Liberia has launched a new reform phase in its electricity sector with support from the United States’ Millennium Challenge Corporation (MCC), as authorities seek to address structural weaknesses and prepare for a potential second cooperation compact.
Local media reported that the government initiated a diagnostic workshop on February 27 aimed at assessing key constraints in the national power system. The exercise is expected to examine high electricity tariffs, infrastructure deficits, operational inefficiencies and governance gaps that continue to hamper sector performance.
Officials say the findings will help shape future reform priorities and guide discussions toward a possible “Compact II” agreement with the MCC, following the completion of Liberia’s first compact in 2021.
The workshop brings together senior government officials, representatives of the national utility and technical and financial partners. Its conclusions are intended to inform strategic policy decisions, investment planning and institutional restructuring in the years ahead.
Liberia’s electricity sector has made incremental progress over the past decade but continues to face significant challenges. Installed generation capacity stands at approximately 126 megawatts, limiting the country’s ability to meet growing demand from households and businesses.
Supply shortages remain frequent, and the country relies partly on electricity imports through the Côte d’Ivoire-Liberia-Sierra Leone-Guinea (CLSG) interconnection a regional power exchange project designed to improve cross-border energy trade in West Africa.
At the same time, Liberia has made notable strides in expanding renewable energy. Renewables now account for 33 percent of the national electricity mix, and they have contributed roughly 70 percent of installed capacity growth since 2015, according to sector data cited in recent reports.
Hydropower remains a central pillar of Liberia’s renewable generation, complemented by smaller-scale solar initiatives. However, limited transmission infrastructure and financial constraints have slowed the pace of expansion and grid reliability improvements.
Electricity tariffs in Liberia are among the highest in the region, reflecting high generation costs, system losses and limited economies of scale. Analysts say reducing costs while maintaining financial sustainability will be a key challenge addressed in the diagnostic process.
Beyond infrastructure gaps, governance and institutional capacity have been recurring concerns. Strengthening regulatory oversight, improving operational efficiency at the national utility and enhancing cost recovery mechanisms are expected to feature prominently in reform discussions.
Despite these challenges, Liberia’s regulatory environment has shown measurable improvement. The country ranked 9th out of 43 African nations in the African Development Bank’s 2024 Electricity Regulatory Index, scoring 0.803 up from 0.628 in 2022 reflecting progress in legal and regulatory frameworks.
The MCC has previously supported infrastructure and institutional reforms in Liberia, including investments in power sector rehabilitation under the first compact. A second compact, if approved, could unlock additional funding tied to performance benchmarks and policy reforms.
For Liberia, strengthening the electricity sector is widely seen as essential to supporting economic growth, attracting investment and improving living standards. Reliable and affordable power remains a prerequisite for industrial development, small business expansion and job creation.
The ongoing diagnostic exercise marks an early but significant step in identifying priority actions to modernise the sector. Its recommendations are expected to lay the groundwork for deeper reforms and renewed external support aimed at stabilising and expanding Liberia’s electricity system in the coming years.
