It was in this context that the Millenium Challenge Corporation (MCC) partnered with other global donors and the government of Liberia in 2016 to rehabilitate the Mt. Coffee Hydro Power Plant and strengthen the capacity of Liberia’s energy sector. Through the $202 million Energy Project, MCC and the government of Liberia launched a five-year process to enhance access to reliable, affordable electricity across the country. Mathematica conducted an evaluation of this project to help MCC study the successes and challenges faced in revitalizing Mt. Coffee and the Liberian energy sector.
The rehabilitation of the Mt. Coffee Hydro Power Plant led to a rapid increase in the availability of electricity in Liberia.
With MCC and other donors’ funding, the four turbines at Mt. Coffee were brought back online between November 2016 and September 2018, enabling the generation of 75 megawatts of low-cost, renewable electricity. This increased generation capacity—combined with grid expansion, improved utility operations, and a strengthened regulatory environment—contributed to rapid growth in electricity connections. From the start of the Energy Project in 2016 to early 2022, electricity connections grew rapidly, from 35,000 users to more than 150,000 users. In newly connected communities, we surveyed community leaders, of whom more than 60 percent reported that health facilities, pharmacies, and schools had electricity in 2021, compared to just 15 percent in 2019. By 2022, nearly 30 percent of Liberia’s population had access to electricity, a change that is clearly visible in satellite imagery of nighttime lights (often used as a proxy measurement for electrification).
Despite this dramatic expansion in access to electricity, Liberia faces critical financial and institutional challenges that threaten the long-term sustainability of the country’s energy sector.
The Liberian Electricity Corporation (LEC), Liberia’s national utility, lost $272 million between 2015 and 2021 due in part to power theft, unpaid energy bills, and the presence of unlicensed private operators. LEC customer growth coincided with an increase in illegal connections as users found ways to connect to the grid without paying, a challenge that LEC struggles to fully address because of insufficient data systems, meters, and other measurement tools.
The shift in electricity tariffs—the amount a utility company can charge its customers—further strained LEC finances. When the Energy Project began in 2016, Liberia had one of the highest tariffs in the world at $0.37 per kilowatt hour. In 2022, a new electricity tariff was approved that reduced rates for 97 percent of LEC customers to just $0.15 per kilowatt hour. Although the revitalized Mt. Coffee produces energy at a lower cost than other energy sources, this new rate does not cover the utility’s power costs. Without higher revenue and cost reductions, the utility will likely not be able to invest in the equipment and training needed to maintain infrastructure and provide reliable power to customers.
Without the long-term financial sustainability of its electricity utility, Liberia will face challenges maintaining and growing its electrification rate.
The Liberia Energy Project set out an ambitious plan to increase access to more reliable, affordable electricity—and it did. However, challenges related to power theft, unpaid bills, and low tariffs remained that threaten the utility’s long-term ability to sustain operations and continue growing its customer base. Mathematica’s evaluation found several ways that additional energy investments and policies could mitigate the challenges the country is now facing:
- Donor investments in data systems that track the transmission and distribution of electricity would enable LEC to strategically target its investments to minimize losses on the grid. These systems allow the utility to concentrate on areas with the highest incidence of power theft and the greatest need for maintenance work. Stronger data systems can also provide insights into the cost of electricity production and distribution, as well as consumption patterns, enabling government decision makers and utility providers to develop evidence-driven policies and tariffs. In addition, given the utility’s financial challenges, donor investment will likely be needed to install these data systems and fund workforce training on their use.
- Donor funding should be directed toward high-security electricity meters. The government should also enact stronger legal mechanisms to mitigate power theft, particularly among large customers. Strong political will is needed to implement these measures.
- The independent regulator should adjust tariffs to reflect the actual cost of energy production and distribution, while keeping customer affordability in mind. This might require large consumers to pay more in the form of cross-subsidies that would offset the tariff increase for consumers with low income. Liberia now has an established tariff-setting methodology but needs stronger data systems, continued external funding to ensure its regulator’s independence from political interference, and greater pricing transparency to establish and maintain a cost-reflective tariff.
The story of Mt. Coffee is one of mixed success. The plant’s restoration resulted in a substantial increase in energy access for communities, but the sector faces significant challenges in continuing to expand high-quality, reliable electricity to Liberians. Lessons learned from MCC’s Energy Project could stabilize the country’s energy sector and inform new large-scale investments into energy infrastructure. As more of the world turns toward renewable sources of energy, we should design power projects that address not only the requisite infrastructure, but also the enabling environment needed for a more sustainable future.
