A potential solution to The Gambia’s energy crisis

By James Orehmie Monday

I have for some time now deliberately stayed away from and out of public commentary on national development matters, primarily because I believed I had said enough in the past and that I had nothing new to add. I don’t believe in talking just for the sake of talking. I have spent this time listening to and reading from others, and in the process, I have learnt a lot more.

However, I now find myself unable to restrain myself in the on-going national debate surrounding the extensive power cuts the country is experiencing, particularly since I came across the comedic skit last week, that I shared earlier today, that so perfectly, and with good and clever humour, captured the issues. So, folks, here goes. I must chime in now, and as always, with boring details. This is not meant to serve as a criticism of the government but a contribution to the on-going debate with a potential solution.

The Gambia has been in a perpetual energy crisis since the late 1970s. This is the predictable result of decades of financial mismanagement, poor governance, and a structural mismatch between what Nawec costs to operate and what it is able to charge. The National Water and Electricity Company, the sole provider of electricity, water and sewerage in this country, is a net importer of power that is almost making it technically insolvent. It carries over D10 billion in accumulated debt, posted a D1 billion net loss in the first half of 2024 alone, and is currently operating with available supply of around 51 megawatts against a peak demand of approximately 111 megawatts, minimum. That is a gap of over 60 megawatts, and it is why the lights go out.

I have spent considerable time over the past week researching and analysing this crisis in depth, drawing on National Audit Office reports, IMF and World Bank assessments, SOE Commission data, and international comparisons. What follows is a summary of my findings and, more importantly, my proposed solution.

The scale of the problem
The technical challenges are complex. Let me try to summarise them here as I understand them to be, and as simply as I can.

Nawec subcontracted its operations and maintenance to a local company. The total combined generation capacity at both Kotu and Brikama plants is about 60mw and is now down to only about 11mw max, due to on-going maintenance.

The Soma solar park has a current 50mw capacity and is only available during the day. So, at night when demand is highest, the output from the solar plant is down to zero.

For many reasons, including high operatiing costs at Kotu and Brikama plants, Nawec’s strategy to meet peak demand has been to be a net importer of power. The power purchase agreements (PPA) with Senegal are for 50mw and 30mw from Guinea. However, due to demand issues in their own countries, Nawec is only able to get 40mw max from Senegal and Guinea combined.

To be a net importer of power, Nawec should have maintained a base load from Kotu and Brikama, for the emergency it now finds itself in. However, due to some issues with the O and M contract, that emergency base load is down by 49mw (60mw-11mw).

Hence during peak periods when the demand is highest (i.e. at night) only about 51mw (11Mw from Kotu and Brikama, combined and 40MW imported from Senegal and Guinea, combined).

The peak demand is about anywhere from 110mw upwards. So, 51mw is available, when at least 111mw is required, hence the current extensive loadshedding, given this 60mw gap/shortfall.

The financial issues are also complex. Nawec owes US$19.6 million to Karpowership (the Turkish floating power plant whose contract was finally terminated in May 2025), and more to others. The government itself owes Nawec D248 million in unpaid electricity bills. These numbers are all available from publicly available open sources.

The tariff was frozen for nine years, from 2015 to 2023. When it was finally raised by 37%, it was still not enough to cover costs. Nawec charges USD 0.24 per kilowatt-hour, among the highest tariffs in the world, yet still cannot break even. Why? Because it pays its power suppliers in US dollars and CFA francs while collecting revenue in Dalasi, with no contractual protection against currency movements. In 2024 alone, exchange rate shifts added approximately D796 million to Nawec’s bills, absorbed entirely as a loss.

The economic consequences extend well beyond the electricity bill. Unreliable power costs African economies between 1 and 6 per cent of GDP annually. For The Gambia specifically, system losses are estimated at the equivalent of 5 per cent of GDP every year roughly USD 138 million destroyed annually. Electricity shortages reduce the likelihood of high-skilled job creation by 35 to 41 per cent and self-employment by 32 to 47 per cent. Tourism, which contributes 20 per cent of GDP and 15 per cent of employment, is directly hurt by unreliable power supply. Every business running a generator is paying three to five times the grid tariff for power that should be affordable and reliable.

My proposed; a six-pillar reform plan
Incremental fixes have failed. What is needed is a comprehensive, one-time reset. I am proposing a six-pillar reform programme built on the following principles.

Pillar 1: Restructure Nawec as a commercially disciplined public company. Nawec should remain state-owned, but it must be transformed, corporatised so that it operates under commercial and financial discipline, free from debt and unsustainable contractual legacy issues. This means separating electricity, water and sewerage into distinct cost centres with their own accounts, adopting international financial reporting standards, and revising Nawec’s mandate to require cost recovery as a minimum standard. This would allow and free the technical experts to develop the engineering, operational and maintenance solutions to Nawec’s problems.

Pillar 2: Transfer all Nawec’s existing debt to a ring-fenced Government Bad Debt/Assets Fund, once, and permanently. This is the heart of the proposal. Every dalasi of Nawec’s accumulated debt, the on-lent loans, the supplier arrears, the domestic balances, is transferred to a self-standing government fund and legally severed from the new Nawec. The fund is managed transparently by the Ministry of Finance, reported to the National Assembly quarterly, and wound down over an agreed timeline. Critically, a hard legislative firewall prevents any future Nawec liabilities from being added to the fund. This is not a bailout. It is a one-time surgical separation of a legacy crisis from a viable future.

Pillar 3: Recapitalise the new Nawec with one full year’s operating and maintenance budget. A clean balance sheet without working capital is still a paralyzed company. The new Nawec needs approximately D8 to D9 billion (USD 130 to 150 million) injected as equity not as debt to pay suppliers on time, operations and maintenance costs, and invest in generation and the network from day one.

Pillar 4: Reappoint same management and board. I believe the current management team and the board are competent, and can lead Nawec going forward under this new arrangement, as it will empower them with the right tools and free them from the legacy debt, contractual and technical issues, that are currently preventing them from taking the utility to the next level.

Pillar 5: Put the management and board under a stricter, legally binding performance contract tied to delivery of sequential five-year operational plans and real consequences for not meeting targets. Targets must be specific and measurable: reliability improvements, loss reduction from 25 per cent to 15 per cent, collection rates rising from 75 to 95 per cent, renewable energy growth, increased domestic generation, reduced net importation, and operating cost recovery within three years. Quarterly performance reports must be published publicly.

Pillar 6: Amend Pura’s Act to give the regulator real independence and real enforcement powers. Pura, the public utilities regulator, needs to be strengthened by law. Specifically: mandatory disclosure obligations for Nawec with financial penalties for non-compliance; independent audit powers; and a protected funding mechanism so Pura cannot be financially pressured by the government it is supposed to regulate independently. Critically, Pura should be empowered going forward to direct the Ministry of Finance to deduct unpaid Nawec bills directly from the budgets of defaulting ministries. If the government owes Nawec money, it should be collected automatically.

The economic case
This is not simply a utility problem. Reforming Nawec is the single highest-return economic infrastructure policy action available to The Gambia right now. A reformed, reliable Nawec would: eliminate annual government transfers; generate an additional 0.5 to 1.0 per cent of GDP growth annually; directly support the tourism and manufacturing sectors, significantly improve the invest climate, attract foreign direct investment; unlock job creation that is currently suppressed by power shortages; and increase tax revenues as businesses expand and grow. The World Bank reports estimate The Gambia will need USD 11 billion in investment by 2050 to sustain growth none of that investment will materialize without reliable electricity.

The upfront cost of recapitalisation D8 to D9 billion is recovered within five years through the elimination of emergency transfers and the GDP growth premium alone. This is a fiscal investment, not a fiscal burden.

The immediate next steps I am proposing
First, the Government should start by preparing a full package of reform documents for stakeholder consultation and cabinet adoption. The package should include a detailed policy paper for this reform agenda, the first five-year operational and maintenance plan for the recapitalised Nawec, a draft performance contract, and draft amendments to the Pura Act. These documents should be consulted upon openly, with civil society, the private sector, the National Assembly and all other stakeholders before Cabinet adopts them as official policy.

Second, once that package is ready, the Government should convene a high-level roundtable with the IMF, the World Bank, the African Development Bank, the EU, and all relevant development partners to present the plan and agree the financing and institutional arrangements needed to operationalize it within twelve months. These discussions should be government-led and government-owned, not a response to donor conditionality, but a confident presentation of a fully worked-out national reform agenda and plan.

A note on public debt
I am aware that some will ask whether the Bad Debt/Assets Fund adds to The Gambia’s public debt. The honest answer is: the debt already exists. It is sitting as a hidden contingent liability in government guarantees, emergency transfers and Nawec’s balance sheets. Making it explicit, capping it, and putting it on a managed wind-down schedule is not a worsening of the debt position, it is the responsible act of bringing a growing liability into the open.

The IMF’s own debt sustainability framework already models SOE contingent liabilities as a shock of up to 8.7 per cent of GDP. Nawec is the single largest source of that risk. The reform eliminates that risk and the five-year fiscal dividend of D10 to D15 billion in cumulative savings more than offsets the recapitalisation cost over the medium term.

The energy crisis in The Gambia is solvable. The solutions are not exotic — they have been implemented successfully in South Africa, Malawi and Senegal, and other countries. What is required is political will, a credible plan, and the right partners around the table. I believe we have all three within reach.