President George Weah has submitted for ratification to the House of Representatives a Loan Agreement in the tone of US$45.3 million, which was signed between the Government of Liberia (GoL) and the International Development Assistance (IDA) on December 11, 2017.
The financial agreement is entitled, “Additional Financing Agreement for the West African Power Pool (WAPP) Interconnection Project Côte d’Ivoire, Liberia, Sierra Leone-Guinea (CLSG).”
The then Finance Minister Boima S. Kamara signed on behalf of the government, while Marisa Leshchenko, Country Manager of IDA affixed his signature for IDA-International.
In a communication to Speaker Bhofal Chambers of the 54th Legislature, the President said the objective of this project is to support government’s effort in providing US$45.3 million and affordable cost of electricity that will be efficient and reliable for the Liberian people in terms of revenue generation.
The communication of the President is dated July 6, but was read on July 10 during the 44th day sitting.
“Honorable Speaker, this project is significant to our economic recovery program, and I trust that the Legislature will ratify this Agreement in a timely manner,” President Weah wrote.
According to the President’s communication, the original IDA for the implementation of the regional project is SDR94,900,000 or its equivalent of US$147 million negotiated in March 2012. He furthered that the amount intended to fund the project increased between the period 2012 and 2016 due to the Ebola epidemic in the Mano River Basin and other economic factors.
“The amount of the additional financing allotted to Liberia is US$45.3 million,” the President said. The maximum commitment charge rate is one-half of one percent (1/2 of 1 percent) and the service charge is the greater of the sum of three-fourths of one percent (3/4 of 1 percent) per annum on the withdrawn credit balance with payment dates of February 15 and August 15 in each year.
The Plenary has voted to forward the communication to the Joint Committee on Ways, Means, Finance & Development Planning; Lands, Mines, Energy & Natural Resources and the Judiciary to review and scrutinize the Financial Agreement and report within two weeks.
According to reports, the development objectives of the Power Interconnection Project for Côte d’Ivoire, Liberia, Sierra Leone, and Guinea (CLSG) aim to reduce the cost of and increase the electricity supply at utility level, and to increase the export capability of Cote d’Ivoire as well as increase the technical integration of WAPP network.
The additional financing aims to fill a financing gap due to several factors of the US$104.9 million of the WAPP-CLSG power interconnection component to avoid delays in completing the line.
It also provides US$17.5m of the Additional Financing for the WAPP integration and technical assistance component to scale up the impact of this component, and to fill a financing gap created by the fluctuations of the special drawing rights (SDR) and U.S. dollar exchange rate.
The Electricity Sector
The electricity sector in the Mano River Union (MRU) countries faces major constraints, namely; low access to electricity, a structural deficit in the supply of electricity, a preponderance of thermal generation in the energy mix, and low financial and institutional capacities of national electricity companies.
The CLSG project will increase the average rate of access to electricity in the four countries from 28 percent to 33 percent, electrifying 125 locations along the transmission line as well as 70 schools, 30 health centers and nearly 1,500 small commercial and industrial craft enterprises, of which 25 percent are held by women. Directly benefiting from the project are the 24 million inhabitants of its impact area who will enjoy reliable electric power at a competitive cost.
The construction of this line will form the backbone of the MRU countries and is one of the priority projects of WAPP Master Plan, a cooperation initiative linking national electricity companies in Western Africa.
CLSG is the first actual project included in the Mano River Union initiative. As an early project, it has been very instrumental to the design of the initiative itself. The idea of a power backbone has been replicated with the Program for Infrastructure Development in Africa (PIDA) Trans-African Highway. The CLSG project introduced the concept of a booster fund to compensate fragile states’ weak capacities to prepare projects in a reasonable time.
The CLSG project will include a capacity-building component to ensure the transfer of knowledge to national structures in order to improve the management of future interconnections in West Africa. It also involves various planning and feasibility studies on hydro power plants that could enhance energy exchange.
The Mano River Union countries are fragile and emerging from long sociopolitical crises. Owing to the low levels of investment in the sector in recent years, power infrastructure has become obsolete with the attendant outcome of extremely poor service. The cost of electric power production per kWh remains very high in these countries where the electricity access rate is among the lowest in the world (two per cent in Liberia and Sierra Leone; 10 per cent in Guinea).