In January the French-based Electricité de France (EDF) acquired a 25.5% stake in the failing power and water utility, Société d'énergie et d'eau du Gabon (SEEG), for a reported EUR15m (US$20m). EDF bought its interest from another French-owned company, Veolia, which has retained a 25.5% stake in SEEG, meaning that together the two companies have majority control of the Gabonese utility.

That Veolia should wish to reduce its involvement in SEEG is unsurprising given its unhappy experience to date. Power cuts and water shortages remain an unwelcome feature of daily life in Gabon. This has led to a public spat between the government and the utility, which accuse each other of failing to honour investment commitments. However, the appeal to EDF of buying a one-quarter interest in the failing company is less obvious, all the more so given that the government is due to publish a long-delayed audit of SEEG (January 2010, Economic policy). The audit is widely expected to lead to the renegotiation of the utility's current contract, which is not due to expire until 2017.

However, EDF has recently signalled its intention to increase its presence in Africa, where growth potential is greater than in the developed and highly competitive European market. Thus, gaining a toe-hold in Gabon, a middle-income country with relative political stability, would fit well with that strategy. Moreover, the deal means that EDF and Veolia can focus on their respective specialisms, electricity and water, in trying to turn SEEG around.