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 July 31, 2020

Compact Budget

Milestones

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

Compact Projects

Electricity Distribution Project

  • $253,073,841Project Total Amount
  • $219,280,438Project Amount Committed
  • $36,986,701Project Amount Expended

MCC Funding will be used to modernize Benin’s electricity distribution infrastructure in order to expand grid capacity to 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 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 signed all planned contracts for electric power works to be built across Benin, including 18 new or expanded substations, installation of nearly 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. The launch of construction works for major line works is expected September 2020, with substation construction to start by the end of 2020 Taken together, these investments will modernize Benin’s power grid and lead to greater reliability and lower distribution losses.

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

Technical and financial evaluation of proposals is underway for the 50MW IPP tender run by the Government of Benin  through its Ministry of Energy.

Projected Long-Term Results

  • Estimated Beneficiaries 10,600,000
  • Estimated Net Benefits $753

Off-Grid Electricity Access Project

  • $44,154,093Project Total Amount
  • $14,968,436Project Amount Committed
  • $4,923,301Project Amount Expended

To accomplish the project objectives, MCC funding will provide financing for:

  • Benin’s first-ever policy, strategy, master plan, and regulatory framework for off-grid electrification; and
  • Competitive co-financing   grants that will fund off-grid electrification investments, including mini-grids, solar household systems, critical public infrastructure, and energy efficiency measures.

The project is MCC’s largest off-grid electrification effort to date, and will support policy reforms and infrastructure financing. With this investment, project financing for renewable energy solutions for the poor will help address the gap in access to electricity for two-thirds of Benin’s population.

Progress and Achievements to Date

In August 2020, MCA-Benin II signed co-financing agreements primarily focused on mini-grid operators which were underpinned by the government’s adoption of an off-grid electrification policy, strategy, master plan and regulatory framework. In conjunction with agreements already signed with solar home system distributors and manufacturers and solar water pump providers, MCC expects to leverage $46.3 million in private investment with $31.5 million of Compact funding.

Projected Long-Term Results

  • Estimated Beneficiaries 135,000
  • Estimated Net Benefits $23

Policy Reform and Institutional Strengthening Project

  • $25,513,859Project Total Amount
  • $22,759,480Project Amount Committed
  • $10,516,807Project Amount Expended

To achieve the project objectives, MCC funding will be used to support interventions to:

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

Progress and Achievements to Date

The Government of Benin and MCA-Benin II signed a management services contract to entrust the management of Benin’s national electricity utility to a private company for a period of four years, which began in November 2019. The contractor has conducted a comprehensive diagnostic of the utility, and is undertaking numerous reforms to improve management and operations On December 20, 2019 MCC released the final $80 million tranche of compact funding after the Government of Benin met conditions relating to tariff reform, electricity utility arrears, and private investment in electric power generation.

Projected Long-Term Results

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

As of September 9, 2020