West Africa receives US$300m from World Bank for energy sector reforms

electricity linkage to 250MW by 2021

WEST AFRICA – The West African regional block has received US$300 million from the World Bank for the implementation of energy sector reforms that will promote access to affordable electricity in the region.

The World Bank funds will be particularly used to help Burkina Faso, Côte d’Ivoire, Guinea, Liberia, Mali, and Sierra Leone implement sector reforms aimed at achieving the potential of the regional power market.

A statement from the World Bank revealed that the funds will be obtained from the Bank’s International Development Association (IDA) and will be in form of credits and grants.

The funds will specifically support the West Africa Regional Energy Trade Development Policy Financing Program (West Africa Energy DPF) which seeks to remove barriers to electricity trade.

The new operation supports a regional energy reform program set out in three pillars.

The first aims to increase confidence in the enforcement of commercial arrangements by supporting payments and enforcement mechanisms relating to energy trade.

The second supports the implementation of least cost investment decisions that consider regional options and that promote competition.

 The third supports transparency, by addressing creditworthiness of national power utilities and keeping the market informed on key investment decisions that impact demand and supply. 

According to a report by Africa Energy Portal removal of boundaries will lower electricity costs for consumers, support the competitiveness of firms and improve resilience and reliability of supply.

The World Bank noted that currently, only 50 percent of the population in West Africa have access to electricity which at its best is plagued with operational deficiencies with an average of 44 hours of outages per month.

The West Africa Energy DPF thus supports a policy reform program being implemented by Burkina Faso, Côte d’Ivoire, Guinea, Liberia, Mali and Sierra Leone, to facilitate trade in cleaner low-cost electricity generated from gas, hydropower and renewable energy across borders.

This is expected to replace the more expensive electricity generated from inefficient small-scale oil-fired and diesel generation and improve the reliability of electricity services. 

The West Africa Regional Energy Trade Development Policy Financing Program is the first World Bank operation to use the IDA Regional Window for a DPF program.

 It allows the World Bank to support reforms in order to reach a common objective across several countries in a coordinated manner.

It also represents a watershed on the regional integration agenda in West Africa which is aimed at creating a regional power market.

Across the ECOWAS region, the economic benefits of the regional power market are evaluated at $665 million per year with a reduction of one third in the average cost of electricity generation in the region.

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