Liberia - Power system efficiency study

Joint UNDP/World Bank Energy Sector Management Assistance Program Activity Completion Report No. 081/87 5,~~~~~~~~~~~~. Country: LIBERIA * 2 ACtiVity: POWER SYSTEM4 EFFICIMNCY STUDY D#4tF3M.R 1QR7 Report of the joint UNDPVtWiId Bank Ener Sector Management Asshbtance Program This document has a restricted distribution. Its contents may not be disclosed without authorization from the Governnment. the UNDP or the WAbrid Rank.  ENERGY SECTOR MANAGEMENT ASSISTANCE PROCRAM Purpose The Joint UNDP/World Bank Energy Sector Management Assistance Program (ESMAP) was started in 1983 as a companion to the Energy Assessment Program, established in 1980. The Assessment Program was designed to identify and analyze the most serious energy problems in developing countries. ESMAP was designed as a pre-investment facility, partly to assist in implementing the actions recommended in the Assessments. Today ESMAP carries out pre-investment activities in 45 countries and provides institutional and policy advice to developing country decision-makers. The Program aims to supplement, advance, and strengthen the impact of bilateral and multilateral resources already available for technical assistance in the energy sector. The reports produced under the ESMAP Program provide governments, donors, and potential investors with information needed to speed up project prepav- ation and implementation. ESMAP activities fall into two major groupings: - Energy Efficiency and Strategy, addressing the institutional, financial, and policy issues of the energy sector, including design of sector strategies, improving energy end-use, defining investment programs, and strengthening sector enterprises; and - Household, Rural, and Renewable Energy, addressing the tech- nical, economic, financial, institutional and policy issues affecting energy supply and demand, including energy from traditional and modern sources for use by rural and urban households and rural industries. Funding The Program is a major international effort supported by the UNDP, the World Bank, and bilateral agencies in a number of countries including the Netherlands, Canada, Switzerland, Norway, Sweden, Italy, Australia, Denmark, France, Finland, the United Kingdom, Ireland, Japan, New Zealand, Iceland, and the USA. Inquiries For further information on the Program or to obtain copies of the completed ESMAP reports listed at the end of this document, contact: Division for Global and OR Energy Strategy, Management Interregional Projects and Assessment Division United Nations Development Industry and Energy Department Programme World Bank One United Nations Plaza 1818 H Street, N.W. New York, N.Y. 10017 Washington, D.C. 20433  LIBEI POWER SYSTEI EFICIENCY STUDY DECENBIR 1987  The Liberia Energy Assessment report and a subsequent report outlining recommended technical assistance projects identified improving the operation of the Liberia Electricity Corporation (LEC) as one of the country's highest priorities in the energy sector. 1/ LEC is public corporation responsible for most of the public electricity supply throughout Liberia. At the time of the Energy Assessment it was facing a severe shortage of cash and rapidly deteriorating service reliability. As a result, the Government of Liberia requested assistance through the joint UNDP/World Bank Energy Sector Management Assistance Program (ESMAP) to undertake a Power Efficiency Study of LEC. The objec- tives of the study were to determine the causes of LEC's difficulties, suggest solutions, and present them as projects suitable for financing by the international lending community. ESMAP was also asked to prepare a preliminary least-cost generation plan to define the short and medium- term investments required to meet demand. During the course of the Power Efficiency Study, it became evident that LEC's difficulties are caused by severe internal and external problems that affect the institutional and technical aspects of its operations. The institutional problems are of such magnitude that the mission concluded that restructuring of LEC and formation of a new corporation are prerequisites for any further investment in the utility. Furthermoret since some of LEC's problems are common to, and affected by, the management of other public corporations, it appears that a comprehensive program of public sector management reform is an important precondition for any real improvement in the performance of LEC. - In parallel with the ESMAP review of LEC, the Government and the World Bank have Agreed to undertake a strategic study of the public enterprise sector. The objective of this study is to recommend owner- ship/management arrangements which will improve efficiency in public corporations. This study, now underway, is concentrating on a group of key public enterprises, including the LEC. In this context, the ESMAP review of LEC and the study of the public enterprise sector are complementary pieces of work. The first one supports the need for restructuring, presents some options for solving the institutional and technical management problems of LEC, and provides a detailed analysis of specific operational improvements to be under- taken. The second, ongoing study concentrates on the strategic aspects 1/ Liberia: Issues and Option in the Energy Sector, December 1984, Report No. 5279-LBR and Liberia: Recommended Technical Assistance Projects, July 1985, Report No. 038/85.  of public sector management reform in Liberia, of which the LEC is an important part. It will define the institutional framework under whic. the process of restructuring should be undertaken and evaluate in more detail the options available to implement it. The following report presents the main findings and recom- mendations of the ESMAP mission that visited Liberia in June 1985. 2/ The mission acknowledges with thanks the sincere cooperation of LECTs management and staff, their efforts in preparing a position paper *on LEgC's operating problems, and their willingness to engage in frank and open discussions. Without this level of cooperation it would have been impossible to develop a clear picture of LEC's needs. 2/ The mission comprised: Messrs. Alfred Culstone (Power Engineer, Mission Leader); Miguel Bachrach (Economist, Team Leader); Alfred Banks (Generation Specialist, Consultant); Willy Pacheco (Distribution Engineer, Consultant); Klaas Kimstra (Diesel Engineer, Consultant); and Daniel Robinson (Financial Analyst, Consultant). Secretarial support in the office was provided by Mrs. Tara Allen.  TANS OF CONTIS FOREWORD*... ....................... .......e..e.......ee