Growing Entry to Dependable Electrical energy in Liberia

Program Overview

MCC’s $238 million Liberia Compact (2016-2021) aimed to encourage financial progress and scale back poverty by offering entry to extra dependable and reasonably priced electrical energy. The compact funded the $207 million Power Sector Challenge, which included rehabilitating the Mount Espresso Hydropower Plant to generate 75 megawatts of low-cost renewable vitality. Actions additionally included supporting the administration companies contract to strengthen the Liberia Electrical energy Company’s administration and operations capability, and establishing an impartial regulator to speed up non-public sector funding within the vitality sector.

Evaluator Description

MCC commissioned Mathematica to conduct an impartial remaining efficiency analysis of the Liberia Power Sector Challenge. Full report outcomes and studying:

Key Findings

  • Buyer connections grew rapidly because the Mount Espresso Hydropower Plant and donor-funded distribution initiatives had been accomplished.
  • Plant sustainability is jeopardized by insufficient funding for operations and upkeep.

  • Regardless of challenges, the administration companies contract, which the agency employed to assist the utility, elevated connections, lowered outages, and improved administration practices.
  • Energy theft stays excessive and threatens sustainability. The utility requires investments in meters and the low voltage community to satisfy buyer demand.

  • The Liberia Electrical energy Regulatory Fee has developed a regulatory framework for electrical energy technology, transmission, distribution, and gross sales.
  • The regulator permitted a tariff that’s too low to cowl prices, non-public operators are unlicensed, and its independence is threatened with out ample revenue.

Analysis Questions

The ultimate efficiency analysis was designed to reply whether or not the undertaking:

  1. 1
    Was applied as deliberate?
  2. 2
    Contributed to enhancements in electrical energy regulation, coverage formulation, and monitoring?
  3. 3
    Affected electrical energy technology, transmission, distribution, and reliability?
  4. 4
    Aided within the sustainability of the Liberia Electrical energy Company as a utility?
  5. 5
    Affected the variety of customers connecting to the grid and the demand for electrical energy?

Detailed Findings

These findings construct upon the interim analysis report outcomes printed in 2020.

The Mount Espresso Hydropower Plant was rehabilitated, offering entry to low-cost hydropower in the course of the wet season (from Might to October) at a value of $0.14 per kilowatt hour (kWh) in comparison with $0.33 per kWh for thermal technology.

In January 2021, one of many items of the facility plant failed, and the unit remained offline on the time of knowledge assortment. Design and building selections could have led to the catastrophic failure. Restore prices had been estimated at $4-$9 million, and misplaced income could exceed $5 million thus far. Further items could require the same restore.

The Liberia Electrical energy Company, the facility utility, estimated connections grew from 35,000 clients in 2018 to 157,000 by March 2022. Whereas total demand has elevated, common buyer consumption has declined over time. Most households report their predominant use of electrical energy is for lighting. Greater than 60 p.c of leaders in communities surveyed between late 2020 and late 2021 reported that well being services, pharmacies, and faculties have Liberia Electrical energy Company electrical energy, in comparison with 15 p.c in 2019. Nonetheless, finish customers report that extra hours of dependable energy are wanted to enhance enterprise productiveness and operations.

From 2015-2021, paid bills totaled $161 million and unpaid bills totaled $16 million. Losses grew over this time period, totaling $204 million for commercial losses and $52 million for technical loses.

Paid and unpaid payments in addition to technical and business losses, by yr and totals by class, tens of millions of {dollars}

Electrical energy Provide Board Worldwide (ESBI) turned the administration companies contractor in 2018. On the time, the Liberia Electrical energy Company operated at a loss and debt exceeded $21 million. The utility additionally had lawsuits for unpaid gas, loans for inoperable gear, contracts resulting from cronyism, burnt data, no asset itemizing, no buyer database and a low voltage community requiring intensive restore. With widespread energy sector corruption, the utility’s monetary disaster, and rising obligations with new donor-funded belongings, the contract lacked working investments, capital investments, and Board of Administrators assist.

Nonetheless, ESBI succeeded in extending the transmission and distribution community. ESBI lowered outages and elevated total demand and the variety of actively paying clients. Energy theft and political interference stay the utility’s best threats to solvency and sustainability. The Liberia Electrical energy Company has misplaced $271.9 million from 2015 to 2021, together with $15.9 million in unpaid payments, $204 million in business losses, and $51.9 million in technical losses. Extra generated energy has meant larger losses.

ESBI had accomplishments across power generation, end user benefits and transmission and distribution. For generation, the Mount Coffee Hydropower plant was commissioned, though one turbine was damaged in 2021. Thermal generators migrated to lower-cost fuel, when possible. Transmission line contracts were renegotiated, though still problematic.
<p>For end users, growth was 35,000 in 2018 to 170,000 in 2022. Demand increased from 28 megawatts to 65 megawatts.</p>
<p>For transmission and distribution, there were 4 substations in 2018 and 11 in 2022. Capacity of substations grew from 80 to 200 for medium voltage. 66 kilovolt lines grew from 120 kilometers to 338. 2,191 kilometers of medium and low voltage lines were added, and 1,342 transformers were added." width="100%" height="" /><figcaption></p>
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The Liberia Electrical energy Regulatory Fee (LERC) was established in 2019 to develop a contemporary regulatory framework for electrical energy technology, transmission, distribution, and gross sales. LERC rapidly developed regulatory governance and substantive legal guidelines, insurance policies, and rules aligned with worldwide requirements; nevertheless, improved sector outcomes will take years to understand. LERC’s monetary mannequin depends on income from charges and levies on gross sales, which threatens long-term independence. For instance, LERC carried out a census itemizing 345 non-public sector electrical energy operators, but it lacks sources to license, monitor, and implement legal guidelines, so LERC can’t acquire charges. In 2022, LERC permitted an electrical energy tariff discount that doesn’t cowl the fee to supply electrical energy. This discount additional threatens the Liberia Electrical energy Company’s monetary solvency. Hydropower prices the Liberia Electrical energy Company $0.14 per kWh to supply. Thermal technology and energy from different international locations value the utility $0.33 and $0.24 per kWh, respectively. In the meantime, 97 p.c of shoppers pay $0.15 per kWh. The combination of energy equipped determines the utility’s income; nevertheless, the Mount Espresso Hydropower Plant unit outage and fewer rainfall have made the Liberia Electrical energy Company more and more reliant on energy from neighboring international locations. The tariff and persisting energy theft worsen the utility’s monetary issues.

Financial Fee of Return

MCC considers a ten p.c financial charge of return (ERR) as the edge to proceed with funding.

  • 10.7%
    Authentic ERR
  • 8.4%
    Up to date ERR (as related)
  • 8%
    Analysis-based ERR

MCC Studying

  • Sustainability for an influence utility requires a secure revenue stream.

  • Tasks ought to proceed to search out new methods to plan for upkeep after the undertaking ends.

Analysis Strategies

Data collection was from key informant interviews, site visits, document review and surveys from households (1,513), businesses (562) and community leaders (55).

This efficiency analysis included an implementation evaluation, longitudinal evaluation of administrative knowledge, a quantitative pre-post evaluation of survey knowledge in two completely different places (linked and unconnected households), qualitative evaluation utilizing doc overview, web site visits, interviews, and recalculation of the ERR.

The ultimate spherical of knowledge assortment occurred between November 2020 and December 2021, 11 months after the compact finish date, leading to an publicity interval of between 23 and 36 months. This timing signifies that knowledge was collected roughly three years after the completion of the Mount Espresso Hydropower Plant rehabilitation, three years after the administration companies contract was put in on the Liberia Electrical energy Company, about two years after the LERC started functioning, and one to 2 years after the grid was expanded into some communities. The analysis collected knowledge from households (1,513), companies (562), and neighborhood leaders (55).


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