Lessons to Learn from Opening the Liberian Telecommunications Market

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In 2004, the National Transitional Government of Liberia (NTGL) embarked upon a great experiment: opening the telecommunications market to competition. The result has been an unmitigated success. We have gone from a landscape of only 5,000 lines when a public corporation called The Liberian Telecommunications Corporation ("Telecom" headquartered on Lynch Street) ruled the roost to a situation where there are almost 2 million GSM subscribers today. The cost to the national treasury has been zero, zilch, nada. But the treasury reaps millions of dollars each year from the GSM companies by way of tax revenue. It's like belonging to a susu club, to which you contribute nothing but from which you receive thousands of dollars every month. A similar scenario can be brought into being with regard to electricity.

According to the folks at Manitoba Hydro, the Canadian company that is managing LEC under a lucrative 5-year contract, financed by the Norwegian government, by which they will have pulled in $8 million in fees by the time their contract ends in a few days' time, the demand for electricity in Monrovia alone is 120MW. LEC is currently producing only 6MW, just 5 percent of the demand. The rest is coming through self-generation. We are producing our own electricity using everything from small Tiger generators to large Perkins and Caterpillar machines.

And why is LEC only producing 6MW of power? Because many of its old generators have reached the end of their useful life. In fact, LEC is producing less electricity today than it did, say, 3-4 years ago. One clever wag has suggested that LEC changes its slogan from "Small Light Today, Big Light Tomorrow" to "Small Light Today, Even Smaller Light Tomorrow". LEC simply does not have the resources to get the job done. To bring 120MW of current to Monrovia will cost several hundred million dollars. LEC does not have that kind of money. The Government of Liberia (GOL) operating on a shoestring budget of $500 million does not have the millions to give capitalize LEC to level required for LEC to get the job done.  And if we are waiting for GOL come up with the money, we will be waiting another 100 years.

Right now LEC is living on life support—-from donors. In addition to the $8 million that the Norwegian government has spent to finance the Manitoba Hydro contract, this same Norwegian government has shelled out an additional $29 million to enable LEC to expand its network. Well, you cannot build a sustainable business on the basis of handouts from donors. Donor programs typically are short-lived. So, what happens when the donor program comes to an end, as they inevitably do? You are left high and dry. If the Norwegians decide not to renew their aid program, LEC will collapse.

So, what are the options for LEC? If LEC wishes to remain in business, it should either seek a long-term partner, a utility with bags of money and know-how, a partner which will inevitably demand a controlling interest in the entity. Or, LEC can simply become a landlord, leasing out its assets to another utility and collecting rent. Alternatively, it could simply sell its assets (and corresponding liabilities).

But lest we allow ourselves to become too distracted with trying to solve LEC's internal problems, let us return to our original premise: how can we apply the lessons we have learned from opening the telecommunications market to competition to electricity?

The answer is quite simple: set aside the LEC monopoly and allow private companies to come to Liberia, set up shop and produce and sell electricity to us. This is precisely what an NGO that me and 25 other Liberian citizens established in December last year are advocating. Our NGO, "The Coalition to Bring Plenty Cheap Reliable Stable Electricity to Liberia" ("Brescelco" for short) has drafted a law, the "2015 Liberian Electricity Act" that will be introduced into our national legislature as soon as it returns from its Easter recess. We have mounted a vigorous public awareness campaign, going from community to community, to educate the public about the issues surrounding electricity and offering solutions. The purpose of this grassroots initiative is to get the public involved in making representations to their elected officials to act so that our electricity problem can be solved.

Next week we will examine the specifics of what actions are necessary to solve the electricity problem.

The writer is a businessman. He can be reached at <[email protected]>.

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