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 has stressed Benin’s national electrical grid, creating power outages that hurt businesses and hinder social services.

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 December 31, 2019

Compact Budget

Milestones

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

Compact Projects

Electricity Distribution Project

  • $226,932,000Project Total Amount
  • $41,753,209Project Amount Committed
  • $10,497,314Project Amount Expended

To accomplish the project objectives, MCC Funding will be used to modernize Benin’s electricity distribution infrastructure to expand grid capacity to accommodate future growth, improve reliability and reduce losses and outages. The project focuses on improving the grid serving Cotonou (and selected regional networks as a complement to proposed solar Independent Power Producer investments), as well as on a national level by building a modern distribution dispatch and control center to more effectively manage the network.

Progress and Achievements to Date

MCA-Benin II has awarded contracts for the construction and equipping of an electricity dispatch and control center that will provide real-time monitoring and control of Benin’s national grid. MCA-Benin II signed five of the six largest compact procurements for electric power works to be built across Benin, including 18 new or expanded substations, installation of nearly 50 miles of new underground cabling, and rehabilitation of over 530 miles of overhead power lines. 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 $753

Electricity Generation Project

  • $12,755,786Project 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 megawattsAC of solar photovoltaic generation through an Independent Power Producer transaction.

Progress and Achievements to Date

In December 2019, the Government of Benin, through the Ministry of Energy, released a competitive solicitation for a total of 50 MW of solar photovoltaic generation to pre-qualified bidders.

Projected Long-Term Results

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

Off-Grid Electricity Access Project

  • $46,784,033Project Total Amount
  • $4,327,327Project Amount Committed
  • $3,508,182Project 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 February 2020, MCA-Benin II signed co-financing agreements with four solar home system distributors and manufacturers worth $13.8 million: $4.4 million from the compact and more than twice that amount in leveraged private investment – $9.4 million. A second call focused on mini-grid operators was underpinned by the government’s recent adoption of an off-grid electrification policy, strategy, master plan and regulatory framework. Signature of those co-financing agreements, which are slated to attract up to $42 million more in private investment, is expected in the coming months.

Projected Long-Term Results

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

Policy Reform and Institutional Strengthening Project

  • $44,453,115Project Total Amount
  • $22,454,489Project Amount Committed
  • $9,003,483Project 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

In September 2019, 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, beginning in November 2019. 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 $753

As of January 28, 2020