Power generation and its impact on electricity tariff : a case study of Sierra Leone
Electricity tariffs are generally high in African countries, but a significant share of it is due to inefficiencies in power generation and supply. This work looked at a case study of the Sierra Leone national utility's power generation and its impact on the tariff system. Sierra Leone is a relatively small country along the west coast of Africa. It is one of the least developed countries in the world, but its electricity tariffs are one of highest in Africa. This is largely due to its inefficient power generation. A significant energy input is wasted and there are high energy output losses in the system. About 10% of the energy input is lost because of poor housekeeping and operating practices. On the average 6% of the power generated is consumed by the plant auxiliaries and the station due to old and inefficient equipment. The technical and non-technical losses of the system are alarmingly high averaging about 38% in recent years. Normally, the level of electricity rates is based on revenue requirement, which depends on the operating cost. The average electricity price in Sierra Leone in 2002 was about US$ 0.18. This high tariff is due to cost associated with the above inefficiencies, which increases the operating costs and the type and age of the generating plants. Besides, on the average there is a net decline on the generation output while operating expenses continue to increase. Using the rate-of-return methodology the tariffs were found to be well below the existing utility tariffs if the fuel is imported from the OECD countries.
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