| Context of Sierra Leone’s Energy Policy | | | | in place, the government should not fail to |
| In December 2004, a UNECA sponsored study | | | | connect energy to climate change. Global warming |
| conducted by CEMMATS Group Ltd., a local | | | | has proved to be as horrendous a global challenge |
| consulting firm, involved various stakeholders in | | | | as the War on Terror. |
| the sector to formulate an energy policy. The | | | | Capital Investment and the Energy Market |
| CEMMAT’s energy agenda for Sierra Leone in | | | | Certainly, one major factor for successful energy |
| terms of policy and management represents an | | | | policy and management is financial resources. But |
| important set of tools that basically encapsulates | | | | the energy sector in Sierra Leone struggles with |
| a multi-disciplinary structure bringing together | | | | limited budgets and inadequate legislation that has |
| sectors of the energy community – the | | | | not allowed for the growth of the energy sector, |
| Ministry of Energy and Power (MEP), the Ministry | | | | let alone provide a sustainable supply of electricity |
| of Trade and Industry, the Ministry of Finance, | | | | to the urban and rural consumers. Clearly, over |
| the Ministry of Agriculture and Food Security | | | | the years, previous administrations were not in a |
| (MAFS), Presidential Petroleum Commission, and | | | | position where they could afford to wisely invest |
| the Ministry of Mineral Resources (MMR). These | | | | or even create an enabling environment for |
| line Ministries of relevance to the energy agenda, | | | | foreign investments in the energy sector simply |
| where their various roles are being specified, have | | | | because of widespread corruption in public |
| dominated the development of the country’s | | | | administration. The National Power Authority, for |
| energy policy. The basic premise of this | | | | instance, has unpaid debts of Le23.4 billion and |
| multi-disciplinary structure is that it is crucial for | | | | unpaid customer bills of Le16.2 billion as well as fuel |
| the effective and efficient coordination of the | | | | bills to petroleum companies of Le8 billion. The |
| management of the country’s indigenous | | | | utility authority also has a defective transmission |
| energy resources. Nonetheless, it sounds as | | | | and distribution system with 35% technical losses; |
| though it would be impossible to coordinate these | | | | and an electricity drop from 28MW from five |
| so many organizations in a country with a history | | | | diesel engines to 6MW from one diesel engine |
| of corruption and mismanagement. But it is not | | | | among other problems. |
| unusual to have various Ministries working in | | | | Other logistical challenges include the procurement, |
| coordination to achieve national development | | | | storage and transportation of petroleum products. |
| objectives. Besides, the specific tasks and | | | | “Sierra Leone is almost entirely dependent on |
| methods of operation that influence the ability of | | | | imports for all its petroleum needs and machinery |
| these Ministries to create the enabling | | | | as well as spare parts” (CEMMAT Policy |
| environment for private interests to ably conduct | | | | Document, 2004). Petroleum products are |
| value added commercial activities with the | | | | transported by road using tankers. The poor |
| country’s energy resources are defined. | | | | state of the roads exacerbates several problems |
| This structure, for instance, places the Ministry of | | | | with transportation. |
| Energy Power in a central position as the | | | | In addition, increasing funds devoted to energy |
| governmental authority responsible for the | | | | supply has only helped relatively little, given the |
| electricity and water sectors and its mandates | | | | impoverished state of the country. Sierra Leone |
| includes sector policy formulation, sector planning | | | | does have a smaller Gross National Product (GNP) |
| and coordination. The Ministry is supported by the | | | | with amounts allocated to the sector way |
| Office of the Permanent Secretary, the Water | | | | considerably less than investments made by |
| Supply Division (WSD), the Radiation Protection | | | | countries with larger GNPs. However, it is not only |
| Unit, and the National Energy & Water Policy, | | | | the total amount of money from the GNP that |
| Planning, and Coordination Unit (NEWPPCU). Under | | | | counts, but also how that GNP allocation is |
| the Ministry’s purview as well is handling | | | | supplemented by foreign direct investments and |
| matters related to electrical power supply, | | | | how such investments in the sector are spent. |
| including that from hydroelectric schemes and, | | | | Besides, it is possible for the government to find |
| nominally renewable energy matters related to | | | | funds to support its energy sector. In 2001, for |
| solar and wind energy through the utilities | | | | instance, the World Bank Group funds estimated |
| companies - the National Power Authority (NPA) | | | | at US$7.5 million were made available to the |
| Bo-Kenema Power Services (BKPS); the Guma | | | | government of Sierra Leone under former |
| Valley Water Company (GVWC); the Sierra | | | | President Ahmed Tejan Kabbah to buy a new |
| Leone Water Company (SALWACO); and the | | | | engine to increase electricity capacity. But a used |
| Bumbuna Hydroelectric Project (BHP). | | | | and poorly rebuilt 7.5 megawatts diesel engine |
| The roles of other Ministries are limited to handling | | | | was acquired. |
| petroleum marketing sales under the purview of | | | | And quite recently, “coinciding with the visit of |
| the Ministry of Trade and Industry and the | | | | the President of Sierra Leone to the UK, Douglas |
| Ministry of Finance; biomass issues (plant and | | | | Alexander, the Secretary of State for |
| animal-derived matter) especially fuel wood | | | | International Development announced two |
| handled by the Ministry of Agriculture and Food | | | | programs of assistance to Sierra Leone totaling |
| Security (MAFS); and the extraction of minerals, | | | | £36 million [– with] £20 million to support |
| including energy related minerals like coal and ore | | | | the building up of energy sector in Sierra Leone |
| dealt with by the Ministry of Mineral Resources | | | | [that] should provide a sustainable electricity |
| (MMR). | | | | supply to the one million residents of Freetown |
| The energy sector maintains this organizational | | | | and provide lighting and power for health centers, |
| structure to develop and implement | | | | water pumping stations, colleges and police |
| inter-disciplinary energy-related policies. The | | | | stations” (Press Release). |
| functions of these various Ministries and other | | | | In view of all these possibilities, a perennial issue |
| authorities as they relate to their responsibilities | | | | that must be addressed in order to build a |
| for various energy resources are outlined in the | | | | sustainable capacity in the energy sector is a |
| relevant Acts of Parliament (accessible via | | | | change of mentality in society and among |
| government gazettes) and pertinent regulations. | | | | decision-makers. “No capacity-building initiatives |
| Some of the relevant Acts include the NPA Act, | | | | will succeed if governments and the public are not |
| 1982; the NPA (Amendment) Act, 2005; Forestry | | | | determined to change the situation” (Embo |
| Act, 1998; and the Petroleum Act, 2002. There is | | | | Reports). Now there is hope with the new |
| also the draft energy policy document prepared | | | | democratic dispensation. On assumption of office, |
| by CEMMATS which is yet to be adopted. The | | | | President Koroma made a pronouncement that |
| policy document has been formulated in the | | | | energy is his topmost priority. To a large extent, |
| context of standard economic, social and | | | | Koroma’s Government is therefore |
| environmental policies; mindful as well of the | | | | supportive of capital investment in the energy |
| nature and linkages of the energy sector with | | | | sector. May be, what the Koroma administration |
| other sectors; and the international and regional | | | | also needs to do is to support a clear energy |
| linkages of the sector. | | | | sector initiative in capacity building by addressing |
| Furthermore, finding efficiency and economic | | | | the problem of proper allocation of funds and |
| value, from an international investor's perspective, | | | | managing a sustainable energy supply mechanism. |
| within a system of such complicated oversight is | | | | The strategy already being pursued by the |
| made less complicated with “the Sierra Leone | | | | Koroma administration which is the actualization of |
| Export Development and Investment Corporation | | | | an “energy stimulus plan” for Freetown |
| (SLEDIC), a statutory body established by section | | | | and the entire country is commendable. A |
| 2 of the SLEDIC Act, 1993, with the primary | | | | Presidential Emergency Task Force has been |
| objective of facilitating the registration of business | | | | created to oversee the increase of electricity |
| enterprises; assisting investors in obtaining permits, | | | | capacity in the country. Measures have also been |
| licenses, certificates or clearances, as the case | | | | taken to involve private interests in the energy |
| may be, needed for the commencement of | | | | sector. Two 48MW independent power producer |
| business; providing information to potential | | | | (IPP) contracts with the Nigerian investment |
| investors on matters relating to investment; and | | | | company Income Electrix and the US investment |
| assisting potential investors in identifying joint | | | | company DELAMORE have recently been signed |
| venture partners in Sierra Leone”. The priority | | | | by the Sierra Leone Government to add to the |
| investment areas SLEDIC is promoting thus | | | | capacity of electricity supply. Income Electrix has |
| include: | | | | already shipped equipment and mobilizing to |
| · Energy and power sector | | | | commission a 10MW generator at Black Hall Road |
| (independent power providers) | | | | to supply electricity to the east part of Freetown. |
| · Agriculture and Agro-Processing | | | | A Sierra Leone Government partnership with the |
| · Mining Sector (Kimberlite Mining) | | | | Nigerian company Income Electrix is a good |
| · Petroleum Exploration and | | | | investment strategy for both countries. Even |
| Exploitation | | | | though Nigeria’s focus on being a leading |
| · Privatization of state-owned | | | | economy via its oil industry has its challenges, |
| enterprises | | | | Nigeria’s share of global oil reserves is quite |
| · Establishment and development of | | | | impressive. The challenge for Nigeria’s oil |
| Export Processing Zone (EPZ) | | | | exploitation is not a scarcity of world-scale oil |
| · Infrastructure (Railway, Roads, | | | | reservoirs, rather it is connecting those oil |
| Telecommunication, Water Supply) etc. | | | | reserves to long-term customer commitments |
| Energy Outlook | | | | and the capital required to build oil refineries or |
| Sierra Leone is far down the under-exploited | | | | multi-thousand mile pipelines. Nigeria’s oil |
| curve in terms of its energy endowment. The | | | | reserves create a terrific opportunity to align and |
| fact is, there are untapped energy resources, that | | | | integrate with Africa, rather than holding Africa |
| the nation needs these resources, and that the | | | | hostage to scarcity. A large part of any diplomacy |
| energy industry can coordinate the exploitation of | | | | with Nigeria should focus on helping Nigeria to see |
| these resources with less environmental impact. | | | | the benefits of such a relationship. |
| Sierra Leone’s indigenous energy resources of | | | | By and large, Sierra Leone’s energy |
| a renewable nature which include biomass, solar, | | | | “industry shows the potential to contribute as |
| wind and hydropower has the potential to provide | | | | much as Le 46 billion (approximately US$ 16 |
| opportunities for Sierra Leonean households at all | | | | million) annually to government revenue in terms |
| levels. The country’s biomass volume is about | | | | of Excise Tax and Road Users Tax” |
| 656,000 tons of crop wastes. It has an annual | | | | (CEMMAT Policy Document, 2004). The potential is |
| energy potential of 2,700 GWh that can be | | | | remarkable even when the demand for energy in |
| exploited for cooking, lighting and some power | | | | the industrial and commercial sectors is mainly |
| applications. A commercially viable biomass supply | | | | met by self auto-generation which has negative |
| therefore exists but discussion about biomass | | | | economic consequences. Michael Conteh, |
| facilities has not attracted much discussion and | | | | resident technical consultant who is playing a |
| promotion by the government. The Government | | | | coordinating role in the Ministry of Energy and |
| of Sierra Leone has not seriously addressed | | | | Power and its relations to the other Ministries and |
| energy, fuel and water efficiency in all sectors of | | | | utility companies as well as monitoring the power |
| economic activity, and has not industrialized | | | | system and providing technical advice to the |
| capacities for optimal use of natural resources for | | | | ministry has spoken quite reassuringly about the |
| sustainable biomass (unicellular-energy | | | | under-exploited state of Sierra Leone’s vast |
| crops-residues-waste). But notwithstanding its lack | | | | energy potential. According to his expert |
| of interest in bio-prospecting, the government is | | | | knowledge of the energy sector, “currently, |
| not going to stand in the way if traditional | | | | there are no programs in the country for |
| biomass firms in Europe and the United States | | | | alternative energies. Sierra Leone’s energy |
| are interested in developing this potential in Sierra | | | | mix is very limited. Apart from cooking that is |
| Leone. | | | | about 95% dependent on biomass, Sierra Leone |
| The country also has a solar radiation potential of | | | | is almost 100% dependent on imported petroleum |
| between 1460 kWh/m2/yr and 1800 kWh/m2/yr | | | | products and electricity for all its energy |
| annually. This can be exploited for lighting and | | | | needs.” Again, restoring the operations of the |
| water pumping, among other applications. These | | | | Sierra Leone Petroleum Refinery Corporation |
| resources provide an intriguing glimpse of a nation | | | | (SLPRC) which has a distillation potential capacity |
| that might have had a sustainable supply of | | | | of 700,000 metric tons has the possibilities of |
| power and profitable exploitation of its promising | | | | generating more revenue for the government. |
| energy resources, had energy efficiency remained | | | | The corporation requires healthy investment to |
| a core value of the country after independence. | | | | sustain its distillation capacity. Bringing together the |
| The goal for sustained economic growth and | | | | five petroleum major foreign oil and oil services |
| development should be seen in terms of | | | | companies operating in the country namely Mobil, |
| managing the full utilization of these resources. | | | | National Petroleum Company (NP), Safecon, |
| The hydro potential in the country has also been | | | | Unipetrol and Leonoil, and/or other investors within |
| an epic story. The network of rivers in the | | | | the SLPRC is critical to revamp the refinery’s |
| country provides an opportunity for | | | | operations and to invigorate the market's future |
| hydroelectricity with over 21 sites already | | | | potential and stimulating the rise of alternatives. |
| identified as capable of producing potential hydro | | | | Royalties Structure and the Costs of Corruption |
| power. The conservatively estimated output at | | | | The structure of energy royalties is spelt out in |
| 1,200MW, recorded in the 1996 Power Sector | | | | the Local Government Act, 2004 (Local |
| Master Plan by Lahmeyer International, is | | | | Government Act, 2004). But Sierra Leone’s |
| necessitated by the country’s extensive | | | | energy sector, with its multifaceted mix of public |
| network of rivers and tributaries. The completion | | | | and private actors, has a bleak history of weak |
| of the current Bumbuna project (Phase I capacity | | | | monitoring, low transparency, and inadequate civil |
| 50 MW, total capacity 275 MW) and the | | | | service pay and benefits; and incentives for illicit |
| envisaged Bekongor project (Bekongor III | | | | gain are rife. The sector has the potential to |
| capacity 85 MW, total capacity 200 MW) – | | | | generate significant cash transactions compared |
| two of the many large projects that are | | | | with other services and infrastructure sectors |
| economically exploitable – is good for the | | | | such as water and sanitation or use of roads. But |
| development of the country and for Sierra Leone | | | | the common forms of corruption plaguing the |
| jobs. But the political will has to be there to get | | | | sector involves petty corruption which is prevalent |
| the Bumbuna project to 100% completion. There | | | | at the interface with customers when bribes are |
| is also the need to create the supporting | | | | paid to or demanded by meter readers or safety |
| environment for private companies to invest in | | | | inspectors and illicit sale of fuel oils. There are |
| mini-hydro, or "run-of-the-river" hydro power | | | | also many illegal connections by low-income as |
| stations. The Bumbuna project, which “can | | | | well as high-income households and commercial |
| eventually become the backbone of a national | | | | establishments. The aggregate impact of |
| grid, has the potential to make a substantial | | | | “petty corruption” may be far from petty |
| positive impact on the national electricity | | | | because losses may amount to more than $10 |
| supply” (CEMMAT Policy Document, 2004). | | | | million each year. Inadequate revenue collection |
| In terms of power infrastructure, the national | | | | and other corrupt practices lead to deteriorating |
| power stations in the major cities and towns, | | | | service with frequent blackouts and supply |
| which are really a collection of regional power | | | | interruptions. |
| stations, needs both new infrastructure and new | | | | The viability of the energy sector thus involves a |
| ideas. “Most of the provincial stations and | | | | strategic study of the complex systems of |
| networks are in a state of total disrepair. The | | | | sustainable power supply and revenue collection. |
| cost required to get them back to their pre-1994 | | | | Governments can act decisively to deal with |
| levels is estimated at Euro 13 million” | | | | corruption in the energy sector—most involving |
| (CEMMAT Policy Document, 2004). The | | | | privatization, competition, more transparent rules, |
| Bo-Kenema Power Services (BKPS) which has a | | | | and more disclosure. Reforms in the energy |
| mixed hydro-thermal operation capacities of 5MW | | | | sector can be in the form of selling specific |
| and 4MW at Bo and Dodo (Kenema) respectively | | | | activities such as the energy distribution system |
| faces the same management problems with its | | | | using prepaid meters to strategic investors with a |
| commercial operations as NPA. Rural electricity | | | | proven track record and a long-term interest in |
| supply is non-existent. A new electricity policy is | | | | the business. The prepaid meter system currently |
| overdue, though the specifics matter, the | | | | piloted in Freetown has the potential to increase |
| CEMMATS draft on energy policy is instructive in | | | | revenue collection and reduce corruption in the |
| this respect. | | | | sector. About 2000 prepaid meters are currently |
| There are fairly quantified fossil fuels | | | | in use. The government has contracted the |
| (hydrocarbons) with commercial value in Sierra | | | | Chinese investment company, the Sierra Leone |
| Leone. These include significant ignite deposits and | | | | Gouji Investment and Development, Ltd. for |
| crude oil which have not been exploited. These | | | | supply of 100,000 prepaid meters. “Chinese |
| fossil resources have not been properly assessed | | | | influence in the investment climate is growing |
| to determine their potential value for practical and | | | | steadily [superseding European and US |
| profitable exploration. Though previous | | | | investment] to the extent that a Chinese |
| administrations had offered to sell concessions for | | | | Chamber of Commerce and Industry was |
| prospecting for oil and other valuable mineral | | | | launched in 2005. The government has been |
| resources in the country, there had always been | | | | supportive of Chinese investment initiatives, |
| institutional secrecy surrounding the potential | | | | apparently because of many years of Chinese |
| existence of oil as a source of wealth creation for | | | | government assistance to Sierra Leone. The |
| Sierra Leone. “The location, extent, and quality | | | | Bintumani Hotel, ravaged by invading rebels in |
| of the find have remained a subject of | | | | 1999, is on lease for 25 years to Beijing |
| uninformed speculation, intense curiosity, and | | | | Construction. The Chinese have transformed a |
| often-wild conjecture. It is a state of affairs to | | | | former home for the displaced, the National |
| which both official secrecy and the lack of | | | | Workshop, into a showpiece tractor-assembly |
| transparency in the conduct of public affairs in | | | | plant [from which the Gouji prepaid meters being |
| Sierra Leone have largely contributed” (Focus | | | | piloted in Freetown are also distributed]” |
| Sierra Leone). The Petroleum Resources Unit, | | | | (African Review of Business and Technology). |
| under the authority of the current President and | | | | Nevertheless, a new Sierra Leone under President |
| headed by a Director–General continues to | | | | Koroma is now open for business and the |
| oversee the possibilities of exploration of these | | | | reforms in the energy sector the new |
| petroleum resources especially with European and | | | | administration is advancing include as well more |
| or American investment companies. It is the | | | | transparent market rules and coordinating an |
| position of the government of President Koroma | | | | independent regulatory body with more |
| that whatever economic benefits that are | | | | presidential oversight to oversee the efficient |
| attached to the exploration of fossil fuels should | | | | management of a more creative energy sector. |
| be in the interest of national development. | | | | Opportunities |
| Good governance groups and the masses roundly | | | | Efforts to address energy supply and coordination |
| criticized previous administrations for inadequate | | | | challenges should be placed in a large policy |
| measures on energy supplies in the country. | | | | framework that addresses other social issues. |
| Previous administrations failed to put real dollars in | | | | More notably, such strategies should be part of |
| the energy sector where they would have had a | | | | policies designed to use modern and efficient |
| direct impact on advancing adequate and | | | | energy services to achieve sustainable |
| sustainable supply of electricity in the country. | | | | development goals. Adequate resources ought |
| More opportunities could also have been created | | | | to be made available for investment in oil |
| to effectively support other forms of renewable | | | | exploration and development activities and there |
| energy. All in all, the energy potential is | | | | has to be investor-friendly legal and regulatory |
| undoubtedly great. But more emphasis has to be | | | | framework to attract oil exploration companies. |
| placed on a more investment-friendly energy | | | | There are issues of supply and storage limitations |
| policy, particularly on opening the energy market | | | | for various petroleum products and the necessity |
| to huge capital investments and broadening | | | | to re-launch refining operation in the country. And |
| incentives for investment. The reality is, there is | | | | when clear and unified standards for operating |
| the need (the market) for more domestic energy | | | | retail outlets are also put in place, access to |
| and more imported energy. | | | | modern and efficient energy resources is ensured. |
| The best talents in the energy industry have to | | | | Guiding national research and development efforts |
| be accessed and retained to coordinate and | | | | to focus on these challenges will require extensive |
| efficiently manage an A+ energy program for | | | | international cooperation, increases in energy |
| Sierra Leone. The country needs a balance of | | | | sector funding and incentives for private |
| vision in the form of a grand strategy to curtail | | | | enterprises. It will also take the creation of an |
| the difficulties the country faces with commercial | | | | atmosphere that is tolerant to the use of |
| energy supplies, particularly electricity supply. | | | | emerging technologies in implementing sustainable |
| Attainable short-, medium-, and long-term steps | | | | energy sector goals. Having a solid energy policy |
| to get the country there have to be practically | | | | can be viewed as strategic to the country’s |
| laid out. And while the grand strategy is being put | | | | national interests. |