WASHINGTON, May 31, 2012 – The World Bank’s Board of Executive Directors today approved US$144.5 million in zero interest financing and a US$31.5 million grant for two projects under the West Africa Power Pool (WAPP) program to increase electricity supply and lower energy cost in Côte d’Ivoire, Liberia, Sierra Leone, and Guinea (CLSG).
“Limited access to electricity services and the high cost of energy are major obstacles to economic growth and stability,” said Jamal Saghir, World Bank Director for Sustainable Development in the Africa Region. “The projects will integrate electricity systems, increase electricity supply, and improve system reliability.”
Together with the African Development Bank (AfDB), the European Investment Bank (EIB), Kreditanstalt fuer Wiederaufbau (KfW), and the CLSG Governments the first project will finance the infrastructure of the transmission interconnection between Côte d’Ivoire, Liberia, Sierra Leone and Guinea of a length of approximately 1,349 km. The project targets countries in Sub-Saharan Africa, which are coming out of conflict and are among the poorest world-wide. Moreover, the power systems in Liberia, Sierra Leone, and Guinea are in considerable need for rehabilitation and expansion.
The transmission line will have a transformational impact on the energy systems and the economies of these countries line by increasing the availability of electricity for private consumption and productive uses and reducing its cost. In recognition of the benefits it was highlighted as a priority project by the G20 at the 2011 Cannes meetings.
“The potential economic development impact of the project is significant. Currently, electricity prices in both Liberia and Sierra Leone are among the highest world-wide,” said Yusupha Crookes, the World Bank Country Director for Liberia, Sierra Leone and Ghana. “These countries will be able to import significantly cheaper electricity from Côte d’Ivoire in the initial years of operation of the transmission interconnection.”
To meet the increasing demand for power effectively, the second project will finance technical and analytical studies to ensure that key hydropower projects can be developed and used to trade electricity along the WAPP CLSG transmission line. The grant also finances key investments needed for continuous flow of power across key WAPP “Zone B” countries; including Benin, Burkina Faso, Côte d’Ivoire, Niger, and Togo. The power utilities of these countries will benefit from more efficient electricity trades, which will improve the effectiveness of their own operation.
“The frequent power cuts on the existing transmission network in the WAPP’s Zone A countries are caused by the lack of necessary and rather low-cost equipment, which have been overdue for some time. Grouping these investments under a regional grant to the WAPP creates the framework to make them a priority for each individual power utility to take action,” said Fanny Missfeldt-Ringius, the Task Team leader of the project. “These investments will allow to significantly reduce frequent power cuts.”
The estimated cost for the two projects is expected to be US$476 million, with US$176 million being financed by the International Development Association (IDA*), the Bank’s fund for the poorest countries; and US$280 million coming from the African Development Bank (AfDB), the European Investment Bank (EIB) and US$20 million from the participating governments.
The Economic Community of West African States (ECOWAS) are faced with the challenge of creating a reliable affordable electricity supply where despite the region’s large energy potential, the per capita consumption of electricity is among the lowest in the world with approximately 171 kWh per capita in 2010. In order to address these challenges ECOWAS formed the WAPP, which is a cooperative power pooling mechanism for integrating national power system operations into a unified regional electricity market.
* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing loans (called “credits”) and grants for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 81 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change for 2.5 billion people living on less than $2 a day. Since its inception, IDA has supported activities in 108 countries. Annual commitments have increased steadily and averaged about $15 billion over the last three years, with about 50 percent of commitments going to Africa.