[Federal Register Volume 80, Number 198 (Wednesday, October 14, 2015)]
[Notices]
[Pages 61846-61849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26064]
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MILLENNIUM CHALLENGE CORPORATION
[MCC FR 15-04]
Notice of Entering Into a Compact With the Republic of Liberia
AGENCY: Millennium Challenge Corporation.
ACTION: Notice.
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SUMMARY: In accordance with Section 610(b)(2) of the Millennium
Challenge Act of 2003 (22 U.S.C. 7701-7718) as amended (the Act), and
the heading ``Millennium Challenge Corporation'' of the Department of
State, Foreign Operations, and Related Programs Appropriations Act,
2015, the Millennium Challenge Corporation (MCC) is publishing a
summary of the Millennium Challenge Compact between the United States
of America, acting through the Millennium Challenge Corporation, and
the Republic of Liberia. Representatives of the United States
Government and Liberia executed the Compact documents on October 2,
2015. The complete text of the Compact has been posted at https://assets.mcc.gov/documents/compact-liberia.pdf.
Dated: October 7, 2015.
Maame Ewusi-Mensah Frimpong,
Vice President and General Counsel, Millennium Challenge Corporation.
Summary of Millennium Challenge Compact With the Republic of Liberia
Overview
MCC has signed a five-year, nearly $257 million Compact with the
Republic of Liberia aimed at reducing poverty and accelerating economic
growth. The Compact seeks to address two binding constraints to
economic growth in Liberia: Lack of access to reliable and affordable
electricity, and inadequate road infrastructure.
Program Overview and Budget
Liberia first became compact eligible in fiscal year (``FY'') 2013,
but failed the scorecard in FY 2014, largely due to a change (by the
indicator provider, not the government of Liberia) in the methodology
for collecting and reporting on data associated with the Natural
Resource Protection Indicator. As a result, MCC's Board of Directors
authorized MCC to continue development of a compact, but with the
expectation that Liberia again pass the scorecard prior to the compact
coming forward for approval. In FY 2015, Liberia passed its scorecard:
It met ten of the twenty indicators, including the Control of
Corruption and Democratic Rights ``hard hurdles.'' An analysis
completed in September 2013 found lack of access to reliable and
affordable electricity and inadequate road infrastructure to be binding
constraints to growth in Liberia.
The high cost and unreliability of publicly provided electricity
(at $0.52 per kilowatt-hour, one of the world's highest electricity
tariffs), coupled with limited electricity grid infrastructure
(currently the electric utility, Liberia Electric Corporation
(``LEC''), has an installed generating capacity of only 22 megawatts
(``MW'') mean that less than two percent of Liberia's approximately
four million citizens have access to the network, imposing a
significant barrier to Liberia's long-term economic development.
Similarly, inadequate capacity to plan for, finance and execute
maintenance on the predominately unpaved road network, coupled with
sustained rainfall for nearly half the year (which renders many of
these roads impassable), undermines national and regional trade
opportunities, threatens sustained political stability and severely
constrains economic growth and social diversification. The Compact will
address these issues through the following investments in wide-ranging
policy reforms, institutional strengthening, and infrastructure:
Increasing Liberia's domestic generation capacity by up to
88 MW through investment in rehabilitation of the Mount Coffee
Hydropower Project (with the European Investment Bank, and the
governments of Norway and Germany);
Supporting sustainability in the power sector by, among
other things, providing training for LEC employees and support to
establish an independent regulator; and
Supporting sustainability in the roads sector, including
re-establishing regional maintenance centers and standing up a
dedicated fund.
The budget for the Compact is approximately $257 million, allocated
as follows (figures are approximate due to rounding):
Compact Budget Summary
------------------------------------------------------------------------
Budget (in US
Project/activity $)
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Energy Project:
Mt. Coffee Rehabilitation Activity.................... $146,800,000
Mt. Coffee Support Activity........................... $18,100,000
LEC Training Center Activity.......................... $5,500,000
Energy Sector Reform Activity......................... $31,190,000
---------------
Energy Project Subtotal........................... $201,590,000
Roads Project:
National Road Maintenance Activity.................... $15,000,000
Roads Sector Reform Activity.......................... $6,070,000
---------------
Roads Project Subtotal............................ $21,070,000
Monitoring and Evaluation Project:
[[Page 61847]]
Monitoring and Evaluation Activity.................... $5,500,000
---------------
Monitoring and Evaluation Project Subtotal........ $5,500,000
Compact Administration:
MCA-Liberia Administration............................ $17,066,000
Financial Management and Procurement Controls......... $9,500,000
Financial Audits...................................... $2,000,000
---------------
Compact Administration Subtotal................... $28,566,000
---------------
Compact Grand Total........................... $256,726,000
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The Energy Project aims to improve various aspects of the energy
sector in Liberia. The Mt. Coffee Rehabilitation Activity aims to
increase the amount of electricity generated in Liberia, facilitate a
decrease in the overall electricity tariff, and contribute to increased
reliability and adequacy of electricity. This activity addresses the
overarching problem in the energy sector, i.e., lack of access to
affordable and reliable electricity, by targeting the insufficient
supply of electricity in Liberia. Complementary activities in the
Energy Project should support the results of the Mt. Coffee
Rehabilitation Activity, address other root cause problems in the
sector and/or mitigate negative impacts and risks of the investment,
such as the risk of increased saltwater intrusion in the municipal
water supply.
The Roads Project aims to improve the quality of Liberia's road
network by supporting the piloting of a new road maintenance regime and
building capacity within the sector. Improved management of the road
sector is expected to decrease vehicle operating costs and provide time
savings for road users.
Energy Project ($201.6 Million)
The Energy Project is comprised of the following four interlinked
activities aimed at enhancing power generation, strengthening the
capacity of key sector institutions, and supporting the development of
foundational policies as the sector modernizes and becomes more
commercially viable.
1. Mt. Coffee Rehabilitation Activity ($146.8 million). MCC funding
along with funding from other donors will cover: (i) The expected cost
of the Mt. Coffee Hydropower Plant's fourth turbine, allowing the
rehabilitated plant to generate up to 88 MW of power once operational;
(ii) unfunded gaps between existing and available other stakeholder
commitments and a total cost to complete the project at $357 million
(which includes contingencies to provide a 98 percent confidence level
that the costs will not exceed that amount); (iii) the cost of a second
66 kilovolt transmission line from the Mt. Coffee Hydropower Plant to a
substation at Paynesville; and (iv) the cost of rehabilitating a raw
water intake located inside the reservoir. MCC's investment in the
rehabilitation of the Mt. Coffee Hydropower Plant will take advantage
of an existing project and financial management structure (the project
implementation unit (``PIU'') being used by the other international
donors. Like an accountable entity, the PIU is a single-purpose
government of Liberia entity with the responsibility for managing and
overseeing the rehabilitation of the Mt. Coffee Hydropower Plant. The
PIU is composed of Liberian and international experts and will remain
subject to applicable MCC-mandated audits. MCC will be part of the
PIU's donor oversight committee, and MCC funds will be isolated in a
new, separate project bank account, to be established.
2. Mt. Coffee Support Activity ($18.1 million). In its assessment
of the rehabilitation of the hydropower facility, MCC concluded that
additional areas of support would be required to better mitigate
environmental and social risks and ensure long-term sustainability that
could not be procured under the contract structures already in place.
These include (i) the provision of small-scale community infrastructure
(foot bridges, water points, pit latrines, etc.) for project affected
persons, (ii) additional human resources support to the activity's
project implementation unit to ensure timely and professional
management, oversight and reporting, (iii) a watershed management plan
(including climate change and fisheries studies), and (iv)
rehabilitation of the raw water transmission line from the Mt. Coffee
reservoir to the White Plains Water Treatment Works.
3. LEC Training Center Activity ($5.5 million). MCC funding will
support the construction of a training center for LEC and the provision
of equipment and training materials. The LEC training center will form
the core base for training of technicians in the electricity sector.
The training center will provide training in the following core areas:
(i) Transmission and distribution, (ii) electrical, (iii) mechanical,
(iv) hydro-electric, and (v) other specialized training. The proposed
training center will also provide training for the director,
instructors, and support staff of the LEC training center, who will be
hired as employees of LEC.
4. Energy Sector Reform Activity ($31.2 million). The Energy Sector
Reform Activity aims to provide support to the key institutions
responsible for policy making, investment planning, asset management,
and environmental and social oversight--namely the Ministry of Lands,
Mines and Energy, LEC and the Liberian Environmental Protection Agency.
With considerable donor financing secured for new transmission,
distribution and generation infrastructure as well as residential and
commercial connections, the proposed activity and its components have
been developed to complement support programmed by other sector
stakeholders. The central components of this activity are:
i. The provision of support for the development of an independent
regulator which is seen by all sector stakeholders as necessary within
the next three to five years, given the levels of investment in the
sector and the proposed expansion plans. MCC assistance will help
establish the regulator within the Department of Energy until such time
as it can function independently. Work to establish the regulator will
be done in cooperation with the European Union, which is separately
assisting the Department of Energy as a whole. Compact funding will
also provide for a situation assessment of the energy sector,
development of a financial model for the sector, analyses of demand,
willingness to pay, connections, and cost of service, and the design of
a regulatory information system;
ii. Support to the enhancement of the capacity of the Liberian
Environmental Protection Agency to better manage its core functions,
including environmental licensing and permitting, review and approval
of environmental and social impact assessments and management plans,
review and approval of resettlement action plans, and monitoring and
oversight of the implementation of these plans to mitigate
environmental and social risks. This support will include the provision
of technical assistance and capacity building for staff of the Liberian
Environmental Protection Agency and the provision of material support
such as IT upgrades and laboratory equipment; and
iii. Support to the implementation of a management arrangement for
LEC. As part of Compact development, MCC has worked with the government
of Liberia
[[Page 61848]]
to study the options for medium to long-term management of LEC, and the
disbursement of Compact funding after February 2016, is conditioned on
the government of Liberia's decision to pursue a long-term management
solution likely to lead to a financially stable utility based on the
results of that study. The form of MCC support will depend on the
management arrangement selected, but could, for example, include
technical assistance to LEC management and staff in the case that a
public management option is selected, or funding and technical
assistance to execute a transaction for a private sector management
option.
Roads Project ($21.1 Million)
Inadequate road infrastructure is a binding constraint to economic
growth in Liberia. Rather than a large capital investment directly in
road construction or maintenance, however, the Roads Project will focus
on institutional strengthening via two activities:
1. National Road Maintenance Activity ($15 million). This activity
will pilot up to five Regional Maintenance Centers (``RMC''), including
the construction of at least two RMCs, and match government of Liberia
contributions (up to $8 million dollars) into a Road Maintenance Fund
(which will be managed by an agency known as the ``Road Fund
Administration''), which is considered critical for the sustainability
of road maintenance.
i. RMCs existed prior to the Liberian civil war and were
responsible for providing routine and periodic maintenance under the
auspices of the Ministry of Public Works (``MPW''), which owned the
maintenance equipment and directly executed road works. In the post-
conflict setting, MPW has moved away from direct implementation of
works to contracting maintenance work to the private sector, due to
ongoing institutional reforms within the sector. The activity will
include the construction of at least two regional RMCs located in the
western region of Liberia, in Tubmanburg, Bomi County and the other in
the southeastern region, in River Gee County, each covering two
additional counties. An RMC will include residential quarters for staff
and resident engineers, technicians and operators. RMCs will not be
fitted with equipment owned by the MPW; rather they will rely on
private contractors to provide the equipment and implement works. MCC
may fund the remaining three RMCs, depending on successful completion
of the first two and an assessment of their viability.
ii. The Road Fund Administration will be created by the government
of Liberia during the first year of the Compact and will exist as a
stand-alone entity under the Ministry of Transport, with the primary
responsibility of collecting, managing, and disbursing money in a Road
Fund dedicated to periodic road maintenance. The fund will be supported
by revenues from a fuel levy, vehicle licensing and registration fees.
MCC will match the government of Liberia's contributions to the Road
Fund on a one-to-one basis up to $8 million during the Compact term,
subject to measurable indicators of performance on maintenance
planning, capacity, and implementation.
2. Roads Sector Reform Activity ($6.1 million). This activity will
provide for capacity building and technical assistance at the national
and regional level, including training support for RMCs, the Ministry
of Public Works, the Ministry of Transport, and Road Fund
Administration staff in transportation planning, policy, maintenance,
and institutional systems from the local to international level.
i. Data on Liberia's road network is sparse; even the most
comprehensive traffic counts collected for the Transport Master Plan of
2010 have significant gaps in the primary road network and little to no
data for the secondary network. Therefore, data collection on roadway
conditions and traffic counts will be carried out under the Compact,
including on primary, secondary and feeder roads. This data will then
be used to inform sector planning, including a network analysis to
support efforts to prioritize road rehabilitation and maintenance.
ii. Compact activities to increase the capacity of the many actors
in the roads sector will be coordinated with and complement the
activities of other donors, building on current efforts of the donor
working group. Compact funding will support an axle load control law,
strengthening the operational framework of the Road Fund and its
administration, training in transportation planning methods,
development of a five-year transportation asset management plan for
Liberia, urban transportation planning in Monrovia, and a review of
existing policies on road safety to develop recommendations for updates
and their implementation. These activities will be undertaken in
partnership with the U.S. Department of Transportation.
Economic Analysis
Currently, the supply and distribution of electricity in Liberia
are extremely limited, both in terms of the number of connections and
the total demand of those connections. Current customers pay a high
tariff, due to the expensive fuel price for the high-speed diesel
generators that are currently used for LEC's entire supply of
electricity. After the completion of the Mt. Coffee Rehabilitation
Activity, existing customers on the grid will receive a one-time
benefit of the drop in tariff, and after that will receive benefits
based on their consumption of grid-delivered electricity, as measured
by the amount they pay for electricity.
Demand for electricity and the provision of new connections to the
grid drive MCC's economic model for the Energy Project. Using a ``base
case'' scenario developed as part of Liberia's Electricity Sector Least
Cost Development Plan (which assumes 90,000 new household connections
and 1,450 new industrial connections by 2020), the project yields an
economic rate of return (``ERR'') of 11 percent with the possibility of
variation, based on the number of additional connections made by LEC
during the lifetime of the Compact.
This figure is inclusive of all capacity building activities that
support the Mt. Coffee Rehabilitation Activity (both operations and
maintenance) and connecting new customers to the grid (e.g., the LEC
Training Center Activity).
Economic analysis for the Roads Project is pending, but will be
complete once designs and feasibility studies are complete. Road
maintenance programs of this nature typically have strong ERRs and
these projects will be subject to MCC's normal investment criteria.
Update on Liberia Threshold Program
Liberia was selected as eligible to receive MCC threshold program
funding in 2010 and the $15.1 million program was then implemented by
USAID from July 2010 to December 2013. It included three components:
1. Strengthen Land Rights and Access. This project was designed to
improve the policy and legal frameworks for land management and thereby
increase security of tenure, investment in land, and land market
activity. A great success of this project, though an unintended one,
was the creation of a stand-alone land agency. Twenty-five communities
successfully prepared land rights inventories.
2. Improve Girls' Access to Primary Education. This project aimed
to improve girls' primary education enrollment and retention. It was
designed as a research-based project to increase educational
opportunities for primary school girls in selected
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communities in three counties, and tested three different intervention
models. Girls' attendance rates at all 40 school programs increased
beyond project targets, and baseline enrollment of girls increased by
23 percent, in comparison to a decrease of over 19 percent in control
schools.
3. Improve Trade Freedom. This project intended to improve
Liberia's trade freedom and to enable Liberia to participate more
effectively in the Economic Community of West African States by
improving performance on key policy measures. As a result of the
project, the government of Liberia eased requirements for processing
import and export declaration permits. The project also provided
support to government of Liberia efforts to revise policies in a way
that would lead to accession to the World Trade Organization; Liberia's
accession is expected to be concluded by December of this year.
[FR Doc. 2015-26064 Filed 10-13-15; 8:45 am]
BILLING CODE 9211-03-P