Disruption in Sierra Leone after Turkish supplier stopped deliveries due to debts
Freetown, the capital of Sierra Leone, is suffering from electricity shortages because Turkish company Karpowership has cut off electricity due to unpaid debts of around $40 million, the country's energy minister said on Friday.
Minister Kanja Sesay told Reuters that the remaining amount "has accumulated over time, with the government subsidizing more than half of the cost that the vessel charges per kilowatt hour."
He said the government needs to spend more on subsidies because it forces consumers to pay the weak local currency, the lion, one of the worst currencies compared to the dollar it uses to pay electricity suppliers.
A government commission is set up to review electricity prices for consumers, which could double.
Karpowership, one of the world's largest floating power plant operators and a member of the Karadeniz Energy Group, signed contracts to supply electricity to the Sierra Leone State Power Company in 2018 and 2020.
The company has reached similar agreements with several African countries experiencing electricity supply difficulties.
Karpowership could not be reached for comment.
The company states on its website that it deployed approximately 65 megawatts (mW) of power generation capacity in Sierra Leone in 2020, meeting 80% of its total power needs.
Sesay said the closure of Karpowership reduced the capital's electricity supply by 13%. Electricity in the capital is currently rationed, with households and businesses without power for several hours a day.
Karpower is one of three power sources supplying the city. The other two are the national dam and electricity from the Ivory Coast interconnector, which also supplies Guinea and Liberia.
Sesay said Karpower's electricity supply is mainly needed during the dry season when the water level in the dam is low. During the rainy season, dependence on the company decreases. The country is currently experiencing the main rainy season from May to November.
The situation in Sierra Leone regarding the electricity blackout caused by Karpowership's discontinuation of power supply over an unpaid debt of approximately $40 million is a significant issue that has multiple underlying factors. Such as:
Electricity Shortages in Sierra Leone: Sierra Leone has been grappling with electricity shortages for a long time. The availability of consistent and affordable electricity is crucial for the country's economic development and the daily lives of its citizens.
Karpowership's Role: Karpowership, a part of the Karadeniz Energy Group, is a company that operates floating power plants. They signed agreements in 2018 and 2020 to provide electricity to Sierra Leone's state power utility. Their contribution to the country's electricity grid was significant, supplying approximately 80% of Sierra Leone's electricity needs.
Outstanding Debt: The primary reason behind Karpowership's decision to halt the power supply was the unpaid debt of around $40 million. This debt accumulated over time, partly due to the government's subsidization of electricity costs. The government was subsidizing more than half the cost per kilowatt-hour, which was necessary because they charged consumers in the local Leone currency, which had a weak exchange rate against the U.S. dollar, the currency in which they paid the power provider.
Impact on Freetown: The capital city of Sierra Leone, Freetown, has been severely affected by the blackout. Electricity supply to the city has been reduced by 13%, leading to rationing of electricity. Homes and businesses are experiencing daily power outages, which can have adverse effects on daily life, businesses, and essential services.
Consumer Tariffs: In response to the crisis, the government has set up a commission to review consumer electricity tariffs. The possibility of doubling these tariffs is being considered. Increasing tariffs can help the government cover the cost of subsidies and outstanding debts but can also place a financial burden on consumers.
Seasonal Dependency: Sierra Leone's reliance on Karpowership is higher during the dry season when water levels at the country's hydroelectric dam are low. During the rainy season, when the dam has better water reserves, the country is less dependent on external power providers like Karpowership. This highlights the need for diversified energy sources and infrastructure development.
Regional Energy Sources: Apart from Karpowership, Sierra Leone also receives electricity from other sources, including its hydroelectric dam and interconnections with neighbouring countries like Ivory Coast. These diversified sources help ensure a more reliable energy supply, but they also underscore the importance of maintaining good relations with energy providers.
African Energy Challenges: This situation is not unique to Sierra Leone. Many African countries struggle with electricity supply due to various factors, including infrastructure limitations, financial constraints, and seasonal variations in energy production.
Sierra Leone's electricity blackout due to the discontinuation of power supply by Karpowership highlights the complex challenges faced by the country in ensuring a reliable and affordable energy supply. It underscores the need for sustainable solutions, including addressing outstanding debts, tariff adjustments, and diversifying energy sources to ensure stability in the energy sector.
