Benin Power Compact

Benin has one of the world’s lowest levels of electricity consumption per capita because of limited access to and availability of electricity for the country’s population of 11.8 million people. Rapidly growing demand coupled with inadequate maintenance and insufficient investment have stressed Benin’s national electrical grid, leading to poor quality service that impacts households, hurts businesses, and hinders public services.

MCC is partnering with Benin to tackle these issues through a $391 million compact that is reforming, expanding, and modernizing the West African country’s power sector. With an additional contribution of $28 million by the Government of Benin, the compact aims to strengthen the national power utility, attract private sector investment into solar power generation, and fund infrastructure investments in electricity distribution as well as off-grid electrification for poor and unserved households.

Financials

Financials as of March 31, 2022

Compact Budget

Milestones

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

Compact Projects

Electricity Distribution Project

  • $257,281,287Project Total Amount
  • $230,886,031Project Amount Committed
  • $155,803,655Project Amount Expended

MCC is modernizing Benin’s electricity distribution infrastructure to expand grid capacity, accommodate future demand growth, improve service reliability, reduce losses, and minimize outages. The project focuses on improving the power grid serving Cotonou—Benin’s center of commerce and government—as well as select regions in northern Benin with high levels of poverty. At a national level the project is building a modern dispatch and control center to manage Benin’s medium voltage electricity distribution grid more effectively.

Progress and Achievements to Date

Major line works and substation construction continue across Benin, including 18 new or expanded substations, installation of more than 50 miles of new underground cabling and the rehabilitation of nearly 500 miles of overhead power lines. Construction of the main electricity dispatch and control center building is nearly complete, and installation of IT equipment began in early 2021. The main and backup dispatch centers will provide real-time monitoring and control of Benin’s national grid.

Projected Long-Term Results

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

Electricity Generation Project

  • $12,668,141Project Total Amount
  • $10,582,107Project Amount Committed
  • $9,647,245Project 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 (IPP) transaction.

Progress and Achievements to Date

The 50 MW solar photovoltaic IPP transaction is nearing commercial close. If financial close is attained, this would be Benin’s first successful IPP transaction and could leverage $50-60 million in private investment.

Projected Long-Term Results

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

Off-Grid Electricity Access Project

  • $44,654,241Project Total Amount
  • $41,078,104Project Amount Committed
  • $12,423,785Project Amount Expended

This project is helping to address the gap in access to electricity for two-thirds of Benin’s population through policy reforms, infrastructure financing, and public-private partnerships, including:

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

Progress and Achievements to Date

MCA-Benin II, the entity implementing the compact, has signed 16 off-grid electrification co-financing agreements that are expected to leverage $46 million in private investment with $31 million of compact funding. Despite ongoing challenges related to the Covid-19 pandemic, distributors of solar home systems are beginning to expand operations in Benin. Four of eight mini-grid project developers recently obtained regulatory approvals for 20-year concession agreements and are completing designs. The remaining four mini-grid projects are still under regulatory review.

Policy Reform and Institutional Strengthening Project

  • $29,442,266Project Total Amount
  • $24,503,602Project Amount Committed
  • $18,054,529Project Amount Expended

MCC funding is:

  • Improving governance in the electricity sector by strengthening regulation, supporting tariff reforms, advancing energy efficiency, and creating a policy and institutional framework for independent power producers.
  • Improving the national electricity utility’s management, operations, and maintenance through a management contract; and
  • Informing and educating 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 $634,000,000

As of March 9, 2022