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"Bumbuna Hydoelectric Plant Will Bring Down the Cost of Doing Business in Sierra Leone"
The African Development Bank-backed Bumbuna hydropower plant meant to provide electricity to Sierra Leonians and thus boost the economy was inaugurated on November 6, 2009. For Samuel Onwona, Resident Representative of the African Development Bank in Freetown, Bumbuna will bring down the cost of business in the country with a much cheaper, sustainable and reliable source of energy.
Question: What are the immediate or short term benefits of Bumbuna for the economy and the people of Sierra Leone?
Answer: The immediate benefits the project brings to the economy are manifold. First, it brings self gratification and national pride to the people of Sierra Leone, given the fact that for many Sierra Leonians, this project was a myth, and even those who were a bit optimistic about its completion, they never believed it would happen in their lifetime.
Second, the thermal plant under the emergency energy program was costing 44 cents per KWh compared to the Bumbuna cost of 10-12 cents per KWh. We, therefore, expect that the cost of doing business, especially in the manufacturing sector, will go down significantly. This means that Sierra Leonians who could not afford to buy generators for their small and medium scale enterprises will now be able to grow their business and generate both income and employment.
Third, Freetown will enjoy more reliable clean and affordable electricity along with the towns of Makeni, Lunsar and Bumbuna township as transmission and distribution networks are properly rehabilitated.
Fourth, the Government can now redirect much needed resources used to finance the emergency thermal plants to other sectors such as agriculture, health and education. For instance, the fuel needed to power the thermal plant alone cost the Government a whopping $2.0 million per month, excluding the management fees for the experts running the plant. Clearly this was quite a burden for a post-conflict fragile state like Sierra Leone.
Rehabilitation of distribution and transmission is top priority
Question: Bumbuna will ultimately have the capacity to supply energy to the entire country. What investments will that necessitate in terms of distribution, commercialization and pricing?
Answer: The Bumbuna Phase I Project only brings 50MW of power, which is not enough to meet the demand on the ground. Bumbuna Phase II, estimated to bring on an additional 225 MW of power is needed along with rural electrification programs of mini hydro-electric plants. In addition to Bumbuna, bio-energy and solar energy sources will all be required to meet future demand.
The immediate challenge for the Government is to work on rehabilitating the old and introducing new distribution and transmission network for Freetown, Makeni, Lunsar and Bumbuna Township. Currently, the distribution network is only able to absorb 12-15 MW of the 50MW being generated under Bumbuna Phase I. The energy policy, which seeks to unbundle generation from the transmission and distribution phases, has to be enacted by parliament and implemented to ensure that a national grid exists. An independent utilities regulatory body needs to be set up to manage the tariff structure to guide potential Independent Power Producers who may want come in to invest and sell power to the grid. Unless the foregoing steps are taken to place the energy sector on a sound footing, efficient and reliable supply of affordable energy could remain a challenge for the country.
Question: Bumbuna was initiated three decades ago. Why did it take so long? What were the key obstacles?
Answer: The reasons for the delay in completing this project are two-fold. First, it was the start-up delay with the studies. The first study was conducted in 1972 and was followed by second study in 1975. There was even a third study sometime in 1982, before calls for bids were finalized. The African Development Bank got involved in 1989 and approved our first loan in 1990. But just a year later, the ten-year war began. This was the second reason for the delay. We remained engaged until 1997 when the escalation of the war caused us to leave. The Contractor had to be demobilized even though the works were not completed. Equipment already installed and completed civil works deteriorated during the war period, leading to huge cost overruns.
After the return of peace in 2002, it took Government considerable time to secure the funding required to complete the project. We are proud to stress the fact that as a key partner with the Government of Sierra Leone, the African Development Bank has been the only donor that remained continuously engaged with the Bumbuna Project from 1989 until its commissioning on November 6, 2009. We are, therefore, happy to have been part of this historic event which has made the Bumbuna dream a reality for the people of Sierra Leone.
Need for capacity building
Question: What is the overall situation in the power sector today?
answer: The situation in the power sector is far better today than what it was a year ago. We have assisted the Ministry to put in place an Energy Sector Policy which may go to parliament for approval soon. As I have alluded to already, this policy provides for the unbundling of the Generation, Transmission and Distribution of electricity over a period of time, so as to encourage private sector participation and engender a more efficient delivery of reliable, sustainable and affordable energy to power the economy.
Presently, there is no national grid, so that has to be an important priority along with the old distribution network in the Freetown metropolitan area. We need to assist the Government to create a competitive as well as conducive environment to attract Independent Power Producers (IPPs) into the sector because the public sector alone cannot do it.
The National Power Authority (NPA) needs to quickly move away from post-paid to pre-paid meters to significantly improve its revenue generation potential. In addition, there is the need to strengthen Bo and Kenema Transmission and Distribution networks and develop the medium voltage transmission line for Bo-Njala-Moyamba-Mobimbi and Lungi-Port Loko-Kambia
Question: Are people willing to pay the price to get clean and safe energy?
Answer: The willingness to pay (WTP) is presently being expressed on a proxy basis by the way people cooperate to pay their electricity bills and recharge their power cards for those with prepaid meters. More importantly, the opportunity cost of not having reliable and regular supply of electricity for home consumption, schools, hospitals and private business has been quite high. If the Transmission and Distribution networks are sorted out and prepaid meters are installed to weed out illegal connections, this will ensure a more reliable supply of energy at a price much lower than the pre-Bumbuna price linked to the 44 cents per KWh cost of the thermal plant. In other words, we expect the post-Bumbuna energy price to be lower since the cost of generation is now well below that of the thermal emergency plant. The WTP will no doubt depend on the retail price that is finally set and the reliability of electricity supply.
Infrastructure and social services are key challenges
Question: What do you see as the top development challenges for the country and how the African Development Bank intends to partner with the government on finding solutions?
Answer: For a post-conflict fragile state, the key challenge is the poorly developed Infrastructure, including road transport (feeder and urban roads), Information and Communications Technologies (ICT), water supply and sanitation, as well as health and education services. Weak human and institutional capacities are next in line. Youth unemployment is a daunting challenge which needs urgent attention. There is an urgent need for vocational training for youth to recapture the lost school years of the war. The cost of doing business is quite high because of the high cost of energy, transport and ICT. Internet access is impossible via landlines because land lines are completely unreliable. This means that the cost of internet access and ICT in general is quite high as well.
The Lungi-Freetown Bridge, in my view, is the third critical challenge, given the opportunity cost associated with poor access to the capital. The capital city is highly congested and the capacity for water supply and sanitation is far below the growing demand on the ground. A bridge would ease up space for the capital to expand with a more orderly infrastructure. This would also help to unleash the full tourism potential of Sierra Leone and help to attract potential investors into the country. Fourth, weak human capital and institutional capacity are a major constraint to development in Sierra Leone. This problem is at the core of the weak implementation capacity of line ministries and project implementation units. Delayed implementation is costly and mutes the potential benefits of projects. They also lead to cost overruns and increase the likelihood of failure. Lastly, corruption is a concern, although the Anti-Corruption Commission is doing its best to assist the Government deal with this problem.
Fragile States Facility and Sierra Leone
The Fragile States Facility makes available UA42.76 million and up to UA2.0 million to the Government of Sierra Leone respectively under the Supplemental Support (Pillar I) and Targeted Support (Pillar III) windows respectively. The Enhanced Support Window provides support for governance and capacity building, as well as the rehabilitation and reconstruction of basic infrastructure. With regard to the Targeted Support, it is directed to human and institutional capacity building and knowledge management.
Three operations, namely, the Economic Governance Reform Program I (EGRP I), Lungi-Port Loko Road, and Water Supply and Sanitation Project have been identified under the Supplemental Support. Of these, only the EGRP I operation - which is a budget support - has been approved and is effective.
This program has contributed to the recent achievement of the National Power Authority (NPA) in the area financial management. The backlog Annual Financial Statements of Accounts for 2006 & 2007 have been audited and published; the financial statements for 2008 have been completed and are now ready for audit. Pre-paid meters are being installed to replace credit meters, and this has resulted to increase in revenue from 1 billion to 6.5 billion Le (Leone – Sierra Leone currency) per month.
The African Development Bank’s support has made it possible for NPA to reduce its arrears with Government procure new transformers and rehabilitate the transmission and distribution lines, resulting in access of electricity by a wider public. Also, the EGRP I program contributed to slowing down the depreciation of the Leone.