The MCC Pact: Will it Solve Liberia’s Electricity Woes?

Wade C. L. Williams, libpolitics@gmail.com

Liberia's Minister of Finance Amara Konneh and MCC CEO Dana J. Hyde signing the pact at the State Department in Washington D.C
Liberia’s Minister of Finance Amara Konneh and MCC CEO Dana J. Hyde signing the pact at the State Department in Washington D.C

Washington D. C- On Monday November 2, 2015, delegations from the United States Department of State, the Millennium Challenge Corporation (MCC) and the Liberian government gathered in Washington D. C. to sign a $257 million partnership agreement.

The total grant initially penned on October 2, 2015 totals $256,726,000 and seeks to address two binding constraints to economic growth in Liberia which are the lack of access to reliable and affordable electricity and inadequate road infrastructure.

This five-year compact will see Liberia and its traditional ally the United States through the MCC combine infrastructure investments with policy and institutional reforms to modernize the country’s power sector and strengthen its road maintenance systems.

An initiative supported by President Barack Obama’s Power Africa engagement on the continent, the compact will support two sectors critical for broad growth, especially as Liberia recovers from the deadly Ebola Outbreak.

The compact includes funding for the rehabilitation of the Mt. Coffee Hydroelectric Plant, development of a training center for technicians in the electricity sector, support for the creation of an independent energy sector regulator and support for the development of a nationwide road maintenance framework according to the MCC.

The signing ceremony at the U.S Department of State cements this framework for development, which will for the next 20 years, see at least 460,000 people gain access to cheap and affordable energy.

MCC CEO Dana J. Hyde stressing the importance of the compact says Liberia accounts for one of the world’s highest electricity costs and the objective of the investment is to drive the cost down and make electricity affordable for all.

“By investing in the Mt. Coffee Hydro Plant, the MCC will provide an additional 88 Mega Watt of clean, renewable and most importantly affordable power,” said Hyde.

Liberia’s Energy woes

The Liberian government under William V.S Tubman in 1963 received a loan from the World Bank to develop a USD $24.3 million hydroelectric project and construction of the facility began in 1964 by the Monrovia Power Authority. Raymond Concrete Pile Company was the contractor and Stanley Consultants served as project managers. By 1966, the initial phase of the dam was completed by the power company and Mt. Coffee began generating electricity but the entire project was not completed until 1967.

The Initial generating capacity of the plant was 30 Mega Watts produced by two turbines but was later increased to 64 MW when two more turbines were added in 1973 under the William R. Tolbert regime. The Samuel K. Doe government announced in June of 1990, plans to more than double the electricity generating capacity of the project. This plan also sought to add a reservoir to allow more generation during the dry season and called for a new 4,000 feet (1,200 m) dam to be built upriver on the Vai River to provide storage capacity, while two 52 MW turbines would be added at the existing power generating plant but this US$300 million expansion never saw the light of day due to the civil war.

Rebel forces under the command of former Liberian President now exiled war criminal Charles Taylor seized the dam, shutting off power and water to Monrovia. The entire facility was looted and destroyed and since then the hydro, even ten years after the war remains desolate and the entire country without power.

Liberia needs US$ 230 Million to make the needed repairs and upgrades to bring Mt. coffee back on line. With initial funding the Liberian government has received from various donors, including the European Investment Bank and European Central Bank, to help finance the work, this additional funding for the hydro from the MCC pact is estimated at US$201 Million. This completes the funding requirements to jumpstart and complete the rehabilitation by the end of 2016 according to Liberian government sources.

The right time

Finance minister Amara Konneh highlighted the government’s appreciation of the investment by the MCC in Liberia’s cure for energy, when he delivered remarks at the November 2, 2015 signing in Washington.

“This grant comes at a time our country is recovering from the curses of war and disease, leaving with us monumental challenges in meeting our economic recovery goals,” says Konneh.

Konneh referred to the MCC grant as a ‘game changer for Liberia’ adding: “Energy is fundamental to our growth strategy and together with roads, is critical to our goal of unlocking the growth potential of our economy.”

“The planned investment in electricity and road maintenance will significantly contribute to our development agenda, thus helping us achieve our central goal of poverty reduction.”

The promise of access to cheap and affordable electricity is not only good news for the current government of Liberia, but also for political players who want to run the country after the Ellen Johnson Sirleaf administration’s tenure expires in 2017, thereby the pouring of goodwill cuts across political divide.

“I think the MCC agreement is great for Liberia and shows the continuing strength in bilateral relations between Liberia and the U.S. The President and her team, especially, the folks at the Ministry of Finance and Development Planning ought to be congratulated for this major economic milestone,” states the Chairman of the opposition Liberty Party Cllr. J. Fonati Koffa in his reaction to the signing of the MCC pact.

A top official of the opposition Congress for Democratic Change (CDC) also shares similar enthusiasm about the pact and its impact on Liberia’s post-Ebola recovery.

“It is imperative that we commend the government and people of the United States for such gesture of prolific magnanimity meant to alleviate the critical power (electricity) challenge of the suffering masses,” states Mulbah Morlu of the CDC who is currently recovering from a major surgery in the United States.

But Morlu’s commendation came with a pinch of salt in terms of the government’s capacity to properly manage funds given it by foreign governments and agencies. He states that judging from Liberia’s continued problems with transparency and accountability, it is welcoming news that the MCC itself will direct the management of the investment.

“We believe the acute absence of an accountable fiscal system under the government of President Sirleaf has required some diplomatic shift in the U.S. Government’s new methods of transmitting development aid to our country, a commendable approach that should accentuate further efforts to keep government officials far away from such projects before it’s ruined by the stains of corruption,” Morlu states.

“We are even more confident that the handling of this project by the Millennium Challenge Corporation provides hope that, unlike the over US$700m spent within a period on building substandard and poor roads, this US$237M packaged energy fund will inevitably ascertain the beginning of the start of energy efficiency and may only lead to ‘Affordable’ power for the consumer population if its managed by a government determined to fight corruption, something this government does not qualify to do.”

Morlu’s sentiments are shared by the ordinary Liberian who is of the view that the stains of corruption taints any remaining legacy the Sirleaf administration may have.

Sherck Saryon a resident of Monrovia though not discounting the need for cheap and affordable electricity, says his celebration of this pact is cautious because of the track-record of international investments and the impact it has on the ordinary Liberian.

“I don’t think this amount is going to impact the life of the ordinary Liberian. Since the inception of this government, there has been so many donations made and so many agreements signed but Liberians still live below US$2.00 a day,” he says.

“Until we can see the tangibles from this agreement we reserve our hopes and comments. We have not felt the impact of anything as it relates to governance or jobs or improving the livelihood of the common man. Electricity is paramount to the development of every nation.”

But supporters of the regime believe this is the best thing yet to happen to Liberia under Sirleaf and it proves that the government is a responsible one.

Boakai Jaleiba, of the Ministry of Finance and a student at the Georgetown University in Washington describes the deal as a massive achievement.

“The signing means that we can now facilitate affordable electricity, for consumers; it also means that after implementation, businesses can now record high profits due to affordable energy costs,” said Jalieba.

Many are of the view that Liberia must exhibit commitment and capacity to achieve what has been set forth in the MCC compact to ensure future validation of a subsequent compact to enhance development in all sectors of the country.

Click link below to see standard to which the MCC hold Liberia on this project:

https://www.mcc.gov/resources/doc/report-selection-criteria-and-methodology-fy16

Wade C. L. Williams is a freelance journalist, currently a Fulbright/Hubert H. Humphrey Fellow at the University of Maryland, College Park.

 

 

Liberia's Minister of Finance Amara Konneh and MCC CEO Dana J. Hyde signing the pact at the State Department in Washington D.C
Liberia’s Minister of Finance Amara Konneh and MCC CEO Dana J. Hyde signing the pact at the State Department in Washington D.C

 

 

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