Benin Power Compact

Only one-third of Benin’s population has access to electricity, and total per-capita consumption is low due to limited access and availability. At the same time, rapidly growing demand for power, inadequate maintenance, and insufficient investment have stressed Benin’s national electrical grid, leading to poor quality service that impacts households, hurts businesses and hinders social services.

To tackle these issues, MCC is partnering with Benin through a $375 million compact designed to modernize the West African country’s power sector. The compact, which is supplemented by a $28 million contribution from the Government of Benin, aims to strengthen the national utility, attract private sector investment, and fund infrastructure investments in electricity distribution as well as off-grid electrification for poor and unserved households.

Financials

Financials as of September 30, 2020

Compact Budget

Milestones

  • Entry Into Force:
    June 22, 2017
  • Signed:
    September 9, 2015

Compact Projects

Electricity Distribution Project

  • $253,073,841Project Total Amount
  • $220,704,100Project Amount Committed
  • $38,501,381Project Amount Expended

MCC is modernizing Benin’s electricity distribution infrastructure to expand grid capacity and accommodate future demand growth, improve the reliability of electricity service, and reduce losses and outages. The project focuses on improving the power grid serving Cotonou, Benin’s center of commerce and government, as well as select regional networks in northern Benin as a complement to solar independent power producer investments, as well as on a national level by building a modern dispatch and control center and network to more effectively manage Benin’s medium voltage electricity distribution grid.

Progress and Achievements to Date

MCA-Benin II has launched all contracts for electric power works to be built across Benin, including 18 new or expanded substations, installation of more than 50 miles of new underground cabling, the rehabilitation of over 530 miles of overhead power lines, and the construction and equipping of an electricity dispatch and control center that will provide real-time monitoring and control of Benin’s national grid. Major line works broke ground in November 2020 and substation construction will start by the end of 2020.

Projected Long-Term Results

  • Estimated Beneficiaries 10,600,000
  • Estimated Net Benefits $634

Electricity Generation Project

  • $12,668,141Project Total Amount
  • $4,295,709Project Amount Committed
  • $3,629,507Project Amount Expended

To accomplish the project objectives, MCC funding will be used to increase Benin’s domestic generation capacity by up to 50 megawatts (AC) of solar photovoltaic generation through an Independent Power Producer transaction.

Progress and Achievements to Date

The 50MW solar photovoltaic IPP transaction is nearing commercial close. If financial close is attained in 2021, upwards of $100 million in private investment in power generation will have been facilitated by the compact.

Projected Long-Term Results

  • Estimated Beneficiaries 10,600,000
  • Estimated Net Benefits $634

Off-Grid Electricity Access Project

  • $44,154,093Project Total Amount
  • $37,761,314Project Amount Committed
  • $5,313,365Project Amount Expended

To accomplish the project objectives, MCC is funding:

  • Benin’s first-ever policy, strategy, master plan, and regulatory framework for off-grid electrification; and
  • Off-grid electrification systems for communities and households through a competitive grant facility that is leveraging private investment.

The project is MCC’s largest off-grid electrification effort to date, which is helping address the gap in access to electricity for two-thirds of Benin’s population through policy reforms, infrastructure financing, and public-private partnerships.

Progress and Achievements to Date

By August 2020, MCA-Benin II signed off-grid electrification co-financing agreements that are expected to leverage $46.3 million in private investment with $31.5 million of Compact funding. Despite delays caused by Covid-19, distributors of solar home systems are beginning to establish or expand operations in Benin, while mini-grid operators are working to obtain required regulatory approvals.

Projected Long-Term Results

  • Estimated Beneficiaries 594,674
  • Estimated Net Benefits $23

Policy Reform and Institutional Strengthening Project

  • $25,513,859Project Total Amount
  • $23,149,060Project Amount Committed
  • $10,676,695Project Amount Expended

To achieve the project objectives, MCC funding will:

  • Improve governance in the electricity sector by improving regulation, establishing a tariff policy, planning periodic tariff adjustments, support energy efficiency, and strengthening the policy and institutional framework for independent power producers.
  • Improve the national electricity utility’s management, operations and maintenance; and
  • Inform and educate the public on tariffs, energy efficiency, renewable electricity and other key electricity sector issues.

Progress and Achievements to Date

This project has led to major reforms in Benin’s power sector, including the first electricity tariff increase in a decade, a four-year management contract for the national power utility, and government approval for an IPP framework that has resulted in internationally competitive bidding for solar power plants that, if built, will supply upwards of one-third of national daytime demand for electric power. The project has also supported energy efficiency audits for public buildings and private industry in order to reduce demand and create cost efficiencies.

Projected Long-Term Results

  • Estimated Beneficiaries 10,600,000
  • Estimated Net Benefits $634

As of December 3, 2020