How would you rate the quality of infrastructures in Liberia and particularly as far as electricity is concerned?
Rating them in one sentence would not do justification, because once upon a time I think they were fairly manageable, but with the intervention of the war these infrastructures have suffered serious damage. To rate them on a scale of one to ten, you are probably talking of about two to three right now. I mean if you look at the entire country.
How would you qualify the state of public utilities?
Public utilities have equally suffered the same damage as a result of the civil war. Again the scale would not be generally different from what I sated before; they all have suffered…it's not just the structures, but also the personnel. Besides the physical assets that got damaged, brain drain, the loss of manpower as a whole has also affected us. Till now we are far, far away from reaching the level where we were. I don't mean just engineers, but in all aspects…down to secretaries. They have all left the country.
Could you give us a brief historical background of LEC?
The LEC as it is today, is a 100% public enterprise owned by the government of Liberia. It was established in 1973 by an Act of the Legislature with the sole provision of producing electrical energy and distributing it throughout Liberia. On the onset, that effort was realized by providing capacities in the generation area and transmission and distribution with an effective radius of over a hundred miles outside Monrovia. And to served the outlining areas that were beyond that, was instituted a rural electrification scheme with which isolated grids were built around the country in the various population areas where it was economically feasible to produce electricity. To the extend that a hydro plant of about 64megawatts was commenced in 1961; the first two units were completed in 1966; subsequent two units were completed in 1974/75 and this plant was operating at full capacity up to the war. Due to certain financial reasons, they didn't provide the reservoir for this because the economy at the time did not have the capacity to absorb this extra investment. Instead, what they built was a thermal plant with gas turbines. Of course in the 1960, fuel costs were very low, so you could provide three to four months of electricity from gas turbines versus spending $30 to 40million for a reservoir. The economists said well for now until the economy performs well we will look at this as a way to go. When 1973/74 came in and oil prices went beyond what anybody anticipated, that whole argument went out the window.
Then in the 80s, there were plans to build a much bigger hydro plant because the St. Paul River on which our main dam was built on was investigated by a group from the United States that found that you had a capacity on that river in excess of about 600 to 700 megawatts. This project was supported, but then we had the coup d'Etat in 1980 and a lot of investments were shelved, including that project. Another idea was thought of, to use heavy diesel marine type engines that are located on the Island; those were installed as interim projects while contemplating the hydro project. Unfortunately, the economic performance did not move us from using those systems to get into anything else. We therefore continued there until the intervening years of the war. All these plants are badly damaged now, they have to be scrapped or rehabilitated. From a customer base, we had by the war about 40,000 customers. The income of the corporation was in excess in about $40million and we had over 2,000 employees. It was a corporation that took care of itself. We were not directly subsidized per say, except in capital investment, because of the way government policy was toward investment at the time, we could not borrow money ourselves, we had to go through government and they in turn will give us loans. The main supporters of investment in the critical areas of generation, transmission and distribution had been the World Bank, the African Development Bank, the European Investment Bank, USAID that started of the hydro project.
Are these institutions still very much poised to help?
Yes, to some extent. There have been contacts, but because Liberia is under sanctions by almost all of these institutions, there is no direct contact with us.
You were talking about $40million income before the war. Today what could be your financial expectations?
Over the past four to five years ago, we haven't been able to produce any electricity at all. I think it was in 1999 that the Republic of Taiwan gave grant aid to the Government of Liberia for the LEC to start off a small diesel plant on the Island with a capacity of about 9mva. That is not even equivalent to the previous capacity of two of our major customers. This is the plant that we are trying to utilize. The European Union came in with a very modest contribution of a million Euros so as to strengthen our distribution network.
| Have you received any form of support from the government to run the corporation?
What the government did when the Taiwanese provided this grant was to commit itself to support the implementation of this project and to that extent the government has given us aid to directly support the staff because at one point the salaries had not been paid for about two years. The government has been able to help us to the level of about two million dollars over the past year and a half to two years.
Is privatization the only solution to revamp the LEC?
Privatization is a way to consider. For Liberia, it requires that one would have to look a little bit further. An institution like ours would need to be studied quite well to understand what the problems are and find out what feasible ways could be considered. The reason I am saying this is because more often people say that when you privatize it is going to perform better. But then that has to be looked at in the context of the greater society… LEC cannot be excluded from the society. LEC performance is like almost married into the economy of this country. We cannot perform better than the economy is performing. So, if privatization is envisaged, it has to be looked at in the greater context of the economy and other institutions that we interact with.
How much investment do you think would be required to revitalize LEC?
It is kind of difficult to say I need this much. But what we are looking at first of all is the market. You have to study the market to know what the demands are. If you determine what the market is and what its requirements are, over time the investment portfolio can be worked out to fit what the projections are. So it would be very difficult to put a figure down, but I can tell you for sure that we need studies to be done on the rehabilitation of the hydro. But again that had to be done in context with what the demand is, because we have lost quite a bit of our major customers that were operating here before.
So, hydro electricity would be definitely the main source of electricity to look at in the early stage?
No. I wouldn't say that. Hydro electricity can be looked at because, again, it depends on the investment level that is required and of course there are other competing projects that the government may have to do. Analysis have to be done to determine where to go, but our position has always been that we will need an interim position or means of generating electricity to keep the basic systems going. If that is thought about, an economic way can be selected in doing that. But again the hydro is also long term, if you commit funds today, to implement it will take three years before you can realize it.
What message would your address to foreign investors looking at the generation, transmission and distribution of electricity in Liberia?
Looking at it from the private sector participation, we would like to get partners that will come in here so that we work together to find out the economic way to solve the problem. Because to tell someone we need help, come and build the hydro is not sufficient. We have to work out the economic way of doing it, we are looking for partners with whom we can develop a scheme that is mutually beneficial to both parties.
What would be the profile of the ideal partner that you might be looking at?
In the utility industry it is not good to look for partners that don't have tenure, a good background. We would like to have a partner, first of all, that has a global view of what the utility industry is, then if he holds our hands and we walk into a banking institution he's known, and also we would like that he's a friend of all, including our government, because we are owned by the government.
What guaranties would you give to a strategic investor?
As we ourselves don't have authority to give guaranties but our role could be to smoothen the local environment, so that the proper decisions can be made.
To conclude this interview, what message would you address to the half million readers of Far Eastern Economic Review?
Liberia over the years has been very prominent in the private sector. In previous years, we were known for our mines, maritime program, fisheries, etc. We have had problems. Every nation goes through that, but we have no intention to bow our heads and let it go. We have to move ahead, and we are seeking partners that can make us go right ahead.
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LIBERIA ELECTRICITY CORPORATION