The World Bank Board of Directors approved a total of $300 million in International Development Association (IDA) credits and grants to support reforms that will help promote electricity trade in West Africa.
The West Africa Regional Energy Trade Development Policy Financing Programme (West Africa Energy DPF) seeks to remove barriers to electricity trade, which will lower electricity costs for consumers, support the competitiveness of firms and improve resilience and reliability of supply.
Currently, only 50% of the population in West Africa have access to electricity, and those who do, pay among the highest prices in the world – more than double those of consumers in East Africa. In addition, due to operational deficiencies, electricity services are unreliable, with an average of 44 hours of outages per month.
Grid reliability in SSA is a neglected gem
The World Bank noted that over the past decade, member countries of the Economic Commission of West African States (ECOWAS) have been working – through the West Africa Power Pool (WAPP) – towards a fully integrated power market. Within a few years, they will have completed the primary interconnectors that will link them together.
The West Africa Energy DPF supports a policy reform programme 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 will replace the more expensive electricity generated from inefficient small-scale oil-fired and diesel generation and improve the reliability of electricity services, states the World Bank.
Electricity trade to unlock green energy potential
Commenting on the development, the World Bank Vice-President for Western and Central Africa, Ousmane Diagana, said: “West Africa has huge potential for clean and green energy generation, which countries can unlock and pool together to bring lower-cost electricity to communities and help create jobs.
“The West Africa Power Pool has done the fundamental work of interconnecting national grids, and it is now time to realise the full strength of the regional power market. Coordinated policies paired with effective institutions and regulatory frameworks will help improve trust in the electricity trade and usher in a new era of affordable and reliable energy in West Africa.”
The new operation supports a regional energy reform programme 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.
“This is a landmark programme for achieving our goal of having a regional energy market and I want to thank the World Bank support,” says Jean-Claude Kassi Brou, President of the ECOWAS Commission.
Brou continued: “The West Africa Power Pool will continue to make strides and with this support, it can help member countries work together on the key coordinated policy reforms needed to deliver regional electricity trade – and therefore access more affordable and reliable electricity. By better using energy resources in the region, we expect the resulting efficient and resilient power systems to make our economies much more productive and inclusive. ECOWAS will continue to be a strong partner in realising this goal.”