FREETOWN, July 14, 2016 — The World Bank Group today approved a project to support the development of a 57MW heavy fuel oil green-field thermal power plant in Sierra Leone to boost electricity generation and supply in Freetown and its environs. The Project is responding to an urgent need for additional baseload generation capacity in Sierra Leone. The Western Area Power Generation Project involves a total project cost of US$138 million jointly supported by the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA) – all members of the World Bank Group. This Project can start operation within two years, displacing numerous expensive and polluting diesel-fueled generators in the Freetown area.
World Bank Country Manager for Sierra Leone, Parminder Brar briefing newsmen
This is the first joint World Bank Group operation in Sierra Leone. Together, IDA, IFC, and MIGA have successfully collaborated to arrange a comprehensive and complementary financial package, including an IDA Guarantee in an amount up to US$40 million, an IFC A-Loan in the amount of up to US$30 million and an IFC interest rate swap representing a loan-equivalent exposure of up to US$3 million, and a MIGA Guarantee in the amount of up to US$60 million. IFC is also the mandated lead arranger of a credit line of US$70 million for this project.
“The joint engagement of the World Bank Group will serve as an important signal to the private sector that the country is ready for investments even as it continues to recover from the Ebola epidemic in the context of a fragile economy,” said Henry Kerali, World Bank Country Director for Sierra Leone. “We recognize the critical importance of sufficient and reliable electricity to support economic activities and job creation, and we welcome the increased access to energy to households and businesses in Freetown under the operation. We now look forward to successful implementation of the project.”
The Project complements Bank policy dialogue in the energy sector that is focused on improving the operational and commercial performance of Sierra Leone’s newly established distribution utility – the Electricity Distribution and Supply Authority (EDSA). The Government is in advanced stages of negotiating a management contract for EDSA with IDA support and the Government has committed to a series of reform measures that are designed to improve the financial viability of the electricity sector and, in particular, of EDSA.
“This project complements Bank policy dialogue in the power sector focused on improving the operational and commercial performance of the sector,” said Parminder Brar, World Bank Country Manager for Sierra Leone. “This project will be successful only if sector financial and operational challenges are addressed adequately. The Bank is working closely with the Government and Development Partners to ensure that this happens in a timely manner.”
In conjunction with ongoing and planned network upgrades under two ongoing World Bank projects – the Energy Access Project (EAP) and the Energy Sector Utility Reform Project (ESURP) – this project supports overall availability of energy and commercial improvements in Sierra Leone’s energy sector. It also facilitates the integration of renewables, in line with the World Bank Group Climate Change Action Plan (2016).
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US$138m World Bank funding to boost energy supply in Freetown
By Moses A. Kargbo
The World Bank Country Manager for Sierra Leone, Parminder P.S. Brar, today briefed the local media on a US$138 million energy funding approved by the Bank Board on July 14, 2016 to support the development of a 57MW heavy fuel oil green-field thermal power plant in the country to boost electricity generation and supply in the capital Freetown and its environs.
The Western Area Power Generation Project is the first joint World Bank Group operation in Sierra Leone, which is responding to an urgent need for additional baseload generation capacity in the country. The project is being jointly supported by the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA) – all members of the World Bank Group. It can start operation within two years, displacing numerous expensive and polluting diesel-fueled generators in the Freetown area.
Mr. Brar described the project as “very unique” in the sense that it was the first time three arms of the World Bank Group were collaborating to deliver a project so “badly needed” by the country.
Together, IDA, IFC, and MIGA have successfully collaborated to arrange a comprehensive and complementary financial package, including an IDA Guarantee of up to US$40 million, an IFC A-Loan in the amount of up to US$30 million, and an IFC interest rate swap representing a loan-equivalent exposure of up to US$3 million, and a MIGA Guarantee in the amount of up to US$60 million. IFC is also the mandated lead arranger of a credit line of US$70 million for the project.
“This project complements Bank policy dialogue in the power sector focused on improving the operational and commercial performance of the sector,” said Mr. Brar, adding that the venture has the capacity to double the current power generation in the entire Western Area. “This project will be successful only if sector financial and operational challenges are addressed adequately. The Bank is working closely with the Government and Development Partners to ensure that this happens in a timely manner.”
The project complements Bank policy dialogue in the energy sector that is focused on improving the operational and commercial performance of Sierra Leone’s newly established distribution utility – the Electricity Distribution and Supply Authority (EDSA). The Government is in advanced stages of negotiating a management contract for EDSA with IDA support and it has committed to a series of reform measures that are designed to improve the financial viability of the electricity sector and, in particular, of EDSA.
Moreover, the World Bank is also supporting two energy projects in the country: the Energy Access Project (EAP), which is a US$16 million funded scheme; and the Energy Sector Utility Reform Project (ESURP), which is a US$40 million IDA funded program.
In conjunction with these two projects, the Western Area Power Generation Project is supporting overall availability of energy and commercial improvements in Sierra Leone’s energy sector. It also facilitates the integration of renewables, in line with the World Bank Group Climate Change Action Plan (2016).
Sierra Leone has in the last nine months received a total of US$268 million in World Bank funding to support various development efforts of the Government.
