Unplugging corruption cables in electricity barge ship contract

Mahmud Tim Kargbo: Sierra Leone Telegraph: 31 May 2018:

Let’s cut straight to the chase. Sierra Leone Electricity and Water Regulation Commission recently approved $0.10 per kilowatt hour, based on an average for Bumbuna, Addax, the 16.5 megawatts at Black Hall Road and the 10 megawatts at Kingtom Freetown. And this is supposed to be the country’s guide to avoiding exorbitant costs of electricity.

International pricing policy on Power Purchase Agreement per kilowatts hour (kWh) varies. In the USA it’s $0.4. Based on international best practice, the highest cost is $0.15 per kilowatts hour (kWh).

Fact of the matter

The fact of the matter is that it matters little the amount of money the current SLPP Government is claiming to have saved from the energy supply contract they have negotiated, compared to the previous very corrupt energy contracts of the former government. What is important is whether their current energy ship contract meets Independent Power Purchase rules and regulations.

By paying $0.16 per kilowatts hour (kWh) as reported by Mr. Sorie Fofanah in his published article – ‘Power cuts will soon be over’, it is very clear that certain people within the negotiation process will be making money illegally at the expense of the people, throughout the period of the contract.

World Bank presence in the negotiation never made it corrupt free

Openly, donors and international institutions like the World Bank like to present themselves as furnishing ‘anti- corruption’ initiatives. In practice, their policies which favour privatisation provide greater positive motivational influence and opportunities for corruption.

Moreover, there are evidence to suggest that donor countries and the World Bank have actively, though secretly discouraged developing countries around the globe from prosecuting multinational companies for corruption.

Therefore, ending or minimising corruption in Sierra Leone requires citizens, civil society and political parties to demand that our political leaders put public interests ahead of the interests of rich individuals and powerful companies, and to hold them accountable.

Transparency, accountability and public involvement are key elements in achieving this. Our strong and independent Audit Service Sierra Leone, as well as our Courts, must be prepared to prosecute, fine and officially or legally prohibit corrupt companies and officials under the New Direction, if President Bio is to succeed in his promised national war against corruption.

Evidence of World Bank Independent Power Producer corruption

Tanzania Government and the Tanzania Electricity Supply Company entered into contractual agreements with Independent Power Tanzania Limited (IPTL) of Malaysia for the supply of 100 megawatts of power over a 20-year period.

The transaction, directly negotiated during power outage with World Bank representatives at the thick of it, was later contested by some patriotic government officials and other interested stakeholders, on the grounds that it was the wrong technology (heavy fuel oil instead of indigenous gas); that it was not part of the least-cost generation plan; that it was not procured on a transparent and competitive basis; and that the power was not needed.

The government ultimately submitted the case for arbitration. Under the final arbitral ruling, the project costs were reduced by about 18 percent. Even so, the costs remain well above international comparators.

In the arbitration hearings, the Government alleged that the contract award had been corrupt, but failed to produce evidence to satisfy the Tribunal of this. The government has not subsequently pursued the corruption investigation. However, legal disputes between the IPTL and the government continue.

Questionable practice in the electricity barge ship contract

The Bio government’s electricity supply contract has been arranged through a memorandum of understanding with the electricity generator, rather than through a transparent and open competitive bidding process.

This normally happens in Sierra Leone, when the Government and state-owned utilities advanced the most specious reasons for failing to engage in competitive bidding, holding, for example: that the procedure has no relevance where a private sector investor chooses to set up a project using its own resources; that it would be counterproductive to insist on competitive bidding when the foreign consortium involved is composed of internationally reputed companies; that the government no longer need to pay mobilisation fees because the barge ship is already in Sierra Leone; that competitive bids require costly and time-consuming preparatory work.

The hard but uncomfortable truth is large contracts, signed with Independent Power Producers in an environment where watchdog institutions are weak – such as in Sierra Leone, offers attractive opportunities to influential decision makers for making illegal gains.

The negotiations are held in secret, and minutes are not kept at all or are very sketchy. The costs to the country and the illegal gains for those entering into the contracts are huge.