World Bank Group intervention on path to transform Sierra Leone’s energy sector for good.
April 1, 2015 By Ahmed Sahid Nasralla (De Monk)
If everything goes as planned, realistically by 2017 Sierra Leoneans in the Western Area will begin to enjoy 24 hours electricity supply throughout the year.
That is the assessment of a World Bank energy sector team that just concluded a 10 days mission in Sierra Leone aimed at evaluating the current energy situation and providing expert advice on what needs to be done to overcome the perennial problems facing the sector and make it deliver electricity to the people in a financially sustainable manner.
The team held series of meetings with the Ministry of Energy, pertinent MDAs, the public private partnership unit (PPU), the State House and the Ministry of Finance and Economic Development.
“This is a significant moment for us in the energy sector after all the hard work that has been put in by all parties concerned,” says the Minister of Energy, Henry Macauley, who took up office in July 21, 2014 in the peak of the Ebola Virus Disease (EVD) outbreak that hit the country. “We applaud the courage and the friendship of the World Bank for coming to see us at this time of Ebola to look at what we have been doing and give their professional and technical advice on what we should be doing and where we should be going.”
The World Bank has been supporting the government of Sierra Leone to achieve its energy vision but the pace is picking up now as the small West African country sets to bounce back from the devastating Ebola pandemic.
“There’s been a downturn in economic activity and that hurts Sierra Leone very much. But as the number of Ebola cases is coming down, the country needs to rebound,” says Carol Litwil, Senior Energy Specialist for the World Bank. “Therefore the World Bank stands with the government to support this rebound. And what we can do from the World Bank energy sector team is to support the energy sector, because we know this is a vital and absolutely necessary condition for Sierra Leone to grow and to rebound from the Ebola.”
The Bank is currently supporting Sierra Leone with two existing projects of a total of US$56 million to undertake the construction of the energy network and to upgrade some of the facilities. There is the Energy Access project, which seeks to improve access to electricity nationwide and the Energy Sector Reform Project, which seeks also to bring about a sustainable reform in the sector.
But that is not sufficient, says Carol, who is also the Task Force Team Leader for the Energy Access Project.
The government of Sierra Leone has further requested for an additional $15 million which the Bank is now conducting due diligence for. This is to make sure that the energy utility can deliver electricity to the people in a financially sustainable manner.
“The aim is to have the energy sector contribute to economic growth, rather than using tax payers’ money to support its budget. So the US$15 million is mainly to support the commercial functions of the sector,” says Carol.
This support is expected to help solve one of the greatest problems that has been plaguing the electricity utility sector in the country for several decades – that is commercial losses. Despite the unbundling of the sector last year, 31st December 2014, which closed the sad chapter of the notorious NPA (National Power Authority) and gave birth to two entities- EGTC (Electricity Generation and Transmission Company) and EDSA (Electricity Distribution and Supply Authority), the problems of the old persist.
“That unbundling is supposed to lead to an improvement in the efficiency of the sector to an extent that it becomes more attractive to private investment, both nationally and internationally,” says Sanusi Deen, Chairman of EDSA. “However, the two entities are now functioning but not without the attendant problems of the former NPA which led to its incapacity to meet the needs of the nation in terms of power generation and supply.”
According to Deen, the sector continues to suffer hugely from technical and commercial losses because the capacity of the network is not strong enough to deliver the electricity efficiently from generation point to consumers.
“You have a lot of wastages in the transmission process. It’s like putting water through a pipe, but along that pipe, before it gets to the end, you have holes all along the pipe. And some of those holes intermittently are created by people who want to use electricity along the line before it gets to where it should go,” laments Deen.
EDSA currently supplies about 24 megawatts generated by EGTC from Bumbuna as well as the thermal plants at Kingtom Power Station and Black Hall Road combined. But only about 15 to 18 megawatts eventually arrive at the end delivery point because of such wastages.
“On top of that you also have commercial losses, which is people tapping into the network to extract electricity illegally,” reveals Deen. “There are a lot of illegal connections in the network; which is, people stealing the energy and not paying for it. And this is in fact the bigger part of the losses that we experience on the distribution network.”
So that at the end of the day, continues Deen, the distribution company is not able to earn enough revenue to pay for the energy that is supplied to it and to maintain its distribution network efficiently. And over and above that it has to meet its fixed cost, like taking care of a large number of staff who are dependent on it for their livelihood.
In the medium term the World Bank, under the Energy Sector Utility Reform Project, will send technical experts to come and work with EDSA and together they will recruit young Sierra Leoneans who will be trained in the management of all the sectors including the technical and commercial areas of operations.
According to Deen the loan has already been approved and they are at the point of starting to recruit some of these young and promising Sierra Leoneans who will become the future managers of the utility.
Furthermore, the government of Sierra Leone has entered into a contract with an independent power provider- CEC (Copper-belt Energy Corporation) for the generation of electricity in the country. This project consists of 128 megawatts HFO5 Plant which is supposed to deliver the first 50 megawatts by next year 2016. For this project the World Bank is supporting by way of establishing a partial risk guarantee which the business needs.
“That is a very key project for us,” says the Minister. “If you imagine that during the rainy season when we are flying high with energy generation, we were enjoying 50 megawatts out of Bumbuna alone and most people in Freetown were enjoying practically 24hrs electricity supply. So if you look at the provision of another 50 megawatts of HFO5 which will not have seasonality in its power production like Bumbuna, we can safely say that we will satisfy a lot of demand.”
As an independent power producing company, CEC will do all the generation and production of the energy and they will sell it to an off-taker, in this case EDSA. But with all the problems associated with the current distribution network this is a risky business to undertake.
“The strengthening of the revenue collection and protection capability of EDSA is therefore very essential if this CEC project is to succeed,” stresses Deen. “If we do not do serious work in these areas, EDSA will not be able to meet its obligation. That work must be done before CEC’s power comes into the network.”
That’s where the World Bank comes in, says Carol.
“We (World Bank) go in and we guarantee the payment. And we work with the government, together with the new established EDSA Board and the utility to make sure they can increase the revenue so that in the future they can pay. But initially we come in with the guaranty to help move the generation project,” explains Carol.
The Bank’s energy experts believe these interventions- the existing projects and the additional financing of $15 million, will help transform and realise the vision of the government and EDSA in delivering accessible and affordable electricity to all Sierra Leoneans and businesses.
Credit: Development and Economic Journalists Association- Sierra Leone (DEJA-SL).