LEGAL AND REGULATORY FACTSHEET
SIERRA LEONE[1]
| Country Population | Actual Generation Capacity | Deficit (in MW)[2] | Energy’s contribution to the GDP | Ease of doing business (ranking) |
| 8,605,718 | 35.2 MW | 8198.7 MW | 22% | 163rd (2020) |
ENERGY MIX OVERVIEW
| Fuel Mix | Hydropower, biomass, and fossil fuels |
| Installed Generation Capacity versus Actual Generation Capacity | Installed: 105 MW 133 MW as of June 2022.
Actual: 35.2 MW (As of June 2020) |
| Transmission Capacity (Wheeling Capacity)[3] | 50.83 MW (as of 2016), equivalent to 59.80 MVA |
| Electricity Access Rate | The electricity access rate in Sierra Leone is 26.2% with 4.8% in rural areas and approximately 54.7% in the urban areas as of June 2020. |
| Electricity Demand | Electricity demand is 236 MW as of January 2018, and it is projected to grow significantly with expectations that it will exceed 360 MW by 2023 |
| Off-Grid/Renewable Energy Capacity and Framework | There are existing frameworks for off-grid solutions such as the Integrated Resource Planning (IRP). |
| Alternative Off-take Arrangements | There are no alternative off-take arrangements. EDSA is recognised as the sole public off-taker in the electricity sector |
ELECTRICITY SECTOR MODEL
| Power Sector Model | Single-Buyer Model |
| Utility Type Structure | Vertically Integrated Utility has been unbundled by the National Electricity Act, 2011 |
ELECTRICITY MARKET DYNAMICS
KEY LEGAL AND REGULATORY AGENCIES
| Ministry of Energy (MoE) | Established for the purpose of creating energy policies for Sierra Leone and it exercises oversight functions of other stakeholders in the electricity sector. |
| The Sierra Leone Electricity and Water Regulatory Commission (SLEWRC) | Vested with the overall function of setting electricity tariffs and prices |
| Electricity Generation and Transmission Company (EGTC) | Responsible for the generation and transmission of electricity and the sale of electricity to the EDSA subject to a PPA approved by the SLEWRC |
| Electricity Distribution and Supply Authority (EDSA) | Performs the functions of supply, distribution, and retail sale of electricity for Sierra Leone except in areas in which the Commission has issued a distribution licence to another appropriately qualified entity |
| Renewable Energy Association of Sierra Leone (REASL) | Promotes renewable energy practices and utilization across the country |
| Public Private Partnership (PPP) Unit | Established in 2010 to coordinate and support transactions of Ministries, Departments and Agencies of the government of Sierra Leone |
LEGAL, REGULATORY, POLICY AND CONTRACTUAL FRAMEWORK
|
POLICIES |
|
| Energy Efficiency Policy 2016 | Aims to improve energy access while transforming the energy sector towards greater sustainability. |
| Energy Policy of Sierra Leone 2018 | Outlines the status of renewable energy in the country including objectives, projections and expected improvements in the sector |
| National Renewable Energy Policy of Sierra Leone (NREP) 2018 | Clarifies the Energy Policy of Sierra Leone and extends it to include goals, policies, and measures for solar and other forms of renewable energy |
| PRIMARY LEGISLATION | |
| National Electricity Act 2011 | Principal law on electricity regulation in Sierra Leone following a repeal of the National Power Authority Act of 1892. Enables the participation of IPPs in the generation and distribution of electricity in Sierra Leone |
| Finance Act 2016 | Guarantees duty waivers for imported solar products that fulfil International Energy Commission Standards |
| SECONDARY LEGISLATION | |
| Mini-Grid Regulation 2018 | Provides protection for basic mini-grid and full mini-grid licensees |
| CONTRACTUAL FRAMEWORK | |
| Power Purchase Agreements | These are agreements entered into by the EDSA to purchase electricity from the EGTC and Independent power producers |
| Public-Private Partnership (PPP) | This is an arrangement where with the government partners with a private sector entity to supply infrastructure assets and services that have been provided by the government traditionally |
| Management Contract | This is a contractual arrangement for the management of a public enterprise by the private sector. |
| Concessions | These are contracts whereby the government entity defines and grants specific rights to a private sector entity to finance, build and operate a facility for a fixed period of time |
LICENSING AND PERMITTING PROCESS
A written application for license must be made by prospective licensee to the SLEWRC and all relevant information to support the application alongside the prescribed fee is expected to be submitted to the SLEWRC. Licenses may not be transferred except prior approval is sought and obtained from the SLEWRC and a licence may be renewed after expiration following an application made to the SLEWRC.
LAND ACQUISITION AND OWNERSHIP RIGHTS
Under the Act, the Minister of Energy may order for the compulsory acquisition of private land or rights over private land to be used by the EDSA or EGTC after adequate compensation has been paid to the initial owner of the land. However, the EDSA and EGTC may be required to refund such compensation earlier received by the initial owner of the land, to the government in addition to incidental costs, where necessary.
INCENTIVES AND FISCAL POLICIES
The electricity sector in Sierra Leone offers several incentives to foreign and local investors seeking to undertake investments in the sector. They include: Goods and Service tax of 15%, VAT and Import duties exemptions, etc.
COMMERCIAL FRAMEWORK
Electricity tariffs in Sierra Leone are highly subsidized, due to the high cost of imported fossil fuels (either coal or oil) used for power generation. The average tariff rate sits at $1.06 kWh. The tariff methodology employed is the division of the aggregate cost of transmission and distribution and assigned to the customer classes. Each tariff is designed to recover the portion of costs assigned to each customer class. In June 2022, the SLEWRC approved a new tariff rate for the electricity sector which became effective on the 1st of July, 2022. Additionally, for mini-grids, the different mini grid developers have varied approved rates across the classes of customers.
INVESTMENT BENCHMARKS
Aggregate Technical Commercial &Collection (ATC&C) losses/system losses, metering, billing, and collection are established investment benchmarks in Sierra Leone.
FINANCING FRAMEWORK
Funding in Sierra Leone’s electricity sector is mostly secured and provided by international financial organizations such as the International Finance Corporation; and local commercial lenders which operate based on the principles of equity.
PROJECTS AND TENDERS
Project bids are displayed on the official website of the Ministry of Energy in Sierra Leone. Bidding is conducted through the International Competitive Bidding (ICB) procedures in accordance with the Sierra Leone Public Procurement Act of 2016 and its complementary regulations and manual. Bidding is open to all eligible Engineering Procurement and Construction (EPC) contractors.
INVESTMENT LAWS, FOREIGN PARTICIPATION AND LOCAL CONTENT
The regulatory framework for electricity in Sierra Leone is regarded as being conducive for investment. A company may be considered wholly foreign-owned and certain incentives exist for investments in what the government of Sierra Leone considers to be “pioneer industries”, such as solar energy.
CHALLENGES AND OPPORTUNITIES IN THE ELECTRICITY SECTOR
| Challenges | Opportunities |
| Seasonal Variation | · Investment in Off-grid solutions and biomass technology for rural electrification
· Investment in energy storage technology to manage system resilience and supply needs during off-peak generation seasons |
| Inadequate Transmission and Distribution Networks | Promote financing in transmission and distribution networks and overall grid infrastructure |
| Lack of Private Sector Investments | Encourage private participation in the electricity sector via the promotion and implementation of an enabling legal, regulatory, policy and fiscal environment |
| Absence of an Enabling Legal Framework for electricity generated from Renewable Energy (RE) sources | Create an efficient Legal Regulatory and Policy Framework for RE investment and deployment |
REFORM INITIATIVES
- The Sierra Leone Electricity and Water Regulatory Commission (SLEWRC) was established in 2014
- The National Power Authority (NPA) was unbundled into the Electricity Generation and Transmission Company (EGTC) and the Electricity Distribution and Supply Authority (EDSA) in 2015.
- The Sierra Leone Rural Renewable Energy Project (RREP) was developed in 2017.
- Millennial Challenge Corporation donation towards reforming the electricity sector in Sierra Leone.
- The Minister of Finance, Sheku Fantamadi Bangura, on 31st January 2023 signed a $75-million-dollar loan financing agreement with the World Bank for the Installation of a 40MW Solar plant and backup battery system in Sierra Leone.
DISPUTE RESOLUTION AND JUDICIAL STRUCTURES
Utility service providers in Sierra Leone have panels that address complaints relating to electricity matters. After complaints have been filed to the panel of the utility service provider in question, investigations are initiated by the panel, and the complaints are resolved by same. Where unsatisfied, claims can be channeled to the Commission and where still unsatisfied, the complaint can be referred to the Consumer Service Committee for a formal hearing, following which a report by way of recommendations will be given to the Commission for a final determination to be made on the matter.
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This document titled the “Legal and Regulatory Factsheet” of the referenced country is not expected to form the basis of, or be construed as standard legal advice; nor should any of its contents and representations be strictly relied upon for any activities. Electricity Lawyer (EL) will not be liable for decisions whatsoever that are made based on the contents of the document.
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[1]All source referencing is contained in our Legal and Regulatory Briefs per Country. The Glossary of Terms referenced in this factsheet can be found in our Glossary of Industry Terms.