After 14 years of conflict, Liberia was a shattered country. Over 200,000 people had been killed. Professionals had fled, taking their technical and managerial skills with them. Infrastructure was devastated, leaving the country with limited access to power, water, and transportation. Businesses collapsed along with the economy, pushing the majority of Liberians into deep poverty. Reconstruction would be long and difficult; restoration of electricity would be a key part of the process.
The end of Liberia’s brutal civil war in 2003 brought peace, but it didn’t turn the lights back on—at least not right away. The country’s electricity sector had been completely destroyed during the 14-year conflict. Before the war, the electrical system had a generating capacity of 128 megawatts (MW), about half of which was provided by the Mount Coffee Hydropower plant, and served 30,000 customers.
But during and after the war, Liberia’s entire electricity system, including Mount Coffee, was destroyed and looted. All metal in the plant, including the turbines and the wiring in the electrical distribution network, was stolen and sold for scrap. Restoring power—a critical factor in rebuilding homes, businesses, schools, the health system, communications, and other public services—would be a key element in rebuilding the country after the war.
President Ellen Johnson Sirleaf, elected in 2006, made restoration of electricity a priority. Under the Emergency Power Program, the Liberia Electricity Corporation (LEC) was reestablished in 2007. Limited power was restored in the capital, Monrovia, using 2 MW diesel generators. Results were modest but symbolically important: a row of lights lit up a street in Monrovia, and 450 commercial customers were connected to the fledgling system. The long process of rebuilding the country’s power infrastructure had begun.
But without technical and managerial capacity, the process of rebuilding was too slow. To address this, the government decided to turn over management of LEC to a private sector firm with substantial experience in the sector. IFC advised the Liberian government, LEC, and a donor, the Norwegian government, in the design and execution of a five-year management contract to operate LEC. After an open tender process, the contract was awarded to Manitoba Hydro International (MHI), a Canadian power company, in April 2010.
Private sector management delivers results
Under MHI’s management, LEC began rebuilding the electrical distribution system in Monrovia, with impressive results. Between 2010 and the end of 2012, the LEC:
- Added over 12,000 new connections, reaching an estimated 50,000 people;
- Increase revenue by 160 percent;
- Decreased losses by 21 percent;
- More than doubled peak load;
- Improved fuel efficiency by 33 percent.
Although capacity was low, at only 20 MW, it was sufficient to begin rebuilding the overall power infrastructure and lay the groundwork for gradual expansion.
The next phase
However, power generation relied on expensive diesel generators. Electricity tariffs are over $0.50 per kilowatt hour, among the highest in the world and too expensive for most Liberians. And low generating capacity meant there wasn’t enough power to support the needs of businesses, hospitals, schools, and ordinary people. More capacity at affordable prices would be necessary to keep the post-conflict reconstruction process on track.
Reconstructing the Mount Coffee hydropower plant was a logical next step. This would add up to 78 MW of power capacity during the wet season and increase the number of new electrical connections. To do this, the Liberian government and its partners envisioned the creation of a project implementation unit (PIU) within LEC to manage the reconstruction of Mount Coffee. It also would require modification to the management contract with MHI.
Most important of these was a tariff structure and governance framework for the revenue generated by Mount Coffee. This will be achieved by pricing the power provided by Mount Coffee at a rate reflecting costs as if the project were commercially financed, and channeling the corresponding amount to a trust account. These funds will be used to finance plant O&M, debt service, and future investments in the sector. This pricing structure also maintains a cost reflective tariff and avoids creating market distortions and roadblocks to future private investment in new generation. The revised contract includes new targets—15,000 additional connections, improvements in collection rates, better operational efficiency, and a reduction in losses. It also provides a framework for expansion beyond Monrovia.
- Power capacity in Liberia is expected to quadruple to over 80 MW. Clean hydro power will largely displace diesel generators, which are costly and more harmful to the environment.
- At least 48,000 new connections will be created, providing an additional 250,000 people in Monrovia with electricity.
- Electricity losses are expected to be reduced from 25 to 12 percent, while collection rates are expected to climb at least 97 percent.
- Up to $30 million annually is expected to be available for re-investment and expansion of the electricity system. These funds will be managed under a transparent governance system.