There are 8 thermal power plants in Ghana which can generate electricity from gas and, in the absence of gas, from light crude oil or diesel. If properly serviced and fueled, these plants can contribute 1300 MW steadily to our national grid (the government-owned hydro plants can add roughly 700 MW even at low capacity such as right now) and more or less help meet current demand. Nearly half of this thermal power is generated by fully private owned entities or private sector-led joint ventures with government.
Apart from the Government’s own VRA, and the SSNIT-owned CENIT, there are two other very critical players. These are private investors in the Ghanaian electricity sector, TAQA and Sunon Asogli, who between them contribute more than 500 MW of the 1300 MW mentioned above.
TAQA and Sunon Asogli raised the more than $500 million needed for these investments from overseas funds, among them the FMO, AFD, OPEC Fund, IFC, China-African Development Fund, and other really credible Development Finance Institutions (DFIs). Both companies, as well as others such as Cenpower, have been in the market for a while now justifying to investors why another $1 billion is needed to add 1000 MW of power to the Ghanaian grid as soon as possible.
An additional 1000 MW of power will more or less replace the highly unreliable hydro segment of our current electricity generation mix. Needless to say, that will *indeed* end dumsor, and even create a surplus for export (at least 700 MW from the three main hydro plants). Sunon Asogli has been working on this for 4 years now, and TAQA for 2 years. CENPOWER has been chasing funds for about a decade.
One major reason why raising funds to pay for this fairly credible prospect of 1000 MW of fresh power is the fact that a good chunk of the 1300 MW power that is *already* available to be delivered to homes and workplaces in Ghana doesn’t get paid for on time. In fact, the government-owned company that buys virtually all this power, ECG, owes the producers about $500m. This leads to lack of fuel and other inputs, and poor servicing, which in turn reduces how much in practice gets generated on a day to day basis. Consequently, it takes a lot to convince investors to put up the necessary cash when existing players are owed so much money.
This is the simplified context of the current power crisis. If you were the government, what would you do? Wouldn’t you, in your search for solutions, call the 4 main players in the sector – VRA, TAQA, Sunon Asogli, and CENIT – and give them even half the concessions currently being promised the likes of Ameri Energy and Karpower to encourage them to:
A. Produce at full capacity, and thereby reduce the average shortfall accounting for the worst of the load-shedding from about 600MW to about 250 MW?
B. Add an additional 300 MW in output, just like TAQA added 110MW to the Takoradi T2 plant within a year based on revamped terms with the government?
Why would you go and engage a whole set of new characters with dubious track records in supplying energy and pay through the nose for this ’emergency’ power that takes as long as ‘routine’ power to come on-stream?
AND WHY WOULD YOU COMMIT $1.5 BILLION OF OUR SCARCE RESOURCES OVER 5 YEARS TO GENERATE 600 MW YEARLY when with 20% of that amount you can spur the private sector to GENERATE 1000 MW?
CREDIT: Bright Simons
Employment and Labour Relations Minister, Haruna Iddrisu, says any attempt to reverse the increased utility tariffs and new taxes will negatively affect government’s ability to fix the energy crisis. According to him, there is an outstanding debt of some 4.5 billion cedis which needs to be settled hence government’s decision to introduce the new Energy Sector levy. The levy has caused an increase in petroleum prices by up to 27% compounding the effects of recent increases in utility tariffs.
In an interview with Citi News, after a meeting with Organized Labour over the tariffs which ended in a deadlock, Haruna Iddrisu explained that these are bitter pills that ought to be swallowed to improve the energy situation. “It is important that the Ghanaian public appreciates why Government has had to take those difficult but necessary decisions to stabilize the economy and to fix the energy crisis and to prevent it from relapsing into a deeper crisis. Government currently has an outstanding debt which was part of the report the Minister of Finance submitted to Parliament which are all within the energy sector. And therefore the energy sector levy introduces among others a price stabilization adjustment which will allow government to deal with the 4.5 billion outstanding debt” he argued. Ghanaians have described the recent fuel prices increases as harsh and insensitive considering that crude oil prices on the world market have been at its lowest in recent times, and that there cannot be a fair justification for the hikes.
The Public Utilities Regulatory Commission’s announcement of an increase in electricity and water tariffs by 59.2% and 67.2% respectively, forced the meeting between government and organized labor which demanded a reduction. PURC had earlier met with the TUC and the Consumer Protection Agency over the matter. Secretary General of the Trades Union Congress, Kofi Asamoah said “organized labor reiterated our position of asking for reduction in the prices of the utility levels that were announced recently. Government also tried to do some explanations as to why there was the need for the utility hikes.” “Beyond that, labour also took a position on the newly introduced energy sector levies. First of all we made it clear that they were undemocratically rushed through Parliament and there were no public consultations held and that it’s going to worsen the plights of Ghanaians. Government tried to also justify why they needed such taxes raised,” he added. Mr. Kofi Asamoah however added that the meeting “did not really conclusively agree on any principle except some specific issues that were raised and we are supposed to meet again,” adding that “we are not happy about the outcome of the meeting.”
By: Ebenezer Afanyi Dadzie/citifmonline.com/Ghana