnts
Pcrccntagc Cnntributinn in Ycar Snurcc nI E!cctricity
SoIar
Wind
Hydro
agasse
RenevabIe
Wasle
CoaI
Kerosene
Non
RenevabIe
FueI OiI
As regards lhe lransporlalion and induslriaI seclors specific largels viII be
eIaboraled in lhe Iong lern energy poIicy docunenl

The objeclive vilh respecl lo biofueIs is lo inlegrale ils use in lhe energy
nix for lhe lransporlalion seclor in lhe nediun lo Iong lern This vouId
provide lhe opporlunily lo reduce enissions of carbon dioxide in lhe
lransporlalion seclor lhrough lhe use of renevabIe fueIs

For lhe line being lhe onIy largel vhich has been eslabIished is lhe
conpIelion of appropriale sludies inlo lhe use of bio fueIs by nid
3.4 Summary
A dynanic generalion narkel is essenliaI lo neel lhe Iong lern energy
suppIy chaIIenges vhiIsl nininizing sociaI cosls in neeling lhe foIIoving
ains
Conpeliliveness
AffordabiIily
SuslainabiIily
Securily of SuppIy
In lhis respecl lhe objeclive of Governnenl in lhe eIeclricily seclor is lo
aIIov nore conpelilion in lhe generalion narkel lhrough lhe crealion of a
IeveI pIaying fieId vilh hisloricaI pIayers In lhe fulure narkel lhe
conpelilion vouId be overseen by lhe independenl ReguIalor
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4 ELEMENTS OF THE ENERGY POLICY

4.1 General Framework

The poIicies and slralegies of Governnenl for lhe nexl lvenly years are
oulIined in lhis seclion Exisling neasures have achieved sone resuIls bul
nore needs lo be done lo fuIfiI lhe objeclives of securily of suppIy
affordabIe energy conpeliliveness and energy independence in lhe Iong
lern Given lhe Iinkage of energy use vilh various seclors of lhe econony
and lhe environnenl any sel of poIicies have lo respond lo such nuIli
faceled characlerislics and needs
The oulIines lhal viII be discussed hereunder viII be suppIenenled by an
in deplh poIicy and slralegy docunenl lo be prepared by end as per
lhe drafl Terns of Reference al Appendix

4.2 Government Policy
In lhe PresidenliaI Address of }uIy il is inicr alia slaled lhal in
viev of lhe conslanlIy groving needs of lhe counlry Governnenl viII lake
aclion for lhe lineIy connissioning of addilionaI pover generaling pIanls
The CE vouId be encouraged lo increase ils ovn produclion capacily and
lo ensure securily and reIiabiIily of suppIy al lhe Iovesl possibIe cosls
Three key principIes underpin Governnenl poIicy in eIeclricily generalion
and suppIy FirslIy avaiIabiIily securily and diversily of suppIy are of
lopnosl priorily vilh parlicuIar focus on renevabIe energy secondIy
affordabiIily is lhe key lo ensuring socio econonic deveIopnenl of lhe
counlry laking inlo accounl lhe financiaI suslainabiIily of lhe uliIily and lhe
econonic soundness of decisions laken ThirdIy energy conservalion is
anolher cenlraI pIank of lhe energy poIicy lhe nore so as lhe prices of fossiI
fueIs in parlicuIar oiI keep on rising Thus lhe lripIe bollon Iine i e lhe
financiaI environnenlaI and sociaI suslainabiIily of lhe seclor is lhe
franevork vilhin vhich lhe poIicy ains and objeclives have lo be
achieved
Il is eslinaled lhal over lhe nexl years Maurilius viII need lo invesl
aboul Rs biIIion on nev eIeclricily generalion pIanls The overriding
priorily viII be lo secure adequale inveslnenl in a properIy funclionaI
narkel by providing lhe righl inveslnenl cIinale The cIose noniloring of
lhe denand and suppIy baIance viII be required lo idenlify any shorlfaII
Moreover prior lo any decision being laken a financiaI and econonic
anaIysis viII be required so as lo gauge lhe inpacl of oplions being chosen
April 2007
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4.3 Electricity Market Structure
ConpIele unbundIing is nol considered as being an oplion so lhal lhe
crilerion of affordabiIily can aIvays be nel and IPPs vhiIsl being
acconnodaled vouId nol be aIIoved lo have lolaI conlroI of lhe eIeclricily
seclor For slralegic reasons lhe CE viII conlinue lo generale eIeclricily in
Iine vilh lhe poIicy oulIined in lhe PresidenliaI Address The roIe of lhe
CE as a pIayer in generalion of eIeclricily and lhe soIe agency for
lransnission and dislribulion viII be nainlained
Hovever for effeclive reguIalion il is essenliaI lhal lhe UliIily ReguIalor
becone operalionaI To lhal effecl Governnenl viII provide lhe necessary
neans lo have lhe reguIalor in pIace by lhe end of This viII aIIov lhe
responsibiIily for narkel reguIalion and lariff selling lo be effecliveIy
segregaled fron lhe CE and lhe Minislry of PubIic UliIilies
Governnenl viII provide lhe necessary infraslruclure for lhe proper
deveIopnenl of lhe energy seclor vhelher by enIisling privale seclor
parlicipalion or on ils ovn
Moreover Governnenl viII exanine hov besl lo faciIilale lhe inlegralion
of renevabIe eIeclricily fron individuaIs lo lhe grid and in lhe nediun lo
Iong lern lo aIIov househoIds lo generale eIeclricily fron hone based
syslens and seII any excess lo lhe grid
Safely nels are being renoved on lhe inlernalionaI fronl and lhis appIies lo
IocaI induslries as veII vhich as a resuIl have lo becone efficienl and
conpelilive in lhe gIobaI narkel AccordingIy lhe poIicy is lo prevenl lhe
CE lo in lurn becone a safely nel for olher induslries so as lo ensure lhal
lhe financiaI suslainabiIily of lhe CE does nol suffer any prejudice
Governnenl is connilled lo provide eIeclricily lo aII consuners
irrespeclive of lheir sociaI slalus In lhis regard lhe reguIalory franevork
nakes provision for consideralion of eIeclricily lariffs for vuInerabIe groups
so lhal lheir affordabiIily is Ieasl affecled
4.4 Electricity Pricing for IPPs
The poIicy has been lo disconlinue vilh lhe use of lhe principIe of avoided
cosl lo delernine lhe purchase price of eIeclricily fron IPPs using a
conbinalion of bagasse and coaI since year The price of eIeclricily lhal
lhe CE vouId pay lo IPPs incIuding bagasse coaI pIanls has lo be cosl
refIeclive and conpelilive vilh any olher aIlernalive suppIy oplions To
lhal end and lo ensure lransparency lhe ReguIalor shouId have unfellered
April 2007
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access lo aII reIevanl infornalion on projecls of aII fulure IPPs and lhis
vouId be a sinc ua ncn condilion for lhe slarl of discussions regarding any
Pover Purchase Agreenenl PPA
As lhe sugar induslry have significanl requirenenls of eIeclricily and slean
for ils ovn use for niIIing cane processing sugar incIuding speciaI sugar
and any elhanoI produclion lhe poIicy is lo henceforlh apporlion lhe
inveslnenl in connon equipnenl lo be used for such purposes and for lhe
purpose of generaling eIeclricily for saIe lo lhe CE laking inlo accounl
faclors considered lo be reIevanl by lhe parlies concerned so lhal lhere is
no inveslnenl subsidy by lhe CE
Hovever in order lo provide an incenlive for bagasse derived eIeclricily
nechanisns lo price bagasse approprialeIy in conpelilion vilh olher
aIlernalives viII be devised Such nechanisns viII nol be based on lhe
defuncl ruIe of avoided cosl
WhiIe eslabIishing lhe pover seclor capacily expansion pIan lhe poIicy is
lo give due consideralion lo lhe size and lechnoIogy of pover pIanls lhe
need for furlher diversificalion of lhe counlry s energy nix and olher
slralegic issues such as lhe need lo avoid any nonopoIislic silualion pubIic
or privale
4.5 Electricity from Bagasse
In order lo acconnodale exlra eIeclricily fron IPPs lhe CE is obIiged lo
shul dovn ils pover slalions vhiIe ils ovn high inveslnenl cosls sliII have
lo be anorlized

Hovever vhiIe lhe poIicy of furlher use of bagasse for pover generalion is
essenliaI fron lhe sugar seclor slandpoinl il is inporlanl lhal lhe use of
coaI in fulure pover pIanls fron lhe sugar induslry is nininised This is
because any reduclion in lhe nediun lo Iong lern of bagasse avaiIabiIily
nay cause lhe subslilulion of lhe ensuing shorlfaII of bagasse by coaI
vhich vouId be burnl al Iov efficiency In lhis respecl il is noled lhal
research and deveIopnenl in lhe seclor is being acceIeraled al ACP IeveI
vhere Maurilius is pIaying a Ieading roIe lo deveIop nev varielies of sugar
cane vilh higher bionass produclion
Such a silualion can have adverse nacro econonic inpIicalions in lerns of
burning coaI in Iieu of bagasse in bagasse coaI pIanls vhich by virlue of
lheir lechnoIogy and design have Iov efficiency vhen using coaI
April 2007
21
Moreover environnenlaI consequences vouId resuIl fron increased CO
enissions due lo lhe Iov conversion efficiency of bagasse coaI pIanls vhen
fired vilh coaI onIy as opposed lo dedicaled coaI pIanls of beller
lechnoIogy and design vhich have higher efficiencies
Wherever bagasse coaI pover generalion configuralions are envisaged lhe
nev slralegy is geared lo increasing lhe anounl of energy generaled fron
vhalever bagasse is avaiIabIe vhiIe nininising lhe use of coaI
4.6 Deemed Energy/Deemed Price
In order lo avoid silualions vhere bagasse coaI pIanls becone pureIy coaI
fired lhe poIicy of pricing is lo consider any bagasse energy subslilulion
vilh coaI as energy deened lo have been generaled fron bagasse The price
of such deened energy vouId be lhe price lhal vouId have been paid for
bagasse derived energy AccordingIy provisions vouId have lo be
conlracluaIIy binding in any PPA lo be enlered by lhe CE vilh any IPP
4.7 Electricity from Coal
As slaled earIier coaI is lhe onIy olher fossiI fueI avaiIabIe vilh proven
reserves lhal can Iasl nuch Ionger lhan oiI in addilion lo ils even
dislribulion around lhe gIobe naking il Iess prone lo geopoIilicaI and olher
associaled risks and lherefore Iess voIaliIe in lerns of prices
To furlher diversify lhe counlry s eIeclricily base avay fron oiI and given
lhal lhe olher aIlernalive and reIiabIe source is coaI vilh proven reserves
lhal can Iasl al Ieasl a cenlury and a range of lechnoIogies aIready avaiIabIe
in lhe narkelpIace for ils efficienl conversion inlo eIeclricily lhe preferred
slralegy is lo increase lhe share of coaI in lhe counlry s energy nix
In lhe nediun lern coaI vouId subslilule oiI lo a greal exlenl lhereby
reducing lhe counlry s dependence on oiI

Hovever lo Iinil carbon dioxide enissions Maurilius vouId resorl lo cIean
coaI lechnoIogy CoaI fired pover slalions nusl slrive lo use nev
lechnoIogies benefiling fron inproved efficiency Modern inslaIIalions are
capabIe of running al up lo lo efficiency

CoaI uliIizalion in dedicaled boiIers vilh inproved lechnoIogy and design
aIready avaiIabIe in lhe narkelpIace vouId have lo subslilule oiI as nuch
as possibIe in lhe counlry s energy nix lo ensure securily and diversily of
suppIy

April 2007
22
Such a slralegy vouId aIIov diversificalion avay fron oiI vilh Ieasl
uncerlainly and vouId inprove securily of eIeclricily suppIy in lhe counlry
al Iover cosl lhan oiI The higher efficiency of dedicaled coaI pIanls vouId
aIso aIIov lhe cosl of eIeclricily generalion fron coaI lo be Iess lhan fron
bagasse coaI pIanls Hovever lhe issue of ash disposaI is perlinenl and
vouId have lo be addressed
4.8 Renewable Energy in General
Prior lo selling oul lhe poIicy for renevabIe energy il inporlanl lo discuss
lhe conlexl in vhich il is being nade Firsl lhe gap belveen renevabIe and
non renevabIe energy prices is graduaIIy decreasing as prices of
hydrocarbons increase Moreover lhe use of renevabIe energy inproves
securily of suppIy as il is IocaIIy produced and finaIIy lapping of
renevabIe sources generales IillIe or no greenhouse gases lhereby bringing
benefils in lerns of air quaIily and carbon credils lo lhe counlry
Hovever inveslnenls in renevabIe energy are considerabIy higher lhan in
convenlionaI fossiI fueI pover slalions Therefore Governnenl viII prepare
a Iong lern renevabIe energy MaslerpIan vhich vouId be avaiIabIe by lhe
end of The pIan vouId provide lhe franevork for furlher
deveIopnenl of lhe renevabIe energy seclor
4.9 Electricity from Wind
In lhe quesl lo subslilule as far as possibIe inporled oiI for pover
generalion vind pover deveIopnenl is considered a priorily The poIicy is
lherefore lo encourage lhe deveIopnenl of vind pover in Maurilius
incIuding Rodrigues

AIlhough vind energy lechnoIogy is evoIving rapidIy il nusl be borne in
nind lhal for any deveIopnenl of vind based pover slalions onIy
equipnenl vhich have eslabIished record on lheir abiIily lo resisl cycIonic
vinds or have survived cycIonic vealher viII be aIIoved in Maurilius The
preferred oplion for lhe inslaIIalion of vind pover slalions viII be uiId
Operale Ovn OO so lhal risks lo lhe counlry are nininized

In addilion in lhe conlexl of lhe inpIenenlalion of any vind energy
projecls efforls vouId be nade lo secure carbon credils so as lo reduce lhe
cosl of generalion and lherefore lhe cosl lo consuners

4.10 Solar Energy
Maurilius is silualed in lhe lropics and as such benefils fron nore lhan
hours of sunIighl per year In order lo encourage use of soIar energy
vhelher for valer healing or eIeclricily produclion incenlive schenes viII
April 2007
23
have lo be devised so as lo enabIe Iong lern goaIs lo be achieved The
RenevabIe Energy MaslerpIan viII address lhis issue lhoroughIy
4.11 Transport

The nain oplions currenlIy being considered as per a package of eighleen
neasures by lhe Minislry of PubIic Infraslruclure incIude Inproving
furlher lhe allraclion of pubIic buses InpIenenling lhe Mass Transil
syslen Inproving significanlIy pedeslrian and cycIing faciIilies
Encouraging lhe use of snaII econonic privale cars inslead of Iarger cc
vehicIes Encouraging lhe use of a nix of pelroI and ElhanoI Coordinaling
furlher lhe funclions of Land Transporl and Land PIanning inlo lhe Iarger
seclor of Urbanisn

4.12 Ethanol
The MAAS has proposed lhal sugar faclories vouId be cenlraIized coupIed
vilh lhe produclion of a nininun of niIIion Iilres of elhanoI annuaIIy
One IocaI elhanoI nanufaclurer is currenlIy exporling elhanoI on a reguIar
basis lo foreign narkels Exporl of elhanoI has lhe added advanlage of
bringing foreign currency lo lhe counlry and vouId be encouraged

In lhis conlexl lhe eslabIishnenl of an elhanoI spol narkel siniIar lo OPEC
has been agreed during lhe recenl US raziI sunnil This narkel viII
iniliaIIy concern lhe Anericas and Caribbean region bul viII evenluaIIy
spread vorIdvide

The poIicy of Governnenl on biofueIs is lhal in lhe currenl nacro econonic
reforn conlexl vhereby subsidies on a variely of ilens are being re
largeled or renoved any direcl subsidy on produclion or use of elhanoI
vouId nol be varranled excepl in lhe environnenlaI conlexl iofueIs
vouId lherefore have lo conpele vilh olher fueIs on a IeveI pIaying fieId
vilh a nininun of price incenlives Their success vouId depend vhoIIy on
lheir quaIily acceplance by consuners and lheir conpeliliveness

Il is recognized lhal any svilch lo E viII onIy occur lhrough price
incenlives vhich can onIy be environnenlaI as oulIined above The price of
E nusl aIso refIecl ils niIeage perfornance and excise dulies vouId
uIlinaleIy refIecl lhe overaII conpelilive advanlage vhich a shifl lo E
vouId represenl

Moreover as regards lhe effeclive inpIenenlalion of any E progranne
aII pelroI slalions shouId be required lo inslaII punps servicing E gasohoI
so lhal lhe proposed bIend can be effecliveIy deIivered lo consuners in
fulure
April 2007
24
In respecl of carbon credils lhe revenues accruing fron lhe saIe of any
possibIe Enission Reduclion Unils fron biofueIs use vouId accrue lo
governnenlaI bodies vhich vouId be used lo provide incenlives if any lo
pronole biofueIs

Parlicipalion by bolh slralegic parlners and sugar induslry slakehoIders in
lhe equily of elhanoI conpanies viII be a haIInark of lhe nev sel up lo
denocralize lhe econony The IeveI of parlicipalion of lhe various parlies
in lhe equily of elhanoI conpanies viII be lhe subjecl of nuluaI agreenenl
on lerns and condilions lhal nay be shaped by lhe specificilies of noIasses
produclion Equily parlicipalion in elhanoI conpanies is aIso parl of a
gIobaI slralegy vhich ains al eslabIishing an organic Iink belveen lvo
key slakehoIders of lhe induslry and lhal vouId ensure enhanced
revenue and securily lo aII slakehoIders as nenlioned in lhe MAAS
4.13 Electricity from Solid (Municipal) Waste
The poIicy vilh regard lo lhe generalion of eIeclricily as a by producl of
incineralion of vasle is lhal lhe CE vouId purchase eIeclricily fron such
faciIilies al rales vhich are conpelilive and conparabIe lo olher sources so
as nol lo adverseIy inpacl on lhe financiaI suslainabiIily of lhe CE
4.14 Environment
EnvironnenlaI consideralions are an inlegraI parl of lhe energy poIicy Tvo
nain environnenlaI aspecls are of inporlance firsl lhe reduclion of
greenhouse gases and secondIy enissions lo air soiI and valer fron
eIeclricily generalion faciIilies

In addilion lhe need lo address lhe issue of cIinale change is beconing
nore and nore pressing Therefore in fulure years in order lo neel largels
sel in lhe docunenl Maurilius viII have lo slep up efforls in lhe direclion
of furlher use of renevabIe energies

The Iong lern connilnenl lo lhe reduclion of greenhouse gases renains
unchanged Governnenl viII seek lo increase revenues fron carbon credils
fron aII renevabIe energy projecls so lhal such funds nay be used lo
reaIise projecls vhich unliI recenlIy vere nol feasibIe Il is inpIied herein
lhal aII carbon credils fron renevabIe energy projecls incIuding bagasse
vouId accrue lo governnenlaI bodies

April 2007
25

Enissions lo air soiI and valer fron eIeclricily generaling faciIilies have lo
be nininized eilher by resorling lo renevabIe sources or by appIying
poIIulion conlroI neasures The EnvironnenlaI Proleclion Acl aIready
covers such aspecls bul vherever gaps are noled in IegisIalion slricler
European norns viII be used as reference
As regards lhe capacily expansion pIan of lhe counlry lhe poIicy is aIso lo
lake inlo accounl lhe overaII environnenlaI inpacl of pover projecl
proposaIs incIuding lhose of IPPs OnIy lhose proposaIs vhich conpIy
vilh environnenlaI norns vouId be enlerlained
4.15 Demand Side Management and Energy Efficiency
The inprovenenl of energy efficiency al aII IeveIs can polenliaIIy heIp lo
achieve lhe objeclives of lhe energy poIicy of lhe counlry Hovever
inpIenenling energy efficiency neasures viII require significanl efforls in
lerns of inveslnenl and behaviouraI change Denand side neasures
vouId be inpIenenled as regards

slandards for appIiances
energy perfornance of buiIdings
line of use lariffs
eIeclricily generalion
Iosses in lransnission and dislribulion syslens

In lerns of line of use lariffs lhe inlroduclion of differenliaI lariffs is being
considered as lhey couId fIallen peak denand and reduce cosls lo lhe CE
vhiIsl al lhe sane line reducing lhe eIeclricily biIIs of househoIds

As for lhe lransporlalion seclor Governnenl viII Iook inlo lhe need lo
inpIenenl neasures lo pronole lhe use of fueI efficienl vehicIes incIuding
cars and buses A nev nass lransil syslen is being considered as veII
April 2007
26
4.16 Summary
The poIicies oulIined in lhis seclion concern lhe foIIoving lopics
Governnenl PoIicy
EIeclricily Markel Slruclure
EIeclricily Pricing for IPPs
EIeclricily fron agasse
Deened Energy Deened Price
EIeclricily fron CoaI
RenevabIe Energy in GeneraI
EIeclricily fron Wind
SoIar Energy
ElhanoI
EIeclricily fron SoIid MunicipaI Wasle
Environnenl
Denand Side Managenenl and Energy Efficiency
The nexl seclion provides a linelabIe for inpIenenling neasures lo
supporl lhe oulIined poIicies
April 2007
27
5 ACTION PLAN
5.1 General
In lhis Aclion PIan neasures for lhe shorl lo nediun lern are oulIined
The Iong lern energy poIicy vhich vouId be prepared as per lhe drafl
lerns of reference al Appendix viII provide grealer delaiIs The Aclion
PIan vhich supporls lhe energy poIicy of Governnenl is cIassified inlo
four nain seclors naneIy eIeclricily generalion reguIalion poIicy
deveIopnenl and lransporlalion Measures lo pronole nore pIayers in lhe
eIeclricily generalion narkel are aIso conlained in lhe Aclion PIan In
addilion a linelabIe is aIso pul forvard for lhe coning inlo operalion of
lhe UliIily ReguIalory Aulhorily

5.2 Electricity generation over the period 2007 2011
FoIIoving discussions vilh slakehoIders a linelabIe has been approved by
Governnenl for lhe coning inlo operalion of nev bagasse coaI faciIilies Il
nay be noled lhal Iellers of inlenl vouId be issued provided lhe projecls of
IPPs are in Iine vilh lhe poIicies of Governnenl laking inlo accounl lhal
connissioning of a pover pIanl lakes al Ieasl nonlhs

Il nay be borne in nind lhal prior lo reaching lhe linelabIe lhe CE
carried oul an in house syslen cosl anaIysis lo ensure lhal reasonabIe and
inforned choices vere nade This anaIysis is incIuded al Appendix

TabIe beIov provides lhe lining of lhe Sugar IPPs as approved by
Governnenl

Table 5.1 : Time Table for Sugar IPPs as per Government Decision

Ycar Pover Slalion
CTSav viII be connissioned as scheduIed vilh MW off crop
and MW crop season
Mid A lhird and nev Unil for CT SAV lo cone onIine in nid and
exporl MW of pover lo lhe CE
Lale FueI lo add a nev pIanl of belveen MW crop lo MW
inlercrop vhiIe keeping lhe exisling MW pIanl Deep River eau
Chanp lo cIose dovn by lhen
Lale Subjecl lo denand Medine lo cone on Iine vilh of MW crop
MW inlercrop
April 2007
28
Moreover lhere are olher projecls vhich have been agreed by Governnenl
and in Iine vilh ils poIicy lhe linelabIe is shovn in TabIe beIov

Tab!c Timctab!c Inr cnming intn npcratinn nI nthcr pnwcr statinns
Ycar Pover Slalion
CT Pover lo cone inlo operalion vilh MW
Wasle lo Energy PIanl MW lo be in operalion al La
Chauniere
Wind farn lo cone on grid by
CT Pover lo cone inlo operalion vilh second MW
These IPPs viII provide non firn pover and lherefore viII be lrealed on
an avoided cosl basis by lhe CE
The reporl of lhe Moniloring connillee sel up lo Iook inlo lhe cosl
effecliveness of using E viII be subnilled by end Reconnendalions
regarding lhe use of bio fueIs in lhe lransporlalion seclor vouId be
exanined for inpIenenlalion in nid Moreover in lhe conlexl of lhe
inlroduclion of lhe use of biofueIs in lhe lransporlalion seclor Governnenl
viII pul in pIace a nechanisn for oblaining carbon credils vhich vouId go
lovards naking lhe use of biofueIs nore allraclive TenlaliveIy il is
largeled lo repIace al Ieasl of oiI used in lhe lransporlalion seclor by
fueIs derived fron renevabIes over lhe period
5.3 Legislation
The UliIily ReguIalory Aulhorily Acl viII be procIained al Ialesl by lhe end
of Appropriale neasures vouId be laken lo sel up lhe Aulhorily so
lhal il is operalionaI vhen lhe Acl is procIained To lhal effecl lechnicaI
assislance vouId be soughl so as lo eslabIish lhe provisions vhich viII have
lo be nade so lhal hunan lechnicaI and financiaI resources are in pIace al
lhe line of procIanalion of lhe Acl and lhe coning inlo operalion of lhe
ReguIalor

Once eslabIished lhe reguIalory body viII proceed in ils dulies using lhis
pIan as a slarling poinl Hence lhe pIan vhich has been sel forlh by
Governnenl viII be nainlained

The EIeclricily Acl viII aIso be procIained in lhe vake of lhe selling up of
lhe ReguIalor i e vilhin lhe sane linefrane Il nay be noled lhal lhe
ReguIalor vouId aIso oversee lhe valer and lhe vaslevaler seclors
April 2007
29
The Energy Efficiency iII viII be prepared vilh appropriale lechnicaI
assislance for enaclnenl sone line in nid Il nay be noled lhal vork
has aIready slarled on lhe IabeIing of cerlain eIeclricaI appIiances vhich
vouId evenluaIIy be Iinked lo lhe Energy Efficiency iII
5.4 Detailed Energy Policy and Masterplan for Renewable Energy up to 2025
The drafl lerns of reference of lhe delaiIed energy poIicy are annexed al
Appendix Discussions vilh lhe EU for financiaI assislance lo prepare lhe
docunenl are undervay and il is expecled lhal lhe lerns of reference
vouId be finaIized by end ApriI lhe sludy is largeled for conpIelion
by end

The sane consuIlanl viII be enlrusled vilh lhe lask of preparing lhe
RenevabIe Energy MaslerpIan The Iong lern energy poIicy docunenl and
lhe RenevabIe Energy MaslerpIan are scheduIed for conpIelion by lhe end
of and nid respecliveIy
Il nay be noled lhal a nev syslen cosl anaIysis viII be perforned as parl of
lhe preparalion of lhe delaiIed energy poIicy docunenl
5.5 Summary & Conclusion
Measures lhal vouId supporl Governnenl Energy PoIicy are conlained in
lhe Aclion PIan Targels for lhe selling up of various pover slalions and lhe
necessary IegaI franevork for lhe reguIalion of lhe energy seclor have been
eslabIished These largels are coherenl vilh lhe linelabIe eslabIished by
Governnenl in Oclober

The niIeslones are as foIIovs
o Terns of reference for Iong lern Energy PoIicy ApriI
o Coning inlo operalion of pover slalions as per TabIes and
o ProcIanalion of URA and EIeclricily Acls end
o Passing of lhe Energy Efficiency iII nid
o Preparalion of DelaiIed Energy PoIicy end
o RenevabIe Energy MaslerpIan nid
o Use of biofueIs for lransporlalion in Maurilius
April 2007
30
Il nay be noled lhal lhe Aclion PIan viII pave lhe vay for lhe
inpIenenlalion of proposed poIicies and is coherenl vilh lhe slralegy of
Governnenl for lhe deveIopnenl of lhe energy seclor for lhe shorl lo
nediun lern

AII slakehoIders shouId reaIize lhal no singIe poIicy vhich has direcl
Iinkage lo lhe overaII energy poIicy shouId be laken on ils ovn in isoIalion
so as lo avoid any confIicl vilh lhe overaII objeclive of lhe direclion vhich
has been charled The sel of poIicies in lhis docunenl represenl a paradign
shifl lhal vouId aIIov lhe counlry lo neel daunling chaIIenges in lhe
energy seclor

AII lhe slakehoIders in lhe energy induslry have lo bear in nind lhal lhere
are aIvays conpeling inleresls and lhal lhe besl lype of narkel is lhe open
one so lhal consuners can benefil fron besl prices The largels for
renevabIes have been sel in an anbilious nanner vilh sufficienl Iead line
for lhen lo be achieved The poIicynakers are confidenl lhal in lhe coning
years lhe appropriale lechnoIogy viII becone avaiIabIe al affordabIe prices

As a concIuding nole il nusl be said lhal lhe energy poIicy of lhe counlry
has lhe rool objeclive of naking Maurilius energy efficienl vhere for each
unil of GDP produced nininun energy is used and accordingIy nininun
carbon dioxide enilled lo lhe alnosphere

April 2007
31

Appendix 1

DEMAND AND SUPPLY FORECASTS
FOR UP TO YEAR 2013

Year 2006 2007 2008 2009 2010 2011 2012 2013
CEB
St. Louis (-5MW yearly as from 2008) 70,0 70,0 65,0 60,0 55,0 50,0 45,0 40,0
Fort Victoria I (-20MW 2006) 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0
Fort Victoria II (-17MW 2017) 17,0 17,0 17,0 17,0 16,0 16,0 16,0 16,0
Fort George (-21MW 2017,-21 2018), 128,0 128,0 128,0 128,0 123,0 123,0 123,0 123,0
Nicolay (Not retired over planning period due to low run hrs expected) 74,0 74,0 74,0 74,0 74,0 74,0 74,0 74,0
New Plant addition Semibase (30 FV 2008+...)
New Peak plant
Hydro (Average of 59MW installed) 25,0 25,0 25,0 25,0 25,0 25,0 25,0 25,0
Sub Total 314,0 314,0 309,0 304,0 293,0 288,0 283,0 278,0
F.U.E.L. 27,0 27,0 27,0 27,0 27,0 27,0 27,0 27,0
FUEL New 20 MW 20,0 20,0 20,0 20,0 20,0
Beau Champ 22,0 22,0 22,0 0,0 0,0 0,0 0,0 0,0
Belle Vue 62,0 62,0 62,0 62,0 62,0 62,0 62,0 62,0
CTDS 30,0 30,0 30,0 30,0 30,0 30,0 30,0 30,0
CTSav 74,0 74,0 74,0 74,0 74,0 74,0 74,0
CTSav 3 15 MW 15,0 15,0 15,0 15,0 15,0 15,0
Medine 18,0 18,0 18,0
Waste to energy 20,0 20,0 20,0 20,0 20,0
CT Power new IPP Coal 50,0 100,0 100,0 100,0 100,0
CPP retirements -15,0 -15,0 -25,0 -25,0 -30,0 -30,0 -30,0
Sub Total 141,0 200,0 215,0 273,0 323,0 336,0 336,0 336,0
Grand Total Effective 455,0 514,0 524,0 577,0 616,0 624,0 619,0 614,0
Breakdowns 35,0 35,0 35,0 50,0 50,0 50,0 50,0 50,0
Maintenance (Scheduled) 60,0 60,0 60,0 60,0 60,0 60,0 60,0 60,0
Effective Capacity available 360,0 419,0 429,0 467,0 506,0 514,0 509,0 504,0
To date May 06 Forecast 365 382 401 420 437 456 478 503
Peak plus10% Spinning reserve 402 420 441 462 481 502 526 553
Capacity margin -42 -1 -12 5 25 12 -17 -49
EPP Capacity balance
Year 2006 2007 2008 2009 2010 2011 2012
C.E.B.
St.louis( -10 2009, -10 2011,-5 2012, -5 2013) peaking only as
from 2009 retire 2014
75 90 75 20 15 15 15
New St Louis 41MW(2006) 210 190 150 125 125 110 125
F.Victoria 1(Mirrlees) peaking emergengy only 2006 retire 2009
0 0 0 0 0 0 0
F.Victoria 2(M.A.N.) 80 80 80 40 40 55 60
F.George 1 125 110 110 80 50 60 60
F.George 2 125 110 120 90 50 60 60
F.George 3 135 125 120 90 70 60 70
F.George 4 135 130 120 90 70 60 70
F.George 5 135 130 125 90 70 60 70
Nicolay 25 21 22 25 26 22 25
Hydro(normal year) 90 90 90 90 90 90 90
Sub/total CEB Generation 1135 1076 1012 740 606 592 645
Used on works CEB 45 43 40 30 24 24 26
CEB Sent Out 1090 1033 972 710 582 569 619
IPP/CPP
CTDS 30MW
200 180 200 175 175 175 200
CTSav 74MW (2007)
0 350 400 350 300 350 400
FUEL new 20MW 0 0 0 330 300 300 330
Medine 120 120
C.E.L. 110 110 110 0 0 0 0
C.T.B.V. 375 325 350 325 325 325 325
F.U.E.L. 160 160 160 0 0 0 0
CTSav 3 0 0 110 110 110 110 110
Waste project 140 140 140 140
Proposed CT IPP (50MW 2009,50MW 2010) 0 330 660 660 660
S.E.(Continuous) (2007 -12,2011 -18,2012 -24)
140 92 76 40 40 20 20
Sub/total IPP sent out 985 1217 1406 1800 2050 2200 2305
Forecasted sent out 2075 2250 2378 2510 2632 2769 2924
Line losses 195 203 204 211 216 224 234
Sales forecast 1928 2047 2173 2299 2416 2544 2690
EPP ENERGY balance (GWH)
April 2007
32

APPENDIX 2

DRAFT TERMS OF REFERENCE FOR THE PREPARATION

OF

THE DETAILED LONG TERM ENERGY POLICY FOR THE
REPUBLIC OF MAURITIUS

Page 1 of 8
Energy Policy for Mauritius, 2007-2025
Terms of Reference

1. The Mauritian Economy

The Republic of Mauritius has set an ambitious objective to move away from a
preference based economy to one which will be globally competitive. In order to
achieve this objective, it has embarked on a major programme of reforms with the
following main thrusts:

(i) the opening up of the economy to encourage and attract investment, know-
how and technology;

(ii) the overhauling of the present investment environment through the
Business Facilitation Act so as to place Mauritius within the top 10
countries in the Doing Business Report; and

(iii) the re-structuring of the economy through the re-engineering of existing
sectors such as sugar, tourism, textile and encouraging the emergence of
new cluster of activities around the Seafood Hub, Duty Free Shopping,
Knowledge Hub, Information and Communication Technology, Integrated
Resorts Schemes, etc.

In order to sustain the objective of becoming globally competitive, Mauritius has to
upgrade its entire infrastructure facilities as well as develop a coherent energy strategy. In
this respect, the outline energy policy for the horizon up to 2025 has been prepared by
Government in consultation with stakeholders such as the Ministry of Finance and
Economic Development, the Ministry of Agro-Industry and Fisheries and the CEB
amongst others.

The background taken into account in preparing the document included the Multi Annual
Adaptation Strategy for the Sugar Industry which was submitted to the EU. The proposed
energy policy would have to follow the thrust of the outline and be more comprehensive
in its approach.

Page 2 of 8
2. Overall Objectives

The main objectives of Government in preparing a National Energy Policy are to:

(i) Broaden the energy base of the country so as to reduce dependence on
imported energy carriers thereby limiting the vulnerability of the Republic
of Mauritius to imported fossil fuels and their volatile prices while
factoring in a reasonable tradeoff relating to the costs of such a policy
relative to the risks;
(ii) Allow optimal use of local and renewable energy sources by ensuring that
any alternative energy projects (e.g. ethanol) are evaluated on the basis of
providing benefits to consumers
(iii) Enhance protection and preservation of the environment, in particular the
reduction of the emission of greenhouse gases;
(iv) Promote energy efficiency including in the Transportation sector;
(v) Provide affordable energy to all sectors of the economy while ensuring the
financial sustainability of the electricity public utility.
(vi) Provide for transparency in Independent Power Purchase agreements
(vii) Promote economic growth and job creation by ensuring reliable supply of
energy at internationally competitive prices;
(viii) Democratize energy supply by opening up the provision of power to new
entrants by developing a transparent and open system that encourages new
entrants including SMEs to compete to offer energy products.

These objectives must be underpinned by real targets in terms of reduction in the use of
fossil fuels, enhanced use of local and renewable sources, improved energy efficiency
and the reduction of emission of green house gases arising from energy consumption.

Given the limited global oil reserves, it is important to chart out an energy policy and
formulate strategies for the short-to-medium and long term that would reduce, as far as
possible, the reliance of the country on imported oil for electricity production and
transportation. However, any such policy needs to be balanced and should factor in long
term fuel prices after removing volatility.

In this regard, it is considered that the policy framework should be multi-pronged, in
keeping with the constraints that the country has, in terms of its geographical location,
availability of other less volatile and better distributed reserves of fossil fuel such as coal,
energy resources available locally and the availability and competitiveness of
technologies in the marketplace for their conversion into electricity and for use in
transportation and industry.

Page 3 of 8

In addition, in formulating the energy policy the following essential criteria have to be
taken into account:

(i) future energy demand;
(ii) economic reforms;
(iii) energy production at prices that are internationally competitive and that
require no subsidy from taxpayers except for an explicitly calculated and
transparent environmental and/or social benefit;
(iv) economic and financial viability of all public sector operators, particularly
the CEB;
(v) the imperative to attract foreign investment into the country including the
energy sector;
(vi) environmental considerations;
(vii) sugar sector reforms and linkage to electricity generation; and
(viii) transportation and industrial development policies and linkage to energy
use

3. Current Regulatory Framework

The current regulatory framework consists of the CEB Act and the Electricity Act 1939
as amended to be replaced by the Electricity Act 2005. Other relevant legislations pertain
to the Sugar Industry, namely the Sugar Industry Efficiency Act, as amended in 2007,
and the Environment Protection Act 2002.

Relevant policy documents include:

1. Outline Energy Policy 2007-2025
2. Presidential address 2005
3. Multi Annual Adaptation Strategy 2006 2015
4. White Paper for Environment Policy 2007
5. National Environmental Strategy 1999
6. Port Masterplan 2002-2025
7. Integrated National Transport Strategy Study 2001
8. Consensus Paper on Transport 2006

4. 3. The Energy Policy Document

The Energy Policy is expected to cover the following:-

(i) an energy sector vision up to 2025, in line with existing strategic policy;
(ii) strategic priorities for Government to take timely decisions with a view to
ensuring security of energy;
(iii) improved legal and regulatory framework to promote private sector
investment in an open, competitive and transparent manner in line with
best international practice;
Page 4 of 8
(iv) policies to address environmental and social impacts related to the energy
sector that are explicit, transparent and costed with a direct link to the
green taxes required to pay for such subsidies;
(v) state-of-the-art technologies to achieve efficient energy use taking account
of economic and financial viability; and
(vi) awareness about the issues/options/challenges and ensure all stakeholders
participation for sustainable development.

5. Terms of Reference

The Terms of Reference are broken down into two parts. First the immediate requirement
in terms of energy policy and secondly in depth studies which will be conditional upon
certain conditions being met at the end of the first phase. Throughout the assignment, the
Consultant is expected to refer to the document Outline Energy Policy 2007 to 2025
Towards a Coherent Strategy for the Development of the Energy Sector in Mauritius as it
provides the gist of Energy policy adopted by Government in April 2007. The Consultant
will be expected to consult stakeholders including the Ministries, parasatal organizations,
and NGOs concerned, as directed by the Client, during the preparation of the policy
document.

The issues that will need to be addressed by the Consultant in the first phase of the
assignment comprising the development of an Energy Policy for the Republic of
Mauritius shall include, but not be limited to, the following:

Part I: Elaboration of Energy Policy:

1. Economic and Financial Analysis
(i) To assess economic and financial implications of the various
options and issues discussed in sections 2 through 8 below;
(ii) To evaluate the economic, environmental and financial costs and
benefits of proposed IPPs plants relative to the plans of CEB

2. Energy Supply

(i) To identify and analyse the challenges, opportunities and threats
faced by Mauritius in terms of availability, reliability,
transportation and prices of primary sources of energy; and
(ii) To formulate the policy and strategic orientations for ensuring the
security, reliability, diversity and quality of supply, including:

a. options for the right energy mix and strike a balance between
renewable and non-renewable sources of energy taking account
of costs, balanced risk assessment and need to produce energy
at internationally competitive prices;
Page 5 of 8
b. the role of IPPs in the overall context and to highlight the
opportunities and threats they may represent to the national
interest, particularly what is required to ensure an open and
transparent system for considering their offers;
c. an assessment of the sectoral energy prices as well as its
implication on the countrys international competitiveness; and
d. energy pricing strategies based on affordability to end-users
and financial sustainability of the electricity public utility.

3. Energy Utilisation

(i) Review the demand and supply matrix and power sector capacity
expansion plan for energy up to 2025 taking into account the need
for green taxes and measures to induce conservation; and
(ii) Assess sectoral energy use and advise on state of the art
technologies with a view to encouraging efficient use of energy so
as to maintain the countrys international competitiveness.
(iii) Propose policies for implementing energy efficiency in the
transportation sector and in electricity including reduction of losses
in transmission and distribution.
(iv) Develop a policy framework and suggest models for the
development of an Energy Efficiency Bill

4. Electricity Sector

(i) Ascertain the operational and technical inefficiencies of the present
generation facilities and their viability of remaining into operation;
(ii) Determine the least cost economic dispatch/load of electricity
generation, transmission and distribution
(iii) Advise on the type, sequencing and timing of new generation
facilities and assess the cost implications for consumers
(iv) Suggest reservation prices based on the above analysis which IPP
proposals would not be considered; and
(v) Propose an investment programme for the new generation facilities
based on the above analysis with due regard to protecting
consumers and ensuring financial sustainability of the electricity
utility.

5. Transportation

(i) Propose a biofuels policy in line with the Mauritian context and
outline policy
(ii) Identify the strategic options for introducing different types of
biofuels including E10, E20, biodiesel and recommend the best
possible course of action taking into account the economic context
Page 6 of 8
(iii) Assess the possibility in the long term for equal taxation of carbon
emissions from various sources of fuel;
(iv) Review major aspects of land transport (public and private) and
identify policies that would enhance efficiency and energy saving
in the sector in the short term, taking into account social
acceptability.
(v) To chart out a biofuels strategywhich will be an integral part of
future energy policy

6. Environmental Aspects

(i) Identification of strategic priorities for availability of sustainable
energy for end users based on -
the supply of renewable sources of energy and improved
energy efficiency;
introduction and/or expansion of existing green taxes to
reduce environmental impacts
sustainable transport systems;
public awareness campaign on efficient use of energy;
(ii) To assess the environmental impact of future energy production,
distribution and use on both climate change and local environment;
(iii) To devise incentives for enhanced use of renewable energy or
disincentives for fossil fuel based electricity generation;
(iv) Identify means and ways of introducing demand side management
and promote research into technology appropriate for the context
of Mauritius and Rodrigues.

7. Institutional and Regulatory Framework

(i) Review the present policy and institutional framework in the energy
sector based on the findings of the study and make proposals for
changes therein to enhance their effectiveness.
(ii) Harmonize and improve the legal and institutional framework with a
view to clarifying the roles and responsibilities of the different energy
agencies and to provide high degree of transparency and clarify for
private sector participation and PPP projects in the energy sector.
(iii) Propose institutional and regulatory changes (and if necessary
legislative action) to ensure an open, transparent and competitive
process for seeking and selecting private sector involvement in the
production of energy products;
(iv) To suggest how the Regulatory Body should, as and when required,
carry out its due diligence to assess the viability of new projects,
submitted in fulfilment of Government policy objectives, and their
impact on tariffs while safeguarding the interests of all stakeholders
including taxpayers and consumers.

Page 7 of 8
8. Action Plan

(i) Develop a practical and coherent action plan for the ensuing years
till 2025 based on economic, financial, social and environmental
sustainability.
(ii) The Action plan shall provide definite specific, measurable,
achievable and realistic targets for the short, medium and long term
i.e. for years 2010, 2015, 2020, 2025, 2050 in relation to

a. Implementation of biofuels (including ethanol) policy
b. Promoting efficiency in the transportation sector
c. Implementing the Energy Efficiency Bill
d. Construction of power plants
e. Energy and Electricity Mix

In so doing, the Consultant shall review targets set in the Outline
Energy Policy 2007 to 2025 Towards a Coherent Strategy for the
Development of the Energy Sector in Mauritius and adjust them if
necessary

Part II: Further Detailed Studies

Additional studies which may form a second part of the assignment subject to satisfactory
completion of the first part of the consultancy services and availability of funds include:

(i) A Masterplan for Implementation of Renewable Energy Policies
taking into account economic and financial analysis
(ii) Preparation of a strategic environment assessment of the Energy
Policy;
(iii) Develop an Energy Efficiency Bill appropriate to the Mauritian
Context

6. Time Frame

The study should be completed within a period of 6 months.

7. Reporting

A Steering Committee, chaired by the Ministry of Public Utilities and comprising
amongst others, of representatives of the CEB and Ministry of Finance & Economic
Development, will supervise the project. The Consultant shall report to the Committee
during the study.

Page 8 of 8
8. Workshop

The Consultant shall submit his recommendations, the rationale behind those
recommendations and their implications to Government in a workshop.

9. Deliverables

The following documents shall be submitted by the Consultant:

Deliverables Date due
(after recruitment of the Consultant)
Draft Inception Report 3 weeks
Draft final Inception Report 6 weeks
Inception Report 8 weeks
Draft Energy Policy document
and Action Plan
16 weeks
Draft Final Energy Policy
document and Action Plan
20 weeks
Final Energy Policy document
and Action Plan
24 weeks

All deliverables, whether draft or final, shall be submitted in three hard copies together
with a soft copy in Word format on CD.

10. Expertise Required

The core team of experts required shall be as follows:

1. Energy Policy Specialist

2. Power Specialist

3. Financial/Economic Analyst

4. Environmental Economist/Specialist

5. Transport Economist/Specialist

6. Institutional and Regulatory Expert

April 2007
33

APPENDIX 3

SYSTEM COST ANALYSIS FOR THE CEB

Methodology and rationale for the assessment of expansion
scenarios for the Mauritius Power Sector in the context of the
Capacity Expansion Plan 2006-2013

Prepared by

Central Electricity Board

and

Ministry of Public Utilities

April 2007

1.0 ,ntroduction

Following the submission of the paper entitled Electricity Generation Policy and
Power Sector Expansion Plan for 2006-2013, a request was received to provide
further details on the approach used to analyse the proposals contained in that
document. Accordingly, this paper prepared by the CEB and the Ministry of
Public Utilities describes the approach and methodology used in assessing
different scenarios resulting from a set of proposals received from the private
power sector.

Within the present Government policy framework and constraints in the Central
Electricity Board (CEB) generation dispatch system, plausible scenarios were
derived and assessed. Projects proposed vary in nature and technology with their
specificities.

An in-house Excel generation model has been developed for this purpose.
Results produced have given very good indications of the cost impact of the
scenarios. The results are comparable in this specific context under a set of
reasonable assumptions at time of the study. Only pre-feasibility figures and
information available at the time of this study has been used. As it is crucial to
ensure the financial viability of the CEB and the countrys economy at large,
results provide a comparative insight to decision makers to make informed
decisions.

2.0 %ackground

In view of the serious challenges posed by the hiking up of oil prices and the
rising cost of energy, Government has reviewed the energy policy for meeting
the future requirements of the country.

Consequently the previous Electricity Plans prepared prior to 2005 are now
superseded. The proposed policies will be the drivers of developments in the
Energy Sector.

The Presidential Address in 2005 set the tone for the future policy guidance for
the electricity generation sector. The key for the CEB is its financial
sustainability, which is intimately linked with a diversification of the energy
basket and providing affordable electricity to the customers to enable the
economy to forge ahead.

By encouraging the optimal use of bagasse as fuel and other renewable sources,
this will largely benefit the countrys economy in reducing the foreign exchange
cost for servicing the energy bill, availing revenues from carbon credits and
bringing efficiency to the sugar production activity that is so vital to Mauritius.

In the wake of this new plan, Government will actively seek to engage in
strategic partnerships, which would guarantee the financial sustainability of the
CEB and would be in accordance with the declared policy of Government to
increase its share in the generation sector.

3.0 0ethodology

3.1 Demand forecast

In many power utilities, it is common practice to derive the electricity sales
forecast from available GDP forecasts because it is known that growth in the
electricity demand is related to growth in the economy. However, in the present
context, such an approach is not deemed appropriate because it is believed that a
ten-year GDP forecast, if available, would not be reliable enough in a fast-
changing economy like ours.

Therefore, the method adopted by the CEB to forecast the electricity sales
(GWh) and capacity demand (MW) over the long-term does not use GDP as
input. This approach is supported by the fact that energy demand has been
growing faster than GDP over the past decade. While GDP has grown by 85%
from 1992, electricity sales have grown by 166% over the same period. Hence
GDP and Energy growth are decoupled in our economic context (Refer to Graph
1).

The CEBs approach consists of forecasting the energy requirement based on
trends in customer numbers and specific consumption by customer category.
Major development projects that have a direct or indirect incidence on electricity
consumption over the short-term are also taken into account. The capacity
requirement is then derived from the energy by applying an energy-to-power
regression formula. The result from this technique has been validated against a
secondary method that makes use of expected changes in load duration curves
over the planning horizon (CEB, 2006).

Source: CEB Load forecast 2006-2013
Year 2006 2007 2008 2009 2010 2011 2012 2013
Peak Power ( MW) 365 382 401 420 437 456 478 503
Annual Increment (MW) 17 19 19 17 19 22 25
Energy demand (GWh) 2129 2250 2378 2510 2632 2769 2924 3092
Annual Increment (GWh) 121 128 132 122 137 155 168
Dcmand Inrccast

3.2 Demand pattern

The CEB plants cater for the partly for the semi base and wholly for the peak
demand requirement and the system reserve margins required for maintenance
and breakdown. By virtue of their technology, the IPP coal/bagasse plants
cannot be started and stopped at leisure.

Hence they cater for the base demand, while the CEB heavy fuel diesel
generators supply the semi base and peak demand. As per the forecast, some 150
MW of new capacity, both base and semi base, will be required over the period
up to 2013 in order to meet demand.

3.3 Present situation

In 2006, the CEB registered a peak power demand of 367 MW and supplied
some 2090 GWh of energy with some 455 MW of effective capacity available.
More than 50% of generation came from fuel oil only. This justified the shift to
coal/bagasse from a financial and economic standpoint. In that year, Fort George
power station, the only oil base load plant provided for about 32 % of power
needs alone (Figure A).

Figure B in the annex shows a typical load duration curve. Total energy demand
is made up of some 50 % of base energy, 45 % semi base energy and 5 % of
peak energy.

It is interesting to note that the average growth in peak demand is twice as much
as the base demand (Figure C). This warrants the introduction of more semi base
plants. But with the high oil price, high fixed cost coal/bagasse plants can now
compete favourably with diesel plants even at load factors as low as 40 to 50 %
utilization factor (Figure D).

With the prevailing high price of fuels, the marginal cost of electricity from coal
is half that from fuel oil. Figure E shows that the evolution of our fuel mix is
clearly away from fuel oil. Hence the justification to favour coal in the base load
and limit fuel oil generators to semi base and peak operation. However, the
The side figure illustrates a typical daily demand curve. The
highest peak is the maximum power demand and the area
under the curve represents the total energy dispatched. Each
colour highlights the individual contribution of each power
plant. This demonstrates the uneven nature of the daily
demand profile.

The daily minimum power is about 175 MW average base
load and 350 MW peak -- that is, a ratio of about two between
the peak and the minimum demand. This indicates that we
need about 175 MW of modulable capacity which can be
switched on and off daily therefore providing greater
flexibility. The IPP plants run continuously and cater for the
base demand only and have limited flexibility whereby their
output can be reduced to 30% to 50% only.
CENTRAL ELECTRICITY BOARD
SYSTEM CONTROL
PRODUCTION CURVE
0
25
50
75
100
125
150
175
200
225
250
275
300
325
350
375
400
425
450
475
500
525
00:00
01:00
02:00
03:00
04:00
05:00
06:00
07:00
07:30
08:00
08:30
09:00
09:30
10:00
10:30
11:00
12:00
13:00
14:00
15:00
16:00
17:00
17:30
18:00
18:30
19:00
19:30
20:00
21:00
22:00
23:00
00:00
TIME ( Hrs )
L
O
A
D
( M
W
)
CPP CTBV B CHA FUEL CTDS CTSav CT Power FGEORGE STLOUIS FVICTOR NICOLAY HYDRO CHAMPNG
MINIMUMLOAD at 04.00 hrs : 200 MW
MORNING PEAK at 11.00 hrs : 450 MW
EVENING PEAK a t 18.30 hrs : 500 MW

Pcak Basc
investment cost in new plants against repayment of loans and depreciation of
existing asset must be carefully accounted.

At present some 140 MW are supplied by Independent Power Producer (IPPs) in
the system. In all, about 340 GWh of electricity is derived annually from
bagasse from the cogeneration plants of the sugar factories. There is still scope
to increase the total output from bagasse to a maximum of 600GWh annually by
increasing the efficiency of the IPPs. This in itself represents a potential national
foreign exchange saving of some 20 Million USD in the annual energy bill. It
must be highlighted that this increase in bagasse output will have to be
accompanied by almost an equal amount of coal-based energy. Base and semi
base energy actually derived from Fort George power plant will be thus
displaced, reducing our dependency on fuel oil.

3.4 Proposals from IPPS

To meet demand, the CEB had elaborated an expansion plan where it proposed
to redevelop its existing Fort Victoria medium speed diesel oil plant (30MW)
along with a 2 X 50MW new coal power plant at a green field site and delay the
retirement of some of its medium speed diesels. We call this the Base Case.

The sugar industry proposed to install 4 X 42MW of new coal/bagasse plants
similar to those already in construction at the Savannah plant. This would be
more than enough to meet demand, but would have high financial impact on the
overall generation cost. This is termed Scenario 1.

After protracted discussions at various technical meetings with all stakeholders
it has been concluded that the sugar industry can meet the centralization
objective while raising the bagasse energy output to the 600 GWh target with
only 35 MW net of new installed capacity (15MW at Savannah, 20/22 MW at
FUEL and 15/21 MW at Medine with the existing 20MW at CEL Beau Champ
closing down). This is termed Scenario 2 in this report.

This would allow lower capital investment and make room for higher efficiency
coal dedicated plants to be pursued. Screening curve, figure D, illustrates the
higher efficiency and lower cost of the dedicated coal plant. Hence a 2 X 50
MW coal plant will be set up as an IPP with the CEB as equity partner under this
Scenario 2.

A waste to energy project is also under consideration for 20 MW and about 150
GWh of energy would be made available. This project is an alterative to landfill
and the energy generated there from is a spin off, and therefore will be simple
energy take and the capacity is not considered firm as it is largely influenced by
feed rate and quality of waste. It will not be appraised in this study, as this
requires a full economic analysis including the waste disposal and
environmental aspects.

Similarly a 25MW wind farm project has also been proposed and will be
considered according to its merit in due course.

3.5 Summary of Scenarios

The three scenarios for which the system generation cost over 2006-2013 have
been calculated are: -

Base Case Scenario
30 MW of medium speed diesel at Fort Victoria in 2008
50 MW of Coal fired plant at new site in 2010
50 MW of Coal fired plant at new site in 2012

Scenario 1, all sugar proposal
42MW of Coal/bagasse fired plant at Savannah in 2008
42MW of Coal/bagasse fired plant at FUEL in 2009
42MW of Coal/bagasse fired plant at FUEL in 2010
42MW of Coal/bagasse fired plant at Medine in 2011

Scenario 2, compromise
15 MW Coal/ fired plant at Savannah in 2008
20/22MW of Coal/bagasse fired plant at FUEL in 2009 (conditional
to existing 20MW at CEL Beau Champ closing down)
15/21 MW of Coal/bagasse fired plant at Medine in late 2011
50MW new coal fired plant in 2009
50MW new coal fired plant in 2010.

3.6 Detailed Methodology for Scenario Analysis

The methodology used for analysis comprises first an assessment from the
technical angle. In this respect, the supply demand matrix is used to establish the
demand/supply balance, whereby account is taken of the criteria in line with
prudent electricity supply practices in terms of reserve CEB needs for
programmed maintenance, unexpected breakdowns and instant fluctuations in
demand, met by what is commonly called spinning reserve capacity.

After arriving at the demand supply balance, a financial exercise is undertaken
to determine the cost implications for the CEB whereby the total costs of
generation over the period 2006-2013 are determined for the base case and for
each scenario;

Then the implications for the country in terms of the foreign exchange outflow
for fuel import for the base case and for each scenario are determined. It may be
noted that the foreign currency outflow for equipment purchase and transfer of
return on foreign equity is not assessed for lack of sufficient information in the
project proposals.

Thus the study of the costs associated with the 3 scenarios and the base case
have been undertaken, with respect to:

Generation costs;
Possible revenue from carbon credits; and
Forex outflow with regard to coal and fuel oil imports only.

3.6.1 Capacity balance

Table A illustrates a typical static capacity balance meeting demand. Allowance
is made for retirement of old plants, 10% of spinning reserve, and about 100MW
for maintenance and breakdown reserves.

3.6.2 Energy balance

Table B illustrates a typical energy balance after introducing the new plants
under a specific scenario. Allowance is made for energy used on works,
transmission and distribution losses and contractual requirements under the
current take or pay contracts. This is worked out to match the requirement of
base, semi base and peak energy as dictated by the load duration curve.
Economic dispatch of plants as per their merit order is also ensured.

Assumptions

In analyzing the scenarios, certain essential assumptions have been made in
order to be able to compare and analyse the projects. Thus all costs have been
determined in constant rupees and constant US dollars, where applicable, with
an exchange rate of Rs 31 to the dollar and Rs 40 to the Euro. No costs have
been escalated given that the forecast of the price of commodities such as oil and
coal, which have significant weightage in the cost structure, cannot be done with
certainty, and any attempt to do so would be merely speculative or guess work.
Furthermore, no discounting of costs has, therefore, been carried out.

Other assumptions have also been made when applying the above methodology.
These are:

A constant price model is used to compute the cumulative generation
cost over the period 2006-2013 without assuming escalation and discount
factors

The annual generating cost is calculated using the fixed, variable and
financial costs

Prices used for the existing CEB and IPP plants are at 2006 economic
conditions except for CTSav, which is at 2007

Prices for coal and waste to energy proposed plants are based on pre-
feasibility offers (Information submitted by the promoters are
insufficient to make proper comparative analysis. Therefore more
accurate analysis will have to be conducted after feasibility studies are
completed)

Financial and operating costs for the proposed plants from the sugar
industry are based on CTSav submissions

Cost for the new CEB coal units are assumed to be similar to the CT
Power proposal and the proposed Fort Victoria project cost is taken from
the CEB consultants feasibility study

CO2 emission avoided with bagasse and municipal waste electricity
generation: 1.5 kg/kWh; and potential credit for CO2 avoided: 10.5
EUR/tonne of CO2 (70% of current EU rate)

Fuel oil price used is 357 USD per tonne (equivalent to USD 71/barrel)
and Coal price of 55USD per tonne

Exchange rates: 1 Euro = Rs 40 and 1 USD = Rs31

Growth of energy demand: 6.2% per annum

Growth in capacity: 4.5% per annum

Prices for all IPPs are assumed as per 2006 tariff

Operation cost for existing plants CEB plants as at 2006 used

Yearly finance charges and depreciation cost of CEB assets is also
considered.

3.7 Generation cost simulation

For each scenario, the total generation cost has been calculated using an in-
house Excel calculation model over the period 2006-2013 based on current
demand forecast and prevailing economic conditions.

The methodology consisted in working out a Capacity balance table to meet
power demand, then calculating the corresponding Energy dispatch and finally
computing the Total cost of generation for all the years in the study.
.

4.0 5esults

The results of the analysis are presented in the table below. It is seen that
Scenario 2 is marginally more expensive to the CEB than the base case,

Summary of estimated costs over period 2006-2013

CEB Base Scenario 1 Scenario 2

Rs (billion) Rs (billion) Rs (billion)
Total Generation Cost 57,24 60,65 57,26

The Ranking of the proposals is as follows in terms of cost to the CEB only: -

1. CEB base case
2. Scenario 2
3. Scenario 1

5.0 &onclusion

Scenario 1 comprising all initial proposals from the Sugar Industry is the most
expensive one and is therefore discarded. Scenario 2, which comprises 3 power
plants from the sugar sector and two coal fired plants, is marginally more
expensive than the CEB base case, and has the advantage of accommodating all
the stakeholders, thereby enabling the optimal use of bagasse while reducing our
dependency on fuel oil. In addition, the CEBs dire financial situation would not
allow such huge investment without the private sector participation. Hence this
solution is retained and recommended.

Outline Energy Policy

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