West Africa Regional Energy Trade Development Policy Financing Program

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The Development Policy Financing (DPF), in the form of an International Development Association (IDA) credit of US172.5 million dollars equivalent and IDA grant of US127.5 million dollars equivalent, is the first in a series of two programmatic single-tranche DPFs with the objective of sustainably increasing regional electricity trade in the six participating countries, with spillover effects for all member countries of the Economic Community of West African States (ECOWAS). The DPF instrument will support the implementation of a common set of policies and reforms that the ECOWAS countries have determined as key for cementing the pillars of sustainable electricity trade, contained in ECOWAS Directive C-DIR-2-12-18 on the Securitization of Cross-Border Power Trade Under the Regional Electricity Market (Directive). The Directive was adopted in December 2018 and became effective in January 2020. Increased trade will achieve three objectives: (i) it increases supply options for a utility and therefore increases supply resilience; (ii) it will enable regional indigenous resources to displace fossil fuel imports and will thus reduce the vulnerability of economies to international oil and gas price fluctuations; and (iii) result in cost reductions which reduces the burden of the sector on the fiscal accounts. While this program was not developed in response to the Coronavirus Disease 2019 (COVID-19) pandemic, maintaining secure strategic electricity supplies is fundamental at this time for healthcare, communication and education services. In addition, the program supports a set of reforms that will deliver on a more efficient regional power market that can contribute to job creation in the recovery phase of the pandemic, and it complements over US5 billion dollars of investments made in regional infrastructure over more than a decade.