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To: Ali Bongo Ondimba From: CCT Consulting Date: 25 September 2011 Subject: Gabon’s Oil Reliance Purpose: Provide strategic analysis and advice concerning Gabon’s reliance on oil to power its economy. Problem: With the third highest GDP in Africa, Gabon has made tremendous progress as a developing country.1 This will be all for naught, however, when the country can no longer rely on oil, their main source of revenue. As oil provides 43% of GDP, when the resource is depleted, Gabon’s GDP and per capita income will inevitably plummet, unemployment will skyrocket, their foreign investors will disappear, and domestic energy shortages will disrupt the nation.2 Gabon needs a reliable plan to mitigate these woes after the driving force of their economy evaporates. The plan must create revenue without oil and ensure reliability of energy domestically. Recommendations: ◊ Extend the “Emerging Gabon Strategy,” a pre-existing, government-created, economic development strategy that emphasizes sustainable growth by reallocating funding to infrastructure needs instead of individuals, firms, and bureaucrats.3 The strategy has already succeeded in generating a stream of revenue from extractive industries and attracted new investors, which has formed funding for capital investment.4 We advise that, using this strategy, funding be allocated toward renewable energy sources to prevent potential shortages after oil peaks. ◊ Expand Hydropower and Alternative Energy o We recommend that domestic energy sources transition to entirely hydropower with remaining oil assets being reserved for exports only. Gabon utilizes 1% of its potential 76,000 gigawatt/year output.5 Currently, hydropower is Gabon’s largest domestic energy source contributing 43% of the country’s needs, with oil following close behind at 40%.6 o With the funding established from the Emerging Gabon Strategy, hydropower should be expanded using HydroQuebec’s successful model, because it created 75,000 new jobs in total and an excess of energy.7 This will address Gabon’s 21% unemployment rate and eliminate concern for shortages because domestic oil demands will decrease with increased access to hydropower. o Estimated initial investment cost: $1700/kw.9 The successful transition to hydropower is reliant on foreign direct investment as well as this initial capital investment, which will be subsidized from oil exports. The initial cost of this initiative is high, but the money remains within the system after implementation and is the cheapest form of alternative energy available.10 o After funds are gathered, construction will require 10 to 12 years. The successful transition to hydropower will be audited every 2 years. percent contribution to total energy from hydropower must increase by 10% every audit to gain energy independence. o If overproduction occurs, hydropower can be exported to neighboring Equatorial Guinea. ◊ The availability of cheap electricity from hydropower will ideally recruit a number of refining and smelting firms, creating more employment and opening up additional mineral extraction options to help diversify and strengthen Gabon’s GDP away from oil.11 ◊ Gabon holds a quarter of the world’s known reserves of manganese, and thus can use extraction of the mineral as a fail-safe while the economy is in transition.12 ◊ To further attract foreign direct investors and illustrate Gabon’s capacity to be economically sound without oil as its backbone, the country will highlight their new stability at the African Cup of Nations in 2012.13


Works Cited The Report: Gabon 2010. (2010, October 18). Retrieved from http://www.oxfordbusinessgroup.com/ product/tourism-131 2 Bureau of African Affairs, (2011). Background note: gabon. United States: U.S. Department of State. Retrieved from http://www.state.gov/r/pa/ei/bgn/2826.htm 3 The Report: Gabon 2010. (2010, October 18). Retrieved from http://www.oxfordbusinessgroup.com/ product/tourism-131 4 The Report: Gabon 2010. (2010, October 18). Retrieved from http://www.oxfordbusinessgroup.com/ product/tourism-131 5 World Energy Council Survey. (2007). Retrieved from worldenergy.org 6 Electricity production from hydroelectric sources (% of total) in Gabon. (2011). Retrieved from http:// www.tradingeconomics.com/gabon/electricity-production-from-hydroelectric-sources-percent-of total-wb-data.html 7 Varley, P. (1995). Battling over the environmental review of quebec’s great whale project. In Boston: Kennedy School of Government Harvard University. 8 Electricity production from hydroelectric sources (% of total) in Gabon. (2011). Retrieved from http:// www.tradingeconomics.com/gabon/electricity-production-from-hydroelectric-sources-percent-of total-wb-data.html 9 Hydropower program: hydrofacts. (2005, July 18). Retrieved from http://hydropower.inel.gov/hydro facts/plant_costs.shtml 10 Varley, P. (1995). Battling over the environmental review of quebec’s great whale project. In Boston: Kennedy School of Government Harvard University. 11 The Report: Gabon 2010. (2010, October 18). Retrieved from http://www.oxfordbusinessgroup.com/ product/tourism-131 12 Gabon EITI. (2011, August 23). Retrieved from http://eiti.org/Gabon 13 The Report: Gabon 2010. (2010, October 18). Retrieved from http://www.oxfordbusinessgroup.com/ product/tourism-131 1

“On my honor, as a University of Colorado at Boulder student, I have neither given nor received 
unauthorized assistance on this work.” Carolyn Evans, Caleb Law, Tu Phan


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