TRANSCO CLSG and the four utilities in charge of electricity in the CLSG countries convened at the first session of the two-day high-level meeting of the Commercial Framework on Wednesday, February 12, 2020, at the Tiama Hotel, Abidjan.
The meeting is part of the final round of negotiations for the Power Purchase Agreements (PPAs) and the Transmission Service Agreements (TSAs) that were signed in 2016. The objective of the final negotiations is to review the PPA & TSAs that were adopted and signed in November 2016, and to align these agreements with the model agreements developed by ERERA.
The Power Purchase Agreements (PPAs) were signed between CI Energies as the seller and the utilities including LEC (Liberia), EDSA (Sierra Leone) and EDG (Guinea) as buyers of 27 MW of firm energy.
TRANSCO CLSG and the three utilities entered into Transmission Service Agreements (TSAs), which among other aspects define transmission charges, losses allocation and payment security arrangements. The total of 83 MW split equally between the three utilities, was required to make the CLSG viable based on the initial estimates of the project in 2012.
It was also agreed in 2016, that these agreements would be finalized as the project moves closer towards commission.
In his opening remarks, the General Manager of TRANSCO CLSG, Mohammed M. Sherif said despite the numerous challenges the project has encountered, he was pleased to inform the participants that with the support of the Governments of the four countries, the Board, and the CLSG Donors, the project is now expected to be commissioned by June 2020.
“Unfortunately, we have been forced to move the commissioning date from March 31, 2020 to June 2020 due to circumstances beyond our control, which includes the difficult terrain and poor condition of the roads,” the General Manager lamented.
He furthered that the outbreak of the coronavirus epidemic has affected the March 2020 partial commissioning schedule for Liberia. Says the General Manager: “Quite recently, the outbreak of the coronavirus in China has affected the movement of key Chinese experts who are to undertake critical works and pre-commissioning tests on sub stations in Liberia and Sierra Leone as well as the SVC contract in Cote d’Ivoire.”
Nevertheless, the General Manager encouraged the participants to work collaboratively to conclude all the essential arrangements that would enable parties to begin efficient and sustainable trade of electricity on the CLSG transmission line based on sound commercial agreements that are fair, equitable and which also conform to ERERA Standards for the electricity market in the ECOWAS region.
The General Manager disclosed that TRANSCO CLSG has received the first draft of the interconnection agreement that will be shared with the technical experts of the Utilities and discussed at a technical meeting that will be held in Abidjan in March 2020.
“It is therefore very important for parties in these negotiations to provide firm commitments to trade on the CLSG transmission line, and agree on transmission tariffs that will ensure TRANSCO CLSG’s financial viability in the medium and long term,” Mr. Sherif stressed.
In the short term, TRANSCO CLSG envisages that there would be a big financial gap between revenues and costs. Management intends to engage CLSG countries and donors to agree upon suitable strategies to close the gap, while pursuing opportunities to expand the national grid, grow industrial and mining loads, in Liberia, Sierra Leone and Guinea and improve trade of electricity through the CLSG transmission line.
The CLSG model exhibits a spirit of mutual cooperation and collaboration among the stakeholders in the four countries. And it is TRANSCO CLSG hope that parties would continue in this same spirit collaboration, during the negotiations to ensure that all parties are treated fairly and that benefits and responsibilities are clearly defined, understood and agreed upon collectively and as far as possible.
The General Manager acknowledged the invaluable support and unwavering commitment of WAPP, the Governments of Cote d’Ivoire, Liberia, Sierra Leone and Guinea, Board, the four national utilities and the four CLSG donors to the CLSG Project and to regional integration. “The CLSG is about to bring light to the lives of millions and this could never have been possible without your contribution, we are grateful and sincerely thank you.”
The General Manager particularly thanked the World Bank for their support through WAPP in the recruitment of financial and legal experts who are assisting TRANSCO CLSG throughout these final negotiations to adopt the final versions of the PPA and TSAs for signature.