Dow Jones

23rd July, 2001.

YAOUNDE, Cameroon -- AES Sirocco has announced upcoming increases in electricity tariffs after taking ownership of Cameroon's Societe Nationale de l'Electricite du Cameroun (Sonel) last week.

Project manager Francois Maze said on state radio that a "slight increase" in tariffs over the coming three years would consider "the purchasing power of the people in Cameroon." He gave no further details.

A government source told Dow Jones Newswires Monday that Sirocco could increase tariffs by 30%. Sonel had previously sold a kilowatt of electricity at 58 CFA francs ($1=XAF754).

Negotiations about job cuts are already under way between Sonel's 4,000 workers and the new management, a source at the firm said.

"We've been confidentially told that the new management wants to cut jobs, but we don't know how many people they intend to keep," the source said.

Another source said AES Sirocco planned to halve the size of the current staff by asking for voluntary departures of workers who would receive redundancy benefits.

The U.S. firm bought 56% of Sonel for XAF53 billion. Cameroon's government holds the remaining 44%, part of which it intends to sell of to private buyers. Maze said last week that the firm would relinquish 5% of its shares to personnel within two years.

Under the contract signed with Cameroon's government, Sirocco will produce, transport and distribute electricity for a period of 20 years. The contract obliges Sirocco to increase the number of the country's subscribers from its current level of 400,000 to 136 million.

Sonel is the country's sole electricity provider. In the last few years, it had been run in tight partnership with the Agence Francaise de Developpement, although under the ownership of the state.

The firm has a reputation for inefficiency, frequent power cuts and corrupt practices by workers. It is common for Cameroon's cities to remain for more than three months without electricity.