Liberia Electricity Corporation Turns Over Management to Foreign Company
Monrovia – A FrontPageAfrica investigation has uncovered that the incoming CDC-led government headed by George Manneh Weah is on the verge of inheriting a three-year Management Service Contract with a two-year renewal option for the management of the Liberia Electricity Corporation (LEC) by a company recently rejected by the government of Ghana because of the firm’s unrealistic demands.
LEC and the Ireland-based ESBI Engineering & Facility Management Limited consummated the contract on November 8, 2017 to allow the private firm assumes full responsibility for managing all aspects of Liberia’s energy sector.
The main objectives of the contract include: To create an operationally efficient and profitable utility that is financially viable; to increase capabilities of local staff; to improve quality and reliability of electricity supply and customer service and increase customer base.
At a high level, ESBI would operate and maintain LEC’s generation, transmission and distribution systems throughout Liberia; build capacity of LEC staff to sustain and improve the performance of LEC beyond the duration of the contract.
The firm would also support the government of Liberia in achieving targeted levels of electrification and network expansion, as set from time to time to meet the National Energy Policy mandates; to sustainably improve the commercial, operating, customer service and financial performance of LEC, amongst others.
ESBI, as gathered by this paper, is bringing in 25 foreign nationals for low level managerial jobs, such as head of procurement, warehouse manager, security personnel, human resource manager, finance officers, head of commerce, amongst others.
The contract does not state why the foreign experts are preferred, but it mentions names of several non-Liberians that would occupy positions including procurement manage – a role several Liberians can perform efficiently.
However, what’s more disturbing is the circumstance under which the contract was negotiated.
The negotiation team was led by Mr. Monie Captan, who is a board member of LEC and head of the Millennium Challenge Account-Liberia. His double role constitutes conflict of interest in the negotiation.
This means the firm’s top negotiator was a referee and a major player at the same time during the negotiation process.
The negotiation team lacked the capacity to negotiate the contract, as they lacked basic knowledge of LEC operations and needs.
Previous Operator Flopped
In early 2017, an Interim Management Team comprised of Liberians took over the management of the LEC upon the expiration contract of Manitoba Hydro International (MHI), a firm which managed the electricity corporation for six years.
MHI, with its headquarters in Canada, reportedly failed to build capacity and knowledge transfer to Liberians, thereby creating a vacuum, forcing the need for another Management Service Contract.
An audit conducted by KPMG International of US$46 million disbursed by the Government of Norway to the HMI for the management of LEC raised some questions about the use of US$26 million on the project and it recommended a review of the contract.
MHI did not meet the contract milestones and this forced the Government of Liberia to decline on a contract extension option, which led to the preferment of a Liberian Interim Management Team (IMT) to manage the LEC.
The Liberian Interim Management Team
With limited capacity, the Liberian Interim Management Team (IMT) achieved quite satisfactorily performance during its one-year management of the corporation.
Under the management of the Liberian Interim Management Team, residential customer connections increased by 25,000 in four months and streetlights around Monrovia were increased from 500 to over 2,500.
The number of large users on the network was reportedly doubled with an increased reliability on the network, thereby reducing the frequency and duration of trips on the system.
There were improvements of the wellbeing and capacity of employees, and rationalized salaries were also attested to.
The IMT also improved the image of LEC generally by creating zones to increase response times; reduced the backlog connections by 50% and also reduced legacy debt by at least 70%.
Why ESBI Deal Is Bad?
With sources pointing to a failed contract in Ghana because of ESBI “unrealistic demands”, incoming President George Weah would have to give the deal a second thought.
Unfortunately, the government of Liberia does not have the right to terminate the contract as it is stated in the agreement that terminating the contract lies in the purview of the procuring entity – MCA-Liberia.