Struggling With Power Quagmire -Finance Minister: ‘Liberia Needs $48m To Overcome’

Intractable inflation, underpinned by propaganda of missing millions, greeted the then young administration of President George Manneh Weah and nearly caused its fall. Three years on, the magic wand came through prudent, hard policy measures leading to some aura of macroeconomic stability. But it seems another unfortunate glitch is hovering over the horizon, nearly quenching smiles that have come on the faces of populace due to the overcome of inflation and all that caused it. The nation’s capital is sunk into impenetrable darkness reminiscing the old dark days of war. Even Madam Sirleaf’s “small light” seemed better, and there is enormous public disquiet threatening to undermine the budding morale of the Government. The nation is seemingly struck in an intractable electricity quagmire, which the Minister of Finance of Economic Affairs, Samuel D. Tweah, says requires a whopping US$48 million to remedy. The Analyst reports.

It is not difficult even in the absence of empirical data for one to speak of rising rate of popularity of the Weah administration owing, amongst other things, to its success in redeeming the country from the deep slope of recession and inflation of its first three years. And it also wouldn’t be a mistake for anyone to say the curve is bending downwards again due to irregularity and fluctuation of electricity particularly in the nation’s capital.

The Liberia Electricity Corporation has been rationing current amongst communities of Monrovia and its environs, stating that the hydro turbines were unable cope with its regular load due to reduction in water table at the Mount Coffee Hydro.

The situation has been a serious cause for concern particularly amongst business people, including petit traders, who heavily rely on public electricity to continue their businesses. Many complain they are being put out of business as a result of the poor electricity regime in the last three months.

Many homes have been reporting extreme discomforts due to the situation, as critical appliances are no longer being used, creating enormous outrages amongst the populace.

Amid the concerns, the Minister of Finance for Development Planning, took to a simulcast radio talks show Wednesday, March 2, 2022, to respond to public anxieties and shed light on what the government has been doing to address the electricity issue.

He lamented the deplorable state of electricity delivery in the country, acknowledging that it is seriously affecting the economy, but assured the public that immediate solution was in the making.

According to him, the Weah government is slated to sign a power purchase agreement with the Ivorian government through the CLSG initiative and cough out $48 million to guarantee steady power supply throughout the rest of the year while at the same time deciding to remove the power distribution function from the Liberia Electricity Corporation (LEC) and outsource the transaction to private investors for efficiency as one of the measures to exit from being a moribund government establishment.

Speaking on ELBC Breakfast Show and also aired on OK FM and other stations across the country, Minister Tweah spoke of progress being made to stabilize the Liberian economy but noted the deteriorating electricity supply in Monrovia that is seriously affecting businesses and homes.

He said the situation has put the government in a dilemma which calls for some tough policy decisions to be made by the Liberian Government, including committing money to a short-term process that will improve the situation.

He said investment in the power sector by West African countries called the CLSG is the most immediate solution while the government is working on medium, and long term solution.

According to him, leaders the sub-region have all agreed that in order to overcome some of the structural challenges with generating power, countries like Liberia with such problems can acquire electricity from Cote d’Ivoire and pay for the services.

The Finance Minister however said this option comes with a cost and it is a tough decision that Liberians should be willing to take.

“We are at the point where we have to make some tough choices and I want to inform the Liberian people right now,” he said further.

“If we have to finally agree, that is the decision of the President, the national legislature, the Minister of Finance and other decision makers to make. To start with the CLSG, the government has to pay $10.4m upfront, the real cost of electricity from Cote d’Ivoire according to the negotiation we are having is $3.6 m per month. Out of the $10.4m, we have to pay 2 months at $3.6 m each making it $7.2m as security deposit. We have to sign the arrangement in a power purchase agreement (PPA) which is fixed and binding without taking into consideration any eventuality.”

He added: “Secondly, the government of Cote d’Ivoire says Liberia owes her $9m for the cross border electricity she has supplied to the country in Nimba, Grand Gedeh and Maryland for the last two years and that LEC has to pay $2 m cash down and the rest of the $ 7m can be paid by a monthly payment of $550,000 until the debt is liquidated.

Minister Tweah who said he appreciated the media engagement because it offered the opportunity to Liberians to play the roles of economists and policy makers, said there is another option opened to the country if the people were to be patient and bear the short run challenges in the last two months going to the rainy season. He said that is when the power generation capacity of LEC through the Hydro Plant might have improved with the payment of $48m to the corporation to stabilize electricity supply in Monrovia.

Calming public nerves, Minister Tweah said: “We are experiencing the current challenges with power public because of the dry season. LEC has not been able to generate electricity from the installed capacity at our plants. When the two turbines are working, we have at least 60 MW from the installed capacity of 88 MW from the hydro plant. Our difficulty right now is for the two tough months, March and April, in May and June and upwards when the rainy season comes, we will have more electricity and will not need the one we want to pay for from CLSG that will cost us $48 million.”

Though we are in the last tough months, he said, there will be improvement to boost the power supply because there are some works being done on the Bushrod plants which have the installed capacity of 38 MW and we could have like 30MW to add to the grid.

He also admitted that “we might have solved some of the structural problems we have with LEC currently.”

Minister Tweah said committing the country’s financial resources to the CLSG for a short term benefit will be helped by major concession companies in the country, including ArcelorMittal, Bea Mountain and other major concessionaires that have started to install facilities that will be used by these business establishments when CLSG supplies its services to the country after signing the PPA but these facilities will not be operational this year.

“Another advantageous point for us is that ArcelorMittal , Bea Mountain and other large users of electricity have begun to install facilities for the electricity we are expecting from CLSG,” the Finance Minister asserted further.

“They will be ready by next year. So bulk of the $48 million, say about half of the money will be paid by these companies while the government pays little as compared to taking the burden of it all just for this year.”

He appealed to the citizens to give the government time to use the rainy season when there will be more electricity to find a durable solution to the problem moving forward.

Minister Tweah, in responding to a question of why the government did not make any allotment for the $48 m in the budget or whether the government can now make the necessary appropriation to accommodate the item, said that it would have distorted the desire of the government to spend money in areas that will further expand the budget space, since the expenditure on the CLSG would have been a short run initiative with a huge cost to the government.

He reiterated that the government has identified areas that will guarantee lasting solutions to the electricity problem and is seriously working towards the scheme to achieve it.

When asked what measures have been put in place to make LEC a viable entity, Minister Tweah said the government has decided to unbundle some of the functions of the entity, beginning with removing the institution from distributing electricity and giving the role to private investors who will engage into the services for efficiency.

He expounded: “We have initiated negotiations with private investors to take over the distribution and LEC will be generating the electricity. We will divide Monrovia into zones, with companies operating within those zones to distribute electricity on a commercial basis. By doing that, we must have solved the problem of power theft, corruption, waste, etc. LEC will not be in the business of coming to communities to climb poles to cut off wires, or collecting tariffs, where some of their very staff will be shortchanging the system. I don’t think private businesses will want to cheat themselves; they are there to make money for themselves and make the system work.”

He was quick to note that the privatization also comes with a cost of job losses because private companies cut down cost while maximizing profits but it is a political decision that the government has to factor in for the system to work.

He said, “people will lose jobs and we want to say this in advance so that our people will know because such decisions are normally followed with protests; that the government is taking jobs away from its citizens.

“Now, I think the entire workforce of LEC is around 800; so maybe the government has to find a way to find jobs or alternative ways to absorb these people when the private companies say they do not need their services. It is a dilemma; you want to improve the system so you have light but people must lose jobs before it happens. But like how it was done at the Central Bank, the government will find a way when it happens. Some kind of tough or political decision has to be made.”

On what he considered the second solution to make LEC viable, Minister Tweah said there is a transition taking place where the existing management contract will be expiring and sounded optimistic that the new dispensation will ensure transformation that will make the corporation viable.

He frowned on the situation where LEC has historically been a dormant government institution, draining resources and not adding anything to its revenue.

Tweah said LEC is being subsidized heavily and owes the government between $24m -$25m in taxes due to the government but that the government cannot make the claim since the corporation cannot afford to pay and in fact still needs money to be afloat.

“There is a transition going on at LEC. We are going to draw on the critical lessons learned in the past 10 to 15 years and reset the corporation for efficiency and profitability. The present management will be leaving for a new arrangement and we are hopeful for a transformation and I am just imagining LEC will be paying the government $25m in taxes she has not been paying. I also look forward to seeing LEC borrowing government money to pay salaries.

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