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Regulatory functions of the energy sector were relegated to the Ministry of Lands, Mines and Energy (MLME), Ministry of Commerce and Industry (MoCI), Liberia Electricity Corporation (LEC), Rural and Renewable Energy Agency (RREA), Liberia Petroleum Refining Company (LPRC), National Oil Company of Liberia (NOCAL), and the Environmental Protection Agency (EPA). State-owned operators including the LEC and micro-utilities have been self-regulating. The result has been high electricity cost and inadequate services, which are major constraints to Liberia’s economic growth and poverty reduction.
To address the situation, the National Energy Policy (NEP) of Liberia was approved in 2009. It provides among others, liberalization of the sector and separation of policy, regulation, and operation.
The National Energy Policy led to the enactment of the 2015 Electricity Law of Liberia (ELL) on October 26, 2015. The ELL provides the legal basis for the establishment of the Liberia Electricity Regulatory Commission (LERC) as the National Regulator. LERC is an independent agency with respect to its budget, management, staffing and the exercise of its duties and authorities as prescribed in Section 13.3 of the Law.
LERC’s function, as regulator, is to issue licenses, approve tariffs, ensure liberalization of the sector, improve service delivery, protect consumers and create a vibrant electricity sector.
In 2017, the Liberia Electricity Regulatory Commission commenced operations with funding from the Millennium Challenge Corporation (MCC). Two years earlier, (in 2015), the Governments of Liberia and the United States of America entered into a Compact in which the amount of $256,726,000 (Two Hundred Fifty-Six Million Seven Hundred Twenty-Six Thousand United States Dollars) was granted to address two binding constraints to economic growth and poverty reduction in Liberia: a) lack of access to reliable and affordable electricity, and b) inadequate road infrastructure. Immediately thereafter, the Millennium Challenge Account-Liberia (MCA Liberia), an independent and autonomous agency of the Government of Liberia was established by an Act of the Legislature to manage implementation of the Compact activities.
One component of the Compact is standing-up the LERC as the key driver of the Energy Sector Reform. Prior to the Compact, the European Union (EU) initiated the establishment of the Department of Energy (DOE) at the Ministry of Lands, Mines and Energy – MLME (now Ministry of Mines & Energy – MME) as the first step toward the formation of LERC. The DoE played the role of Sector Regulator for the first two years beginning 2015.
The 2015 Electricity Law of Liberia contemplated that the Regulator would reside within the Ministry of Mines and Energy with effect not later than two (2) years after the effective date of October 26, 2015. The Law also anticipated the creation of the LERC within the Ministry not later than one (1) year after the effective date of the Law, including the appointment of Commissioners. It was also envisaged that a transition of functions to the LERC would be completed within one (1) year after the LERC shall have been created. The final stage of the transition was the subsequent removal of LERC from the Ministry immediately after the end of the second year.
Despite technical assistance from the EU, Government of Norway, and opportunities provided by the ratification of the Compact, the LERC Commissioners were not confirmed by the Legislature until September 2018. The delay has shifted the timeline as relates to the standing-up of LERC.
The timeline as prescribed in the 2015 Electricity Law was aligned with the Compact’s duration, but this did not happen. However, as the Compact end date (January 20, 2021) approaches, LERC has embarked upon a robust strategy that will compensate for lost time and ensure survival of the Commission.