MCC Initiates Negotiations for Sierra Leone’s Proposed $480 Million Compact

By: Christian Conteh

The Millennium Challenge Corporation (MCC) has initiated steps to negotiate a Millennium Challenge Compact with the Government of Sierra Leone, as outlined in a Congressional Notification sent on April 12, 2024. This notification signifies the start of consultations with Congress before the commencement of negotiations.

Aysha House, Vice President of Congressional and Public Affairs at MCC, conveyed the corporation’s intent through the notification. The proposed compact, with a budget of up to $480,669,000, aims to address a critical constraint to Sierra Leone’s economic growth – the inadequate availability of affordable and reliable electricity.

“This notification is (1) to advise you that the Millennium Challenge Corporation (MCC) intends to start negotiations with the Government of Sierra Leone for a Millennium Challenge Compact (Compact) and (2) to initiate Congressional consultation before the start of negotiations.

The proposed $480,669,000 compact assists the Government of Sierra Leone in addressing a binding constraint to economic growth, which is insufficient availability of affordable and reliable electricity to satisfy demand among households, businesses, and social institutions,” the correspondence states.

The compact is structured around three key projects:

Transmission Backbone Project – which aims to expand Sierra Leone’s transmission network to increase coverage and reliability. It includes investments in a new transmission corridor and the construction of a national dispatch centre to enhance grid management capabilities.

Distribution and Access Project- Designed to improve the reliability and financial viability of the distribution network, this project includes refurbishment of existing infrastructure, establishment of new connections, and regularization of existing ones. It also involves the construction of distribution dispatch centres to enhance operational efficiency.

Power Sector Reform Project: This project seeks to improve the financial sustainability of Sierra Leone’s electricity sector through reforms and capacity-building initiatives. It includes support for regulatory agencies, utilities, and the Ministry of Energy to enhance governance, tariff reforms, and private sector participation.

Sierra Leone’s eligibility for the compact was confirmed in December 2023, following progress in advancing the country’s national dialogue process and implementing the Agreement for National Unity (ANU). The MCC Board reselected Sierra Leone for compact development, recognizing efforts to strengthen democratic and electoral institutions.

The proposed compact is expected to benefit approximately 4.6 million Sierra Leoneans, with an estimated 28% of beneficiaries falling below the national poverty line.

The notification underscores MCC’s commitment to supporting Sierra Leone’s economic development and addressing the challenges facing its power sector. Negotiations with Sierra Leone are set to commence 15 days from the date of the notification, marking a significant step towards realizing the goals outlined in the proposed compact.

This notification serves as the foundation for constructive engagement between MCC, Congress, and the Government of Sierra Leone as they work towards finalizing the Millennium Challenge Compact.