Home Governance Rainbow Alliance Wants Gov’t Accounts For High Gasoline Price ‘Bonanza’ …Demands Removal of US$1.75 Surcharge on Each Gallon

Rainbow Alliance Wants Gov’t Accounts For High Gasoline Price ‘Bonanza’ …Demands Removal of US$1.75 Surcharge on Each Gallon

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By: Our Staff Writer

MONROVIA: One of Liberia’s robust opposition blocs, Rainbow Alliance, says it feels particularly ashamed that Monrovia, the oldest capital city in Africa, is labeled the “dirtiest and darkest capital city in Africa,” especially on the occasion of the 200th anniversary of the founding of the Liberian nation.

In a statement issue in Monrovia during the week, the National Executive Committee (NEC), of the Rainbow Alliance frowns at the “sudden 40 percent hike” in the price of gasoline and fuel on the Liberian market.
The Rainbow Alliance is a conglomeration of eleven (11) opposition political parties including the Grand Old True Whig Party (TWP) and the Movement for Economic Empowerment (MOVEE), among others.

The Alliance described the “hike” in the price of gasoline and fuel as a “big mistake by the government that has multiplied the suffering of the Liberian people.”

According to the Rainbow Alliance, barely a few days after the government assured the Liberian people that it had enough fuel and gasoline supply to cover three months, it summersaulted and imposed the severe price hikes which came as a shock to the Liberian people.

“This insensitive imposition on the Liberian people has been met with silence from the President of Liberia, Mr. George Manneh Weah, who has not exercised the minimum decency to address the Liberian nation to explain why his government took such a drastic decision. It should be cleared to the president and his advisers that the high price of gasoline and fuel has a corresponding rise in the price of everything including, transportation, food, running of generators in private homes, hospital care, and the ability of students to attend school on a regular basis,” the statement added.

The Alliance asserted that it is unfortunate that “the government is using the geopolitical uncertainty of the Ukraine crisis as an opportunity to exploit the Liberian people at a time when getting a decent meal on the table has become very difficult due largely to leadership letdown and the mismanagement of the economy.”

“It is understood that the government earns a huge amount of US$1.75 on each gallon of gasoline and fuel that is sold at the retail level, in addition to other surcharges said to be set aside to contribute to the road fund. We call on the government to give account of the bonanza that it is earning from the huge price hike, assure the Liberian people of how long this price hike will be enforced and announce interventions that could reduce the burdens on the Liberian people,” the opposition political parties pointed out.

The Rainbow Alliance therefore “demands that the government of Liberia reduces its surcharge of US$1.75 on each gallon of gasoline and fuel by half and pass on the savings to the Liberian people. This is what a responsible government should do in a time of crisis to protect the livelihood of its people.”

According to the Alliance, in addition to the huge price hikes on gasoline and fuel, the government has failed to address the lack of electricity for long periods of time leading to the loss of productivity, the increase in the crime rate, and the spoilage of food in homes and businesses for those who cannot afford private generators.

It maintains that the government’s energy policy “seems to be in disarray” while government officials who are the largest users of the Liberia Electricity Corporation (LEC) services do not pay their bills and therefore put a strain on the LEC to supply adequate fuel for its generators in the dry season.

“The government has failed to address the large-scale power theft issue thereby causing disruptions in the LEC power grid. Worse of all, the government continues to renege on paying its indebtedness to the West Africa Power Pool, WAPP, thereby denying the Liberian people of the much-needed steady supply of affordable electricity,” the Alliance added”.

However, in the face of the prolonged electricity crisis in the country, the Senate, which is the Upper House of Liberia’s bicameral Legislature, recently cited the Management of the Liberia Electricity Corporation (LEC), to give reasons, if any, why the somewhat unstable and discouraging electricity situation in the country remains unabated.

Multiple dossiers (records) in the public domain indicate that Liberia and its partners have spent nearly US$300 million to rehabilitate the Mount Coffee Hydro Plant aimed at restoring reliable electricity to Monrovia and its environs.

Also, the Plenary which is the highest decisions-making body of the Upper House on Tuesday, May 18, 2021, cited the Liberia Electricity Regulatory Commission (LERC) and the Ministry of Lands, Mines and Energy to appear before it to give reasons, if any, why electricity is not available to many homes and offices in the country.

Senate Committee Chair on Concessions and Investments, Grand-Kru County Senator, Numene T.H. Bartekwa, at the time, requested the endorsement of the Senate Plenary to cite these institutions.

The Grand Kru lawmaker told the Plenary of the Senate that businesses and residents in Monrovia and its immediate surroundings were facing extreme difficulties in accessing electricity, a situation which, he said, was creating serious embarrassment for the government.

He added that the Government of Liberia and its international partners have invested huge resources into the development of the Mount Coffee Hydropower Plant with a total output of 88megawatts plus the West African Power Pool 27 megawatts cross border electricity support from Ivory Coast.

According to him, despite the huge investments in the electricity sector, many citizens, residents, and businesses grossly lack access to electricity services as their plights remain unaddressed.

The Grand Kru Senator said the grave embarrassment that Liberians, foreign residents and businesses face on a daily basis is seriously harming the image of the entire government.

Following lengthy debates on the matter in the Senate Chambers, Montserrado County’s tough-talking Senator, Abraham Darius Dillon, made a motion for the Managements of both LEC and LERC to appear before the Senate Plenary on Tuesday, May 18, 2021 to address themselves to the electricity situation.

Meanwhile, a recent Millennium Challenge-Liberia Compact Completion Report has given detailed accounts bordering on “massive electricity theft” at the LEC and other acts of “expanding corruption.”

The Compact Completion Report also underscored the need to look at both institutional and environmental sustainability issues. For the institutions, the report stressed that the long-term success of Mount Coffee is dependent on a few key factors.

According to the report, while the Compact’s projects have made a number of achievements, there are many concerns about the sustainability of these achievements over both short-term and long-term basis.

The report indicated that the success of the Liberia Electricity Corporation (LEC), is dependent on good governance, sound economic management, Political Will and Financial Support and Commitment of the Government of Liberia (GOL).

While the Management Services Contractor has been able to bring some operational stability to LEC, the Compact Completion Report made it clear that LEC lacks the capital expenditure (CaPEx) and operational expenditure (OpEx) funds that would enable it move to the next phase of the business plan.

According to the Compact Completion Report, the January 2021 update of LEC business plan shows that the utility needs US$ 109 million of Capital Expenditure (capex) funding for its turnaround.

The Report, however, added that the World Bank is in position to fund at least US$42 million of that amount, leaving a gap of US$65 million that needs to be funded through external sources by April 2024.

Moreover, LEC’s current financial projections also show a net operating cash flow deficit of US$16 million.

According to the report, because of the lack of capitalization, LEC is not able to expand its customer base in response to output and that people who cannot get connected resort to illegal connections, thereby exacerbating the utility’s losses.

According to the report, LEC is therefore still caught in a spiral of commercial losses which at one time was as high as 74% of power produced.

The reports added that because GOL has not been able to capitalize the utility, it is not certain if the MSC contract will be picked up after the contract ends, though it appears, the World Bank may fund an extension of the MSC under new terms and conditions.

According to the report, when the utility lacks funds to provide or maintain even basic services like meters, more people go unserved, resulting in more illegal connections. This leads to more equipment blowing, thereby repeating the cycle.

Commenting on bringing LEC Technical and commercial losses under control, the report indicated that an evaluation study by Mathematica found that while LEC has had an almost fourfold increase in MCHPP’s total electricity supply (in MWh per month) from 2015 to 2019, total electricity sold only doubled.
Similarly, the report says technical losses increased from about 500,000 megawatt hours (Mwh) in January 2015 to 1.9 million MWh in September 2019.

More strikingly, commercial losses increased from 1 million MWh in January to 10.8 MWh in January 2019. Since 2018, commercial losses have steadily risen and stabilized around 58 percent, for a total loss rate of about 70 percent.

The study went further to conclude that Liberia presents the exact context in which corruption proliferates: weak governance, poverty, poor utility management, high energy demand, and high tariffs.

“As a result, LEC has one of the highest rates of commercial losses in the world, with thriving cartel responsible for grand electricity theft and small-scale, but widespread power theft in communities,” the Compact Completion Report revealed.
It added that LEC is beset by technical inefficiencies, an ability to connect customers despite excess generation capacity, expanding corruption, and unsafe infrastructure.

The report made it clear that utility requires increased funding for operations and capital expenses, a systemic response to theft and corruption, and support from the Government of Liberia and donors to implement the reform needed to sustain the utility.

It may be recalled that in October 2015, the US and Liberian governments signed an agreement to establish Millennium Challenge Account in Liberia (MCA-Liberia) as the legal, independent and autonomous agency of the Government of Liberia responsible for the implementation and oversight of the Millennium Challenge Corporation’s Liberia Compact.

The five-year Compact was in the amount of US$256,726,000. Its goal was to reduce poverty through economic growth, and it was designed to address two binding constraints to economic growth currently existing in Liberia including lack of access to reliable and affordable electricity, and an inadequate road infrastructure.

The Compacted entered into force on January 20, 2016 and expired on January 20, 2021. The objectives of the two projects were to access to more reliable and affordable electricity; and to improve the planning, and execution of routine, periodic and emergency road maintenance.
The energy project had a budget of approximately US$201 million and was implemented through four interconnected activities, each with sub-activities: Mt. Coffee Rehabilitation Activity, Mt. Coffee Support Activity, Liberia Electricity Corporation (LEC) Training Center Activity and Energy Sector Reform Activity.
LEC has been allegedly implicated in similar cartel during the administration of former President Charles Taylor when the then government through the Ministry of Finance was trying to purchase four generators for electricity. But reports had it that when the Taylor-led Administration asked LEC officials to purchase the generators, then LEC executives bought refurbished generators from Chez Republic, a situation which reportedly angered ex-President Taylor to dismiss both the then LEC Management Team and its erstwhile Board of Directors.

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