Home Economy To Ensure Reliable And Sustainable Electricity: LEC Clears US$9 Debts

To Ensure Reliable And Sustainable Electricity: LEC Clears US$9 Debts

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By: Linda Gbartie

MONROVIA: The Liberia Electricity Corporation (LEC), has disclosed that when its current Liberian Management Team, headed by Mr. Monie R. Captan, took over on July 23, 2022, it inherited several challenges.

The Liberia Electricity Corporation (LEC), in a statement issued recently on its performances and challenges stated that some of the conditions included a US$9 million debt accrued to Ecobank, salaries and benefits to employees were delinquent and irregular, one out of four turbines at the Mt. Coffee Hydropower Plant was out of service due to a fire outbreak in the stator component.

LEC also indicated that none of the four HFO plants at Bushrod Island was available for operation due to maintenance and repair issues, accrued cross-border debt totaled US$12.3 million, and that negotiations for a power purchase agreement for power import over the CLSG network were stalled.

With respect to utility performance indicators, the LEC stated that the baseline data for select KPIs at ESBI’s departure 2021 annual report were as follows: aggregate technical and commercial losses stood at 62.7%, revenue stood at $30.33 million, total customer population was 142,947, and the entity’s balance sheet showed an aggregate financial loss of $20.9 million which could not enable the entity implement its business turnaround plans, as it also needed capital investment programs due to chronic lack of capital injection by the Government of Liberia.

According to the statement, the Liberian Management Team of LEC, on assuming operational control recorded the following achievements:

Paid in full the US$9 million debt owed to Ecobank, paid in full all outstanding salaries and benefits owed to employees and regularized the payment of salaries and benefits;

Secured financing of US$5.5 million through the World Bank LESSAP project for the repair of the damaged Mt. Coffee turbine for which procurement is ongoing;

Repaired all HFO thermal generators leading to their full availability and current operation for the dry season;

Paid US$3.7 million against cross-border debt, thus reducing the debt from $12.3 million to $8.6 million, and as well concluded negotiations for a Power Purchase Agreement with CI Energies/CIE and a Transmission Service Agreement with Transco CLSG in October 2022 within 3 months.

Under the Liberian Management, the LEC industry KPIs was able to improve the following over the period of time:

Aggregate technical and commercial losses dropped from 62.7% to 46.4%, with a reduction in commercial losses from 47.7% to 31.4% representing a 34% drop;

Revenue increased from US$30.33 million to $54.67 million representing an 80% increase;

Customer population increased from 142,947 to 282,505, representing an increase of 97.6%; and financial losses declined from $20.9m to 12.9m, representing a reduction of 47.33% in annual financial losses.

The corporation emphasized that with the following achievements, it is still confronted with three major challenges that must be addressed to ensure its commercial sustainability and the supply of adequate and reliable electricity across the country.

The LEC highlighted that what undermines the financial sustainability of the corporation as power theft.

The corporation emphasized that despite the unparalleled progress made over the last eighteen months, its commercial losses are still among the highest in the subregion.

“We know the extent and nature of the problem, and we know how to tackle it. What we require, in addition to our initiatives and efforts, is the enforcement of the Anti-Power Theft Law. We also need the support of every citizen to protect the electric network from unauthorized tampering and illegal connections. Power theft affects us all because it undermines LEC’s capacity to buy fuel to generate sufficient electricity or pay for energy imported into the country,” the release added.

Additionally, the LEC said, that as the grid expands and demand grows, its network is reaching optimum capacity, requiring upgrades in network capacity to improve network performance which will require an upgrade of transmission lines and substations and the replacement of transformers.

“Such an upgrade is heavily capital intensive and will require government’s investment in the electricity infrastructure. Many electrical grids within the subregion have gone through years without additional investment, contributing to inefficiency and underperformance,” the LEC noted.

However, the LEC has called on the government of Liberia which is the sole shareholder of LEC to make budget allocations to improve its electrical infrastructure.

The corporation said, though development partners will help, but the LEC investment must be government-driven.

The government also highlighted that the Gap Community Electrification project is a bold initiative by LEC.

However, 37 Gap Communities, covering 33,768 households have not been connected to the grid and to connect the remaining communities will cost approximately US$12.6 million.

Despite its best intentions and efforts, the corporation said, it cannot raise sufficient resources to finance electrification projects, as such, it is better to reserve its operating capital, the hitherto source of funding the program, for the maintenance and operation of the national grid.

“Unless the government or donors fund this initiative, many communities will remain deprived of access to electricity,” LEC stressed.

Meanwhile, the corporation has urged the government of Liberia to make budgetary allocations to connect these gap communities.

“The most pressing challenge is that demand has exceeded the electricity supply, especially in the dry season when hydro production is low and consumption increases.

Consequently, there is a supply gap requiring load shedding and filling this gap requires significant capital investment and time.

Increasing generation capacity takes money and time. Even when all the money for a power plant has been secured, it would take years to procure and build the facility”.

“Beyond money and time constraints, LEC must select a source of generation that is affordable, renewable, and climate sensitive.

Since the inception of the Ukraine War, fuel prices have increased dramatically, rendering the operation of fossil-based fuel generators unaffordable and a recipe for huge and uncontrollable financial losses.

This peril is in addition to the impact of such power sources on carbon emissions and climate change,” the released statement.

Moreover, the released statement that the LEC has adopted a strategic generation plan to pursue a Hybrid Renewable Energy Integration solution, mainly pairing hydropower projects with solar power projects.

According to them, under the World Bank RESPITE Project, LEC and the government have received financing totaling US$96 million for the expansion of Mt. Coffee by more than 50% of its current capacity and the construction of Liberia’s first ever utility size solar power plant which will be designed around a 20MWp capacity and located at Mt, Coffee and the procurement process for the solar plant is 50% completed, and contract should be awarded by 2nd Quarter of 2024 as well as bid documents for the expansion of Mt. Coffee will be completed in 2024

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