Misjudged Demand, Stalled Reforms, and Deficient Oversight Impeded USAID/Haiti's Sustainable Electricity Goals

This is the Office of Inspector General's audit of what USAID built in northern Haiti after the 2010 earthquake and what became of it. USAID constructed a 10 MW power plant at Caracol, owned by the Haitian Government, and in May 2013 followed it with the Pilot Project for Sustainable Electricity Distribution, run by NRECA, intended to grow the utility into something that could stand without US support. The 2013 contract set out expansion to 25 MW by 2014, roughly 25,000 residential customers by 2016, and break-even by 2017, with the whole scheme meant to model reform for the rest of the country.

The audit finds none of that achieved. By January 2017 the project did deliver reliable power to the Caracol Industrial Park and about 8,000 households, and showed that Haitians will pay for electricity when metered and charged low prices. But the plant stayed at its original 10 MW, customer numbers were a fraction of plan, the utility was not self-sustaining, and USAID was still paying operations and maintenance, having added nearly USD 5 million to the contract with up to USD 8.3 million more planned and an extension to at least May 2019. Industrial demand was the first misjudgment: the industrial park, projected by State Department calculations to create up to 65,000 manufacturing jobs, did not draw the load assumed.

The second failure is Haitian reform commitments. Efforts to strengthen EDH produced only minor and temporary gains; the decision not to install a high-level energy official, turnover in key posts, and a year without a fully functioning government during prolonged and contested elections all interrupted progress. Raising electricity prices, which USAID and its contractor considered essential to cost recovery, was politically risky around elections and stalled until August 2016, more than three years into the project. Government fuel deliveries to the utility were routinely late, arriving only after high-level USAID, State Department and industrial park intervention.

The third is USAID's own oversight. The mission reported staffing shortfalls as significant internal-control deficiencies in 2015, 2016 and 2017, lacked contracting officers, monitoring specialists and engineering support, and assigned early oversight to engineers who needed stronger project-management skills. A rushed connection of selected communities left homes with unsafe wiring and residents without payment or safety information, and the project never caught up on metering, line renovation or removing illegal connections, nor could it cut off non-payers. NRECA billed unmetered households at flat rates that few collected, leaving boxes of unclaimed bills, retired about 3,600 accounts in June 2016, and by January 2017 was collecting only about half of what it billed communities, with USD 1.5 million in revenue officials considered unrecoverable and roughly a third of generation lost monthly, mostly to theft. Overtaxed and undersupervised staff missed overstatements in results reported to Congress and significant database errors, yet the mission still rated NRECA satisfactory or better in annual performance assessments. USAID has attempted course corrections, revising its energy strategy in May 2015 to transfer the utility to a private operator rather than to EDH and signing a new agreement with the Haitian Government in August 2016, but the audit holds that significant risks remain.