“LEC on Life Support”

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Brescelco Chairman Harry .jpg

The Chairman of Brescelco, a coalition advocating for “sufficient, cheap and reliable electricity to Liberia”, has described the Liberia Electricity Corporation (LEC) as an institution that surviving on life support, relying primarily on donor aid; which is usually short-term.

Mr. Harry Greaves, who founded the advocacy group, said such a situation does not provide basis for building long-term business model.

Mr. Greaves’ statement was contained in a presentation delivered last Friday at a public hearing on the reform of the Liberian electricity sector, conducted by the senate Committee on Lands, Mines, Energy, Natural Resources and Environment and House of Representatives Committee on Energy, in the Senate Chamber.

The LEC, Mr. Greaves asserted, does not have enough money, skilled manpower, know-how or management talent to get the job done; and “the government with a budget of only US$500 million a year, does not have enough money to capitalize LEC properly.”

With the state-owned LEC producing only 6 Mega watts, which accounts for 5 percent of electricity demand in Monrovia alone, Mr. Greaves said the corporation’s tariff of US54 cents per Kilowatt Hour (KwH) is the highest in the world, against countries like Ghana, whose tariff is about US15cents/KwH.

“LEC current is unreliable, unstable and very rarely can a community expect to get 24-hour current, and because of lack of regulation, spikes in LEC current can damage people’s appliances with no recourse. According to Manitoba Hydro International (MHI), current demand in Monrovia is 120MW.”

On the short term needs of LEC, Greaves, who is also a former managing director of the Liberia Petroleum Refining Company (LPRC), said the corporation will have an additional 38MW of power from three Heavy Fuel Oil (HFO) plants currently under construction; but observed that it is insufficient as Monrovia alone will need another 100MW within the next three years.

On the long-term, Greaves said the country needs 700-800MW to provide grid power for iron ore mining companies, businesses and households nationwide.

The solution to the electricity problem, according to Mr. Greaves, is to unbundle services into three constituent parts, generation, transmission, distribution, and offer services to private investors, alongside LEC, based on their demonstrated capabilities.

Mr. Greaves also called for the introduction of an independent regulatory commission to referee the resultant competitive landscape. He said opening the country’s electricity market to both local and foreign private investors will further enable Liberia to play its proper pilot role in the US$27bn Obama Power Africa initiative.

The role of the regulatory commission, according to Greaves’ document, is to license operators, including LEC, based on their demonstrated capabilities, set tariffs and, at the same time, ensure that the consuming public gets current that is affordable, safe and reliable.

To avoid confusion and duplication of functions, the Ministry of Lands, Mines and Energy should be restricted to making policy, with no regulatory role.

Greaves advised against assigning a role to LEC, that since it cannot properly perform due to the absence of money, skilled manpower, know-how, and management talent, it risks bringing the whole system down.

Making presentation earlier on the current state of LEC, the Managing Director of LEC, Joseph T. Mayah, disclosed that since 2006, the corporation has implemented or is implementing a number of projects totaling US$800 million, and of that amount 51 percent constitutes grants and 49 percent loans.

Mayah said LEC currently manages an active customer base of 34,121 with average monthly sales of US$1.8M; however, he said the major challenge faced in the commercial activities is electricity theft. “Criminalization of this unwholesome practice through the passing of the electricity law will protect the LEC revenue generation capabilities.”

Under the current legislation, the LEC is responsible for the generation, transmission, distribution and sales of electricity throughout Liberia.

About the views of LEC on the liberalization of the electricity sector, Mr. Mayah noted that the inherent challenges faced by the state owned utility to meet up with the increasing electricity demand and the inability of government, “in view of competing demands, to mobilize sufficient investment capital for the sector development and expansion are among several factors triggering reform.”

Mayah told the hearing that LEC is recommending that a hybrid of unbundling, corporatization/commercialization, Independent Power Producers (IPPs) and the passing of the electricity law form the basis for liberalization of the electricity sector of Liberia.

Also speaking at the hearing was the Minister of Lands, Mines and Energy, Patrick Sendolo, who on behalf of government expressed support for the liberalization of the electricity sector, though he did not concur with some comments made by Mr. Greaves.

Present at the hearing included partners to the energy sector of the country, among them the Country Manager of the World Bank, Madam Inguna Dobraja.

The joint committee meanwhile is expected to conduct further hearings into the electricity sector in August.

President Ellen Johnson-Sirleaf recently submitted to the Senate for passage a bill titled: The Liberia Electricity Corporation Act of 2015, which she said is intended to open up the country’s energy sector to meet the increasing demand of the citizenry.

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