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Liberia’s Infrastructure: A Continental Perspective

Africa Infrastructure Country Diagnostic: a multi-stakeholder effort

Banque Africaine de Developpement

African Union Agence Française de Développement

Development Bank of Southern Africa

Department for International Development

European Union The Infrastructure Consortium for Africa

Kreditanstalt für Wiederaufbau The New Partnership for Africa’s Development

Public-Private Infrastructure Advisory Facility

Sub-Saharan Africa Transport Project The World Bank Water and Sanitation Program

Methodology and approach

Methodology Data collection by local/international consultants and Bank staff

from national sources based on standardized methodology Baseline year for data is 2007-2008

Approach Focus on benchmarking Liberia’s infrastructure against African

neighbors Benchmarking group includes Resource-rich countries, Low

Income Non Fragile (LIC-Non Fragile), West African neighbors, and regional outliers

Why infrastructure matters?

Across West Africa ICT has been a significant boost to growth, while power has been a drag

Changes in growth per capita due to changes in infrastructure (2001-5 vs. 1991-5)

Addressing infrastructure deficiencies could boost West African growth by 2 to 5 percentage points

Potential changes in growth per capita from improving infrastructure to level of African leader (Mauritius)

Key Message #1

Road spending is not adequate to rehabilitate and

maintain deteriorated network

Traffic concentrated along mining corridors that converge on city of Monrovia

Benchmarking indicates poor condition and low paving, alongside relatively high density and low traffic

  Unit LIC-Resource

RichLiberia

LIC-Non Fragile

Classified road density

Kms per1,000 km2 land area 57.1 101.4 55.9

Paving ratio % of primary network paved 82.1 39.4 71.6

GIS Rural accessibility

% of rural pop within 2 km from all-season road

19.7 23.7 34.1

Paved road traffic Average Annual Daily Traffic 1,408.2 573.9 1,287.7

Unpaved road traffic

Average Annual Daily Traffic 54.2 17.1 38.5

Classified network condition

% in good or fair condition 79.9 60.0 86.2

Over-engineering% of main road network

over-paved relative to traffic15.0 32.2 29.6

Maintenance and rehabilitation needs of main road network are seriously under-funded at present

Optimal fuel levy would be very high suggesting need for a hybrid approach to maintenance funding

Liberia is already making a significant effort on road sector spending

The key objective is connectivity, which can be achieved at a variety of different standards

Base scenario Pragmatic scenario

Main roads

(regional)

Regional connectivity provided by

800kms of 2-lane paved roads

of which 100% in good condition

Same but with 50% in good condition and

50% in fair condition

Main roads

(national)

National connectivity provided by 1,500kms of 1-lane paved roads

of which 100% in good condition

Same but with 50% in good condition and 50% in fair condition

Feeder roads Rural connectivity provided by 5,700kms of 1-lane unpaved road

of which 100% in good condition

Same but with 50% in good condition and 50% in fair condition

Urban roads Urban connectivity provided by 4,300kms of paved roads putting entire population within 500m of a paved road

of which 100% in good condition

Urban connectivity provided by 1,700kms of paved roads putting entire population within 500m of a paved road of which 50% in good

condition and 50% in fair condition

Cost implications of alternative standards can be very high – a factor of two to one

US$m pa for 10 years Investment O&M Total

Improve Expand Upgrade Total

Base scenario

Main roads 4.9 45.5 0.0 50.5 16.2 66.6

Feeder roads 11.2 11.5 0.0 22.7 11.2 33.9

Urban roads 2.8 11.4 63.6 77.8 9.9 87.7

Other modes 2.2 4.0 0.1 6.2 3.1 9.3

Total 21.1 72.4 63.7 157.1 40.4 197.5

Pragmatic scenario

Main roads 1.6 28.0 0.0 29.6 14.1 43.7

Feeder roads 1.3 3.7 0.0 5.0 12.7 17.7

Urban roads 2.8 9.8 8.2 20.8 9.9 30.7

Other modes 2.2 3.4 0.0 5.6 1.8 7.4

Total 7.9 44.8 8.3 61.0 38.5 99.5

Road freight transport is particularly slow and expensive in West Africa

CorridorLength (kms)

Road in good condition (%)

Trade density

(US$m per km)

Implicit velocity(km

/hr)

Freight tariff ($US/tonne-km)

Western 2050 72 8.2 6.0 0.08

Central 3280 49 4.2 6.1 0.13

Eastern 2845 82 5.7 8.1 0.07

Southern 5000 100 27.9 11.6 0.05

Key Message #2

Freeport of Monrovia now performing quite well by

regional standards

Benchmark indicates Freeport of Monrovia performing relatively efficiently

 Monrovia Cotonou Abidjan Tema Apapa Dakar Lome

TRAFFICContainers (‘000 TEU/yr) 50 158 500 420 336 331 460 General cargo (mn tonnes/yr) 0.6 1.1 na 7.9 3.4 6.1 naEFFICIENCYContainer dwell time (days) 15 12 12 25 42 7 13

Truck processing time (hrs) 5.5 6.0 2.5 8.0 6.0 5.0 4.0

Vessel pre-berth waiting (hrs) 3 48 3 9.6 36 24  Vessel stay (hrs) 3 48 2 48 41 60  Container crane productivity (containers/hr)

  18 13 12    

General cargo crane productivity (tonnes/hr)

16 15 16 14 9   23

CHARGESContainers (US$/ TEU) 200 180 260 168 155 160 220

General cargo (US$/tonne) 10.5 8.5 13.5 10 8 15 9

Key Message #3

Resurgence of air traffic, but safety and security

issues remain a concern

Liberia’s air transport market is small but competitive, but striking lack of renewal of fleet

Air transport activity rebounded following collapse of regional carriers in early 2000s

Key Message #4

Need to consider low cost solutions to address huge

challenge of achieving WSS MDGs

Low dependency on surface water but over half of the population practices open defecation

UnitResource

RichLiberia LIC

Non-FragileAccess to piped water % popn 12.0 2.9 10.5Access to stand posts % popn 12.6 6.8 16.2Access to wells/boreholes % popn 49.0 76.2 38.3Access to surface water % popn 23.7 14.4 37.4Access to flush toilets % popn 1.6 13.4 4.9Access to improved latrines % popn 6.4 14.9 9.9Access to traditional latrines % popn 54.8 15.5 50.1Open defecation % popn 27.6 55.8 40.3

Domestic water consumption liter/capita/day per population served

90.3 55.7 95.7

Revenue collection % sales 69.7 75.0 92.7Distribution losses % production 43.6 28.8 34.3Operating cost recovery % total costs 55.6 100 110Connections per employee number 95.7 195.5 158.6Total hidden costs % revenue 286.7 123.9 121.4

TARIFFS LiberiaScarce Water

Resources

Other developing regions

Residential tariff (at 10 m3) US cents per m3 44.5 60.3 3.0 – 60.0Non-residential tariff (at 100 m3) US cents per m3 221.3 120.7

No progress on open defecation during the last 20 years, major slump in piped water

Demographic and Health Surveys NationalCensus 20081986 2000 2007

WaterPrivate tap 14.6 2.5 2.9 2.4Public or shared tap 22.4 13.2 6.8 46.0Protected wells 19.1 47.3 58.7 11.7Unprotected wells 13.8 28.1 17.5 12.4Surface water 30.1 28.1 14.4 27.5Improved water 56.1 63.0 68.4 60.1Unimproved water 43.9 37.0 31.9 39.9

SanitationFlush toilets 15.2 17.0 13.4 13.5Improved latrines 11.7 13.6 14.9 21.1Unimproved latrines 32.7 16.2 15.5 8.4Open defecation 40.2 50.4 55.8 57.1Improved sanitation 27.0 30.6 28.3 34.6Unimproved sanitation 72.9 69.4 71.3 65.5

Water hidden costs at 124% of revenues are towards middle of West African range

Costs of meeting WSS MDGs is very sensitive to choice of technology for service provision

Mns USD pa Capital expenditure of which: Operations and

maintenance

Grand

total

Expansion Rehabilitation Total

Base scenario

Water 33.6 18.2 51.7 22.7 74.4

Sanitation 23.6 6.6 30.1 17.1 47.2

Total 57.1 24.7 81.8 39.8 121.6

Pragmatic scenario

Water 10.5 18.2 28.6 16.3 45.0

Sanitation 16.2 6.6 22.7 9.7 32.4

Total 26.6 24.7 51.4 26.0 77.4

Key Message #5

Urgent need to slash power costs and expand capacity as a

precursor to raising access

Notable lack of power infrastructure, planned interconnections will play key role

  Unit Resource Rich

Liberia LIC-Non-Fragile

Installed power generation capacity MW/mil. people 43.2 2.7 20.2 Power consumption kWH/capita 205.7 87.0 107.4Power outages Day/year 14.5 12.7 10.4 Firms’ reliance on own generator % consumption

44.9 97.1

21.2

Firms’ value lost due to power outages % sales 7.0 2.9 6.5 Access to electricity % population 46.1 0.0 15.0Urban access to electricity % population 79.4 0.0 57.6 Rural access to electricity % population 28.0 0.0 3.9 Growth access to electricity % population/year

2.4

0.8

Revenue collection % billings 81.1 93.0 93.1 System losses % production 25.8 24.8 23.7 Cost recovery % total cost 53.9 55.8 84.4 Total hidden costs as % of revenue % of revenue 168.3 186.7 68.8 Effective power tariff (US cents) Liberia Mainly thermal Other

Developing Regions

Residential at 100 kWh/mo. 43 14.5 5.0 – 10.0   

Commercial at 100 kWh/mo. 43 18.8Industrial at 50,000 kWh 43 14.2

Exceptionally low generation capacity and access, exceptionally high prices and even higher costs

Liberia’s hidden costs of power are relatively high by regional standards

Liberia’s power prices are the highest in Africa

Average effective tariff (US cents per kWh)

Power costs in Liberia can be expected to fall substantially in medium term

Operating subsidy

Capital subsidy

Depending on extent of demand growth needs vary from US$122 to US$243 mn pa

US$m pa for 10 years Low Demand

140MW by 2020

High Demand

280MW by 2020

Investment 85 159

Generation 48 121

Transmission & distribution 37 37

Operations & maintenance 36 85

Generation 31 80

Transmission & distribution 5 5

Overall total 122 243

Generation 79 201

Transmission & distribution 43 43

Note: Generation costs taken from World Bank, 2010

Though currently experiencing shortages, medium term power prospects are strong in Cote d’Ivoire

Currently WAPP’s largest power exporter supplying 1.8 TWh to Burkina Faso and Ghana This is already much more than Liberia’s maximum projected

demand of 1.2 TWh in 2020

Continued to honor power export contracts during recent crisis period 2003/07

Significant hydro and gas resources available with relatively low LRMC US$0.07/kWh

Gas reserves limited but ability to tap into Ghana and Nigeria via West Africa Gas Pipeline extension

Strong track record of financing investment in power generation through IPPs (circa 500 MW to date)

Guinea is the ‘sleeping giant’ of the WAPP, but major challenges remain to be overcome

WAPP’s largest potential power exporter with possibility of supplying 17.4 TWh into regional pool This is more than ten times Liberia’s maximum projected demand

of 1.2 TWh in 2020 by 2020

Based on development of 3,700 MW of cost-effective hydro-power with lowest LRMC in WAPP: US$0.06/kWh

Cost of developing power very high relative to Guinea’s economy (>20% GDP) would entail regional finance

Difficult political situation and weak track record on power are additional challenges

A long term vision of regional power trade?

Key Message #6

Huge strides on GSM, next frontiers are internet

connectivity and rural access

GSM coverage developing rapidly, imminent access to submarine cable

Mobile footprint has grown at a much slower pace than GSM penetration

Benchmarking indicates strong level of mobile penetration and exceptionally low calling costs

Source: Preliminary results AICD 2008

  Unit Resource Rich Liberia

LIC Non- Fragile

GSM coverage % population 66.9 32.0 42.4International bandwidth Mbps/capita 4.1 0.1 3.0Internet penetration subscribers/100 people 0.1 1.0 0.1Landline penetration subscribers/100 people 19.3 0.1 7.5Mobile penetration subscribers/100 people 11.4 34.0 6.4

Prices Unit

Liberia

Without Submarine

Cable

Other Developing

RegionsMobile basket US$/month 5.2 11.1 9.9Fixed line basket US$/month 13.620-hour Internet package US$/20 hours 140.0 68.0 11.03-min call to US US$/3 min 2.6 2.0Inter-Africa tel. calls US$, mean price 0.7

High international call charges driven both by technology and market power

US$ Percent cases

Call within SSA

Call to USA

Internet dial-up

Internet ADSL

Without submarine cable 67% 1.34 0.86 68 283

With submarine cable 33% 0.57 0.48 47 111

monopoly on international gateway 16% 0.70 0.72 37 120

competitive international gateway 16% 0.48 0.23 37 98

Significant potential for private expansion of GSM coverage, but high coverage gap

Key Message #7

For Liberia to catch-up on infrastructure within a decade

would take spending of US$350-600 million annually

Economic target Social target

ICT Install fiber optic links to neighboring

capitals and submarine cable Provide universal access to GSM signal

and public broadband facilities

Power Develop 280 MW of new generation

capacity plus WAPP inter-connection Raise electrification to 66 percent

(100 percent urban and 6 percent rural)

Transport Achieve regional (national) connectivity with good quality 2-lane (1-lane)

paved road

Provide rural road access to 80 percent of the highest-value agricultural land, and urban road access within 500 meters

WSS Na.

Achieve Millennium Development Goals, clear sector rehabilitation backlog

Possible infrastructure targets over next ten years

$ mn/yr Capital O&M Total

ICT 31 14 45

Power 159 85 244

Transport 157 40 197

WSS 82 40 122

Total 429 179 608

To meet these targets based on conventional standards would cost US$600 mn pa for a decade

$ mn/yr Capital O&M Total

ICT 31 14 45

Power 79 43 122

Transport 61 39 100

WSS 51 26 77

Total 222 122 344

A more pragmatic set of standards would bring the cost down to US$344 mn pa overall

Even more pragmatic standards represent a huge burden relative to Liberia’s economy

Key Message #8

Liberia has been spending around US$90 million per year on

infrastructure (around 10% GDP)

Existing financing flows to Liberia, (average over 5 year period US$ million per year)O&M Investment Total

Public Public ODA Non-OECD PPI Total Investment

ICT 2 0 0 1 17 18 19

Power 7 1 13 1 0 15 23

Transport 7 6 26 1 0 33 39WSS 2 2 5 0 0 7 8

Total 16 9 44 2 17 72 90

Recent infrastructure spending has been US$90 mn pa, most investment is either ODA or PPI

ODA commitments increased in recent years

Existing infrastructure spending is fairly typical though more skewed towards investment

Key Message #9

Liberia could recover a further US$17 million annually by

addressing various inefficiencies

Inefficiencies absorb (at most) US$17 mn pa, most of it associated with under-pricing of services

US$ million ICT Power Transport WSS Total

Over manning 0.7 0.0 0.7

Losses 0.8 1.0 1.8

Under-collection 0.6 0.6 1.1

Budget Execution 0.0 0.2 0.0 0.3 0.5

Tariff Cost Recovery 2.3* 9.0** 1.7 13.0

Total 0.0 4.5 9.0 3.6 17.1

* Divides almost equally between capital and operating subsidy** Assumes maximum cost recovery fuel levy of up to US$0.25/liter

Operational inefficiencies are relatively low compared with the benchmarks

Under pricing of water and power adds up to 0.5 % of GDP, still low by regional standards

Unlike water, power will only become widely affordable in medium term as costs decline

Based on illustrative five person household on US$1 per capita per day

Affordability threshold Affordability threshold

Key Message #10

Liberia’s funding gap is at least US$250 million per year

Depending on ambition of targets funding gap ranges from US$250 to US$500 mn pa

US$m pa ICT Power Transport WSS Total

BasicNeeds (45) (251) (198) (122) (615)Spending 19 23 39 8 90 Potential gains 0 5 9 4 8 (Gap) (25) (224) (149) (110) (508)

Pragmatic

Needs (45) (122) (100) (77) (344)Spending 19 23 39 8 90

Potential gains 0 5 9 4 8

(Gap) (26) (94) (52) (65) (246)

While gap is daunting, progress can be made by thinking strategically about infrastructure

External finance is on the rise in Liberia Strong performer on PPI and FDI Growing support from OECD and other partners

Many large scale natural resource deals in the pipeline Potential source of fiscal revenues for infrastructure Could contribute directly to infrastructure provision

Growth vision centered on corridors provides solid basis for prioritization of investments

Prospects to further reduce costs in medium term through greater regional trade in WAPP area

Liberia has done relatively well so far at capturing private infrastructure investment; albeit only for ICT

Note: PSP annual disbursements to Ghana, 2002-2007 annual

Absent any increase in spending achievement of targets will be several decades away

Since the peace, there have been signs of renaissance in Liberia’s infrastructure Major expansion in mobile penetration at very low pricesFree Port of Monrovia is performing relatively well Reasonably efficient power and water utilities

Looking ahead, key infrastructure challenges are Expanding power generation capacity to reduce costs Putting in place a sustainable basis for funding road maintenanceAddressing deficit in sanitation

In a nutshell: cross-sectoral findings

Redressing infrastructure situation would cost US$350-600 mn. pa (depending on type of standards set)

Recent infrastructure spending has been US$90 mn. pa (or 10% of 2009 GDP)

A maximum of US$17 mn. pa could be captured by addressing inefficiencies, especially road user charging

If inefficiencies were captured the funding gap would amount to US$250-500 mn. pa

Although daunting relative to today’s GDP, there are reasons to be hopeful and a definite need to be strategic

In a nutshell: Financing framework