Technical Assistance and Capacity Building Support to Ministry of Energy & MCC - (TCB- ERPU & MCC)
- Reference: P-SL-KF0-009
- Approval date: 18/12/2013
- Start date: 28/12/2015
- Appraisal Date: 01/07/2013
- Status: OngoingOnGo
- Implementing Agency: MINISTRY OF ENERGY AND WATER RESOURCES
- Location: MIN OF ENERGY & STATE HOUSE
The overall goal of the project is to strengthen the institutional capacity of the Ministry of Energy and provide supplementary support for developing compact development proposals in line with MCC Compact Grant eligibility qualification that GoSL recently attained. The specific objectives are to strengthen institutional and staff capacity of MoE, establishment of Energy Resource Planning Unit (ERPU) in order to provide oversight role in preparation of the Power Sector Integrated Resource Planning and Tariff Studies, plan and manage country's power systems and assess economic and environmental trade-offs involved in different options of power generation The project also seeks to provide technical assistant to assist the MCC Secretariat to prepare bankable project proposals for energy, water and sanitation infrastructure development and policy and institutional reforms to aid the diversification of the country's sources of growth, for possible funding by the MCC. Sierra Leone was recently announced by the US Government to have met the MCC scorecard performance for eligibility which could provide GoSL with a possibility of accessing a funding of up to USD600million from MCC Compact Grant towards projects stimulating economic growth and poverty reduction.
Sierra Leone lacks infrastructure in various parts of the country and sectors of the economy. In the area of power, only 2% of the population is connected to the national grid. This is due to inadequate power generation, transmission, and distribution capacities. The AfP advocates for the expansion of power generation capacity from about 90 Mega Watts in 2012 to 1,000 Mega Watts by 2017 and to increase access to electricity from 2% of the population in 2012 to 8% by 2016. In addition, power losses of up to 40% are experienced due to poor maintenance of electricity generation, transmission and distribution infrastructure and this contributes to the population's low access to electricity. Sierra Leone is also not connected to any regional power grid which would have assisted to address her power shortages. The AfP therefore regional integration through connection of its national grid to the West Africa Power Pool (WAPP). However, MoE lacks the capacity to plan for this interconnection. In addition, MoE is also unable to effectively support the potential energy projects that are proposed by the private sector due to lack of planning capacity to facilitate private sector investment in the power sector.
The establishment of the ERPU is expected to improve long-term planning and management of the national power systems in generation, transmission and distribution infrastructure including assessing more economic and environmental trade-off options in power generation. The unit is also expected to develop mechanisms to plan for the interconnection of the national power grid to WAPP and review projects proposed by the private sector developers in the energy sector in order to support Government in addressing current challenges of limited and unreliable power supply..
The planned expansion of the energy sector will require Sierra Leone to mobilise financial resources from various sources. The country lacks financial resources to invest in infrastructure and other priority development areas and GoSL borrows domestically to meet its budgetary requirements. This crowds out private sector investment and disturbs the local macroeconomic environment and prospects for economic growth. It is due to this factor that Sierra Leone has planned to submit project proposals to finance its energy and other infrastructure development and policy and institutional reform projects to the MCC. The country's recent advances in the areas of Good Governance, Economic Freedoms, and Investing in Citizens have enabled it to become eligible for financial support under the Millennium Challenge Corporation of the Government of the United States of America. GoSL requested the Bank to support the preparation of project proposals for funding from the MCC. The Bank provided a Fragile States Facility Pillar III Grant amounting to UA 137 ,467 which enabled the country to conduct analyses of constraints to economic growth and poverty reduction. It is this analysis that identified energy, water and sanitation, and institutional and policy reforms for sound economic management as key areas that will require support from the MCC. The GoSL is at stage of developing specific project proposals which will be submitted to MCC for review and approval. The GoSL is seeking the Bank to provide supplementary financing to support development of compact proposals.
The proposed project is a stand-alone operation that will benefit from the FSF grant operation funded from the Targeted Support Window for TCB (Pillar III). The project will have two interrelated components which are as follows:
Component 1 - Establishment of an Energy Resource Planning Unit (ERPU) in the Ministry of Energy (MoE): This component is aimed at providing technical assistance for the establishment of an Energy Resource Planning Unit within the MoE. The main activities that will be undertaken under the component are
(i) recruitment of technical assistant (s) or consultant(s) to assist with the establishment of the Unit;
(ii) preparation of an organogram and job descriptions for the Unit;
(iii) establishment of procedures and systems to guide national power grid planning and interconnections to regional power systems and markets;
(iv) facilitating the recruitment of staff of the Unit by MoE,
(v) collaboration and coordination with West African Power Pool (WAPP) countries, the regional regulatory authority, and WAPP coordinating centers and
(vi) training ERPU staff in power resources planning systems and interconnections as well as in monitoring and evaluation approaches for the energy sector.
Component 2- Support for the MCC Compact Development and Submission Processes: The objective of this component is to support the GoSL to prepare bankable project proposals to finance energy, water and sanitation, and policy and institutional reforms for rapid economic growth and poverty reduction, for possible funding by the Millennium Challenge Corporation. The main activities under the component will be
(i) the recruitment of an international consultant and 3 local sector specialists to assist with the preparation of MCC Project Concept Notes and Project Concept Papers based on the findings of the Constraints Analysis;
(ii) training of MCC Compact Development Secretariat staff in Economic Rates of Return techniques for use in project preparation;
(iii) multiple stakeholder consultations to validate the project proposals;
(iv) facilitating GoSL's submission of the MCC Compact to the MCC; and
(v) a roundtable discussion with the MCC Board at its Headquarters in Washington DC to present and validate the Compact proposals prepared.
The specific objectives are to strengthen institutional and staff capacity of MoE, establishment of Energy Resource Planning Unit (ERPU) in order to provide oversight role in preparation of the Power Sector Integrated Resource Planning and Tariff Studies, plan and manage country's power systems and assess economic and environmental trade-offs involved in different options of power generation
Sierra Leone is one of the fragile states that have just emerged from long civil wars. During its civil war, much of its already limited physical infrastructure was destroyed. This included power infrastructure for the generation, transmission and distribution of electricity. As a result, the electricity sector is facing numerous challenges, especially
(i) low electricity access at 2 per cent of the population;
(ii) inadequate maintenance of infrastructure resulting in power losses of up to 40 per cent of the generation capacity;
(iii) lack of financial resources to invest in the sector;
(iv) no regulatory framework in place; and
(iv) lack of institutional capacity to plan for the development of the sector. The country is one of the 4 member states of the Mano River Union (MRU) and Sierra Leone has one of the lowest levels of access to electricity at 2 per cent which is the same as Liberia's against the regional average of 28 per cent. These countries plan, within the contexts of the MRU and ECOWAS, to connect their national electricity grid to a regional electricity system and a regional electricity market so as to accelerate the expansion of access to electricity in the region. This challenge is expected to be addressed through the recently approved Cote D'Ivoire, Liberia, Sierra Leone and Guinea Networks Interconnection Project (the CLSG) which will support the integration of these countries' isolated and small-scale national grids into a unified integrated system. Sierra Leone lacks the capacity to plan for the development of its own power sector as well as its interconnection with the planned regional system. The GoSL intends to address this through technical assistance for the establishment of the Energy Resource Planning Unit in its Ministry of Energy.
The GoSL lacks regulatory framework and adequate financial resources to invest in the energy sector and borrows domestically to meet its budgetary requirements. However, its recent advances in the areas of Good Governance, Economic Freedoms, and Investing in Citizens have enabled it to become eligible for financial support under the Millennium Challenge Corporation of the Government of the United States of America. GoSL requested the Bank to support the preparation of project proposals for funding from the MCC. The Bank provided a Fragile States Facility Pillar III Grant amounting to UA 137,467 which became effective in April 2013 and will close on 31 December 2013. The project has enabled the country to conduct analyses of constraints to economic growth and poverty reduction. This involved the identification and documentation of core constraints to and investment opportunities for economic growth and poverty reduction in Sierra Leone. This analysis is one of the standard stages established by the MCC that countries have to go through in order to access MCC funding. The analysis identified energy, water and sanitation, and institutional and policy reforms for sound economic management as key areas that will require support from the MCC. The GoSL is now at stage of developing specific project proposals which will be submitted to MCC for review and approval. The GoSL is seeking the Bank to provide supplementary financing to support development of compact proposals.
The establishment of the ERPU will directly benefit the Ministry of Energy, the National Power Authority (NPA), the Sierra Leone Generation and Transmission Company, and the Sierra Leone Distribution and Supply Company. They will get support for their policies and operations from a dedicated unit in government that will focus on the future expansion of power systems in the country. The project will also benefit the private sector establishments or firms operating in the extractive industries, telecommunications, commerce, tourism, agro-processing and other sectors of the economy that will gain access to increased, reliable, and cost-efficient power supply. In the long term, the project will benefit all Sierra Leoneans through improved access to energy for the delivery of such basic social services as education and health as well as for domestic use. Effective power planning will also support private sector investment and stimulate economic activity that will enhance income and employment opportunities and eventually lower electricity tariffs or rates through more readily available and competitive energy sources.
Both the GoSL's AfP and the Bank's current CSP prioritise gender issues due to Sierra Leone's gender inequalities, especially with respect to educational attainment, access to land, and legal protection. These inequalities work against the economic, social and political empowerment and prosperity of women. The establishment of the ERPU will not necessarily have a direct impact on gender. However, although most of the project activities will be related to capacity building in MoE and the MCC Compact Development Secretariat, the project has the potential to improve women's access to cleaner energy sources, reduce overdependence on fuel wood and time spent to fetch traditional cooking fuel. The increased access to cleaner energy and electricity will have potential to improve women economic empowerment through access to cleaner energy and create employment opportunities.
BANGURA Ibrahim Ansu - SLFO