MCC Board finally approves $480 million grant to develop Sierra Leone’s energy sector

Sierra Leone Telegraph: 27 June 2024:

The U.S. government’s Millennium Challenge Corporation – an independent agency working to reduce global poverty through economic growth by providing grants and assistance to countries that meet rigorous standards for good governance, fighting corruption and respecting democratic rights, has announced its decision to fund the development of Sierra Leone’s energy sector.

This announcement comes following months of uncertainty as to whether the US government will provide much needed financial support to help propel the Bio-led government’s economic development strategy, after controversial presidential and general elections held last June, were declared by independent monitors and the US Senate Committee as lacking credibility.

But a joint statement issued last week by both the main opposition APC and the ruling SLPP, committing to peaceful dialogue and electoral reforms spearheaded by the Tripartite Elections Review Committee, whose report is expected in a few days, has paved the way for the US government through its MCC to finally approve this long-awaited $480 million, which many believe will help transform the country’s failing energy sector, headed by the president.

Sierra Leone’s economic development has been seriously hampered by decades of under-investment, poor governance, corruption, lack of sustainable access to electricity and water.

Announcing this landmark decision, the MCC said: “In Sierra Leone, 70 percent of the population does not have access to electricity. The MCC compact with Sierra Leone is important for its potential to deliver affordable energy for 4.6 million people.

“Approval of the $480 million investment reflects the MCC Board’s recognition of the progress made to implement the Agreement for National Unity, including the delivery of the draft Electoral Review Committee report, which is expected to be finalized and published in the coming days.

“These actions taken to date represent a critical advancement of efforts to strengthen Sierra Leone’s democratic and electoral institutions following the June 2023 elections. In making its decision to approve, the Board also noted the need for continued progress toward implementing meaningful electoral reform through peaceful dialogue and inclusive political processes including the near-term publication of the Electoral Review Committee report.”

Responding to the MCC funding decision, President Bio said: “I am thrilled that the MCC Board of Directors approved USD$480 million investment for Sierra Leone’s Energy Compact. This significant investment in our country’s energy sector will undoubtedly have a positive impact on the lives of citizens. It also reinforces our commitment to promoting good governance and sustainable development. I extend my profound gratitude to the MCC Board of Directors for their belief in Sierra Leone.”

But what is not clear, is whether this $480 million MCC investment is additional funding to pay for the yet to be disclosed overall costs of building Sierra Leone’s first gas-to-power plant in the east of the capital Freetown.

According to statement published by the US embassy in Freetown, “Formerly known as the Western Area Power Generation Project, the facility will be Sierra Leone’s first gas-to-power plant. It will address a critical need for the Sierra Leonean people’s access to reliable energy infrastructure. Construction is now beginning and is expected to reach completion in 36 months. Milele Energy, a Nairobi-based independent power-generation company, and energy project developer TCQ Power are co-sponsors of the project.

“This is a seminal development for Sierra Leone and an unprecedented one for the U.S. Government, accounting for the largest increase in energy capacity in a single country of any prior DFC project. DFC announced earlier this year its Board of Directors had approved up to $412 million in financing and political risk insurance to the project.”

Commenting after the groundbreaking ceremony, U.S. International Development Finance Corporation’s (DFC) Deputy CEO –  Nisha Biswal said: “Access to power is essential for improving lives and livelihoods now – and driving economic growth for years to come,. Today, we will break ground on the Nant Energy power project, which will contribute significantly to Sierra Leone’s energy security, marking a major milestone in this project’s development.”

U.S. Ambassador to Sierra Leone Bryan David Hunt said: “We are proud to support a private sector initiative that is poised to revolutionize Sierra Leone’s energy landscape,” “The Nant Energy project brings opportunities to communities across the nation. The effects of this project will be profound, and we are excited to witness a new era of prosperity for the country and the region.”

The US embassy’s statement concludes: “DFC’s investments in reliable energy drive development in Sierra Leone and around the world, promoting economic growth and job creation. Yet there is much more work to be done. Roughly 770 million people worldwide still lack access to electricity and millions face frequent blackouts and brownouts. Energy access is critical to advancing development goals across all sectors, including strengthening infrastructure, growing small businesses, combatting food insecurity, and providing needed healthcare.”

Hope may be returning to Sierra Leone once again, with further announcement this week, of major investments at the OPEC Fund for International Development Conference in Vienna, where over $800 million was pledged by various international development and financial institutions to boost Sierra Leone’s renewable energy and agriculture sectors.

The pledges announced are as follows:

OPEC Fund: USD$250 million

Arab Bank for Economic Development in Africa (BADEA): USD$250 million

International Fund for Agricultural Development (IFAD): USD$90 million

Africa50: USD$130 million

Qatar Fund for Development: USD$80 million.


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