As at 2013, Ghana's “dependable installed capacity” was estimated at 2,936MW which generated 12,874 Gigawatthours which was 6% higher than 2012. For the installed capacity, 53% hydro, (47% VRA; 5%, Bui); 48% thermal (36% VRA, 12% IPP) and Renewable (0.1%, VRA Solar). The installed generation mix has gone through evolution from 1965 to what is currently happening. At each phase of the evolution, the share of the generation mix reflects the level of dependency on different sources of primary energy. The generation mix has moved from hydro dominance in 1965 (hydro dominance -100%), thermal augmentation era in the 1980-1990s (80%:20% hydro-thermal), thermal dominance with hydro as complement era in 2000-2020s and beyond thermal-coal-renewable era (beyond 2020). As we can observe from the trend, electricity from thermal sources is increasing becoming dominance source. This would be mean that as the capacity continue to expand towards thermal electricity, the role of the private sector becomes very much important if Ghanaian really want good quality services. I will also mean that, consumers must begin to realize that the old mentality that electricity is a state-sponsored commodity that is available at all times must begin to change. Folks, take or leave, if Ghanaians wants enjoy sufficient quality electricity we must pay for the economic cost of generating it. It is the only way private sector can come in with their capital investments.   

 

Now that we are in the era where thermal electricity generation constitutes a major source of grid-power, another important dimension that we have at to take a look at is the source and cost of fuel. The thermal plants we run in Ghana basically use light crude oil (LCO), natural gas (NG) and in some rare cases diesel (DS). Now the question is where do we get these fuel from and at what cost to the nation? Nearly all VRA thermal plants run on both light crude oil and natural gas. Some of the plants run by the IPPs can either run on LCO or NG. For example, the Sunon Asogli, which provides about 200MW run solely on NG. The advantage of running solely on NG fired thermal is that it might be cheaper, but such the operations of plants are usually at the mercy of the gas supplier. Should there be any unforeseen circumstances, the supplier is able to deliver the gas the plant completely shuts downs. Similar case happened in 2010. The crude oil get in Ghana is bought on negotiated contract with Nigeria over a given period of time or from the spot market. Natural gas is mainly from the West Africa Gas Pipeline until recently, 2014 Ghana started producing it own NG.

 

 

The construction of the domestic processing plant cost Ghana nearly $1b and its expected to help Ghana reduce dependency on the light crude oil and also produce LPG for homes. The project has taken some time before seeing the light of day. It took 4 years into the time we started producing oil before we could complete the project. It means majority of the gas from the Jubilee field were flared at expense of the state. According to the “Petroleum Development Agreement” Ghana owned 100% of the associated gas from the jubilee field. Therefore we had no reason to delay in putting up the Atuabo plant. The Atuabo gas is expected to produce nearly 120mscf daily NG to VRA to augment the Nigerian Gas we get from the West Africa Gas Pipeline. Apart from the hydro and thermal electricity, a meager share of the mix comes from renewables, which is mainly solar. There is 2.5MW gridconnected solar PV in Navorongo, Northern Ghana. In addition, there are a number of privately own grid-scale solar systems which amount to 3.5MW. 

 

 

To sum up the key issues on the generation side, which contribute to the electricity crises in Ghana, I have put them in the following perspectives: high cost of LCO to fire the thermal plant. Access to LCO is affected by international price fluctuations and foreign exchange rate; irregular supply of contract-volume of natural gas fuel from Nigeria through the West Africa Gas Pipeline; inadequate public/private sector investments in generation plants; overreliance on Akosombo in times where thermal generation is not enough because of the inability to buy crude - resulting in draw down of water in the lake and low rainfall and low stream flow also contribute; indebtedness of government to VRA (GHS 1.2b to purchase crude and pay off credits), ECG (GHS 700,000); redundancy of the 2.5MW solar plant during peak hours (6pm-10pm) - not much can be wheeled to the grid when it is needed most and the Bui water intake problem (400MW hydro plant cannot be utilized to its optimum because of design and hydrological flow issues).

 

 

Are we able to transmit significant amount of electricity we generate to where it is needed?

 

GRIDco is state-own company that manages the electricity transmission infrastructure. GridCo receives power from VRA and IPPs and sends to through its transmission lines within the country and in the sub-region. The customers are mainly

(a) ECG (biggest consumer),

(b) Mining companies,

(c) Export,

(d) NEDCo,

(e) VALCO.

 

The problems we face in electricity transmission are as much as important as generation. Having nearly 20% technical losses in transmission I consider a major challenge and contributor to the electricity crises. The losses mainly due to transmission lines that have outlive it time. New investments are needed. So simply put, for every 100kW electricity VRA/IPP generates, 20kW is lost on its way to ECG. When it gets to ECG, additional 12% non-revenue losses occur. People consume the electricity without paying for it. Just for illustration, if the value the 100kW of electricity generated by VRA is 100 Cedis, 32 Cedis is literally lost down the drain to put it simply. It is not acceptable and we must put a stop or at least reduce it to the barest minimum possible.

 

 

Is ECG in the position to distribute electricity without cash flow problems?

 

ECG and NEDCo are the two state-own companies that distribute power to industries, homes, offices and commercial entities. ECG has the largest customers (southern sector) whereas NEDCo focuses on northern sector (demand is relatively small). So let us focus on ECG. ECG has monopoly over the downstream electricity market within their coverage area. Over the many years, ECG has been confronted with management and operational challenges, which have not totally enabled them to function the way the country expected from them. Here some of the problem ECG currently find itself; (a) its inability to collect revenue, (b) Illegal connections (non-revenue losses), (c) ECG indebtedness and weak cash flow, (d) complaints about sub-standard pre-paid meters, corruption etc. These reasons among many more others do not allow ECG to function and operation efficiently. It is usually said that, more people own ECG than it can possibly imagine. So why can’t ECG simply go after their debtors to collect their monies?

 

 

Is PURC really a biting downstream gatekeeper?

 

I beg to differ on this. Here is my candid about PURC. I sincerely believe are suffering from identify crises. They do not know whom to protect, government, financial viability of IPPs or the public interest. From where I sit I think it’s a tough call and the earlier they realize this the better. Because people are beginning not take them serious. Let me give you one clear example. How on earth can any state-own agency even contemplate of hiking electricity prices when the people are living in darkness for almost God knows when and expect the citizen to believe you are projecting their interest? Seriously folks, the PURC must sit up. See come to think of it, the PURC is mandated to set and announce electricity prices every quarter, after review of changes that have taken place in the automatic price adjustment formulae variable and electricity service quality.

They are to ensure that electricity producers get prices that keep in business and attract other IPPs to invest and at the same time make sure that quality of electricity service meet what the consumer pays for. The processes for setting up the tariff to put it bluntly has never been adequately predictable. Meaning that, no independent institution or individual can come to the same price determination if all the set of variables presented to PURC at time of price review because of the subjectivity in apply the called “decision variable”. In the formulae, the “decision-variable”, which allows the PURC to announce prices which otherwise would have been high or low. Friends do you recall what happened last week, when people were sleeping in darkness, the PURC sought to invoke the law that request them to quarterly review the tariff. They ended up revising the tariff upwards. In the midst of all these, one question keeps bothering my mind. “To what extent, can PURC balance the ingredients of electricity pricing such as affordability, quality of service, political influence, equity against the backdrop of rising private participation in the market”?

 

 

Let us now look at the “2012/2015 dumsor “in Ghana

 

Friends all the factors I have elaborated in the foregone contribute in various degrees to the current “dumsor” Ghana is experiencing now. In this text, I have characterized “dumsor” to mean a situation where peak load electricity supply does not meet demand. So when such situation arises, GridCo cuts the demand to meet the available supply. The cutting or moving of load from say, industry to household or from one suburb to another is what they refer to load management, or load shedding or power rationing. Normally for peak load shedding, the number of hours is between 1-6 usually around 6pm to 11pm depending on the supply deficit. But when the deficit include both “base and peak load supply”, practically, what is happening in Ghana now and also sometime in the 2006/2007, it is then we are see long periods of shedding (10, 12, 24 or 48 hours). I must also say that load shedding is different from power tripping when there is technical failure in say in one of ECG's transformers. So we should clearly distinguish that from dumsor. Let me also say that although I will focus on the 2012/2015 dumsor, it is important to take note that the problem has been a long-standing one. 

 

 

Let’s do a quick one down memory lane. Ghana has experienced 4 major “dumsor”, in the era of four different governments (PNDC - 1982,/1985), (NDC2 - 1998/2000), (NPP1 - 2006/2007) and (NDC3/4 -2011,2012/2015) and under pretty much same sets of "infrastructure", "institutions" and "policies" and may be "recycled experts - same faces but rebranded differently". Although some institutional changes occurred along the line but they are not radical enough. The factors that have contributed to cause the current dumsor are not markedly different from those cite cites over the years, except this time round the issues have compounded beyond what we were used to ten years ago.

 

 

The common narrative in all the dumsor theory is that "supply is not meeting demand and thus we shed load. This is because the rate of growth in demand is so high we need to invest in the supply side in order to catch up. I have heard the same narrative in this current dumsor. Practically nothing has changed. Some old narrative is being played back to us by different set of people because they happen to be in government. Now let delve in the 2012/2015 dumsor. It started in August 2012, when the West Africa Pipeline, was wrecked by a ship, which led to gas supply shortage from Nigeria. During this period, we lost 200MW because Sunon Asogli Thermal, which is a single fuel plant, was shut down because it didn’t get gas. At that time we were shedding load at peak hours. It took almost 8 to 12 months to solve the problem. During the same period Ghana commissioned, the Bui and other thermal plants. The coming to stream of the new plants and the repair of the West Africa Gas pipeline actually helped to manage the problem to a certain degree and power supply become a little bit stable. Not too long, the others problems started to crop up once more. The problems were many and are of varying degrees of impacts. I have listed them here:

(a) shutdown of number of VRA thermal plant because of concurrent maintenance and service;

(b) lack of funds to procure crude oil from the market to fire the thermal plants;

(c) irregular supply of contract volume natural gas from West Africa Gas from Nigeria;

(d) low water levels at Akosombo;

(e) because of Ghana’s inability to run the thermal plants optimally, Akosombo Dam had to run near full capacity which had led to drawing down of water from the late, (f) indebtedness of Government to VRA (GHS- 1.2blillon), ECG(GHS 700,000) and VRA indebtedness to West Africa Gas Pipeline,

(g) redundant Bui dam and (h) delays in delivery of domestic Gas from Atuabo.

 

Ever since Ghana Gas Company started to process gas in December 2014, VRA has not been able to off take the processed lean domestic gas from Atuabo because VRA plants at Aboadze are shutdown for scheduled maintenance. So currently, Ghana Gas can supply 60mscf lean gas that supply nearly 650MW of power and yet, VRA is still not ready. 

 

My friends, these issues are the very bane of the electricity crises in Ghana now. Currently, we shed load for 48hrs, because 300-600MW supply deficit, 12 hours of electricity access, 48 hours in darkness. This is also against the backdrop that, at least Ghana needs to consistently invest in electricity generation in order to double it every 8 years to meet 10% annual demand growth. For most times Ghana had experienced dumsor, the approach has been practically been the same. I must also say it the practice we adopt is standard everywhere in the world. The power managers have to focus on "arranging short-term emergency power to ramp-up the deficit" whilst they work on near-term plans to get us out of the doldrums. 

 

Folk let’s looks at what they do during the emergency periods and how people are feeling the pinch. The common practice is that GRIDco informs ECG about how much electricity will be available at base or peak load and based on that, ECG then prepares "load shedding timetable". Timetable published by ECG is supposed to help customers plan towards when they will have light and the time they do not have light. Although, ECG publishes the timetable, and hardly do they follow it. In fact this crass inefficiencies at ECG and GRIDco adds additional stress to the people who depend on ECG to plan their businesses, household activities. In addition to this, a lot of people have also experienced erratic voltages and unannounced power outages which had damaged people’s electronic gadgets (fridges etc). There also many reported cases fire guts in houses. People have also reported of petty thefts and armed robbery because such activities thrive in the darkness. 

 

Those households that can afford generator buy them at high cost because the demand too high. Many households have incurred additional cost by buying standby generators. The generator industry in Ghana is thriving now. The cost of a standard 1.4-13kVA generator ranges 450, 6500 to 29,000 Ghana Cedis. Those homes that cannot afford generator will have deal with the heat and related diseases that come with it. Students do not have the luxury of learning in the night. They either has to learn during the day, also find alternative light using torchlights, candle or solar lights etc. For businesses and industry, production cost goes up and business owners have to either lay-off workers or cut production. Recently, the multimedia group, contemplated to cut short their programming from 10pm and resume at 4am for some of their stations in Kumasi, Takoradi because of the same dumsor. I had a personal experience in December 2014 when I was in Ghana. I slept in a hotel in Kumasi, and the hotel manager told me that, during the day, if I want to use electricity in my room, I either have to contribute for them buy diesel to fire their generator or I pay additional price for using genet when I am finally checking out of the hotel. I got rejected the offer and then I left. As for small businesses (hairdressers, barbering shop, tailors), they feel the pinch of the dumsor most.

 

 

So what has government proposed to do?

 

So what has government proposed doing during this emergency period? Government has announced its plan to mobilize1000MW emergency plants from Turkey, UAE and USA. Here is the breakdown. Karpowership (Turkey) - 450MW, APR - 250MW, General Electric - 300MW. Although it’s a laudable idea that government has taken step to remedy the situation, however, people have raised issues with the approach Government has adopted. People are wondering: (a) when will the emergency power government has arranged be available to the grid and whether or not the April deadline Government has promised will be realized? The concern has been that, considering the technical things that must done before the power from emergency plants are tied into the national grid, the April ending deadline announced by government may not be achieved. From what I know and read, it might take couple of additional months before the tying is completed. However, it could very well mean that the engineers may have speed up work as much fast as expected to meet the deadline; (b) cost and length of the power purchase agreement (PPA), if the plants are emergency plant why is government signing 10 year PPA (c) Why is GNPC providing fuel purchase guarantee to the emergency power providers? How far can GNPC guarantee for stable fuel supply beyond the emergency period? If GNPC can provide such guarantees over such periods of time, why are they not providing the same support to VRA so that they can get fuel to fire our own thermal plants. Apart from the efforts government is making to acquire emergency power, there are many additional options government has already considered. I think its note worthy to mention them again. The measures I have suggested or considered by government are all geared towards finding lasting solution to the dumsor. I have listed them below:

 

• There is the deed to speed up maintenance of VRA thermal plant at Aboadze in order to off take the 60mscf lean gas from Ghana Gas? This can provide 650MW of power. As to why VRA is not taken advantage of this I don’t have the answer. I don’t see why VRA is not taking advantage of this cheap gas from Ghana Gas.

• Government must begin to find viable ways to pay off ECG and VRA. It will improve their cash flow position. Particularly for VRA, it will enable them to raise letter of credits to purchase gas timeously. This will reduce the "fuel supply risk to the thermal plant operators.

• Reform ECG to become more efficient - the second tranche of the Millennium Challenge Account (MIDA) from the USA government is seeking to restructure ECG and I suspect eventually ECG will greater private sector participation. If they go with the privatization, then we have to “demonopolize” the electricity downstream market. Transform the market gradually, to allow for more private sector participation. I think this option should be part of the long-term strategies.

• Government has also proposed through the newly established power ministry, to consolidate generation operators into hydro and thermal. They propose to consolidate "VRA and Bui" into "one hydro generation entity". For thermal generators, allow SNNIT and other institutional investors (pension funds to take over). I think this is a good idea. But my only concern is that, to what extent can PURC asked people to pay more if the quality of electricity service we enjoy does not improve. Bear in mind that the more private sector participate in the market, quality of service is expected to improve, however, someone must pay for the economic cost of electricity, can the government allow the market to dictate the prices? We live to see!!.

• Make more gas available and reduce dependency on crude oil. Use crude oil in emergency situations. It means we have to make sure we benefit fully from domestic gas first (Atuabo - 120mscf/day) and recently, government signed a $7billon ENI/Vitol/Sankofa field agreement which will produce additional 300mscf/day of lean gas by 2016. This means by the end of 2016, Ghana should produce and rely on it own gas of 420mscf to generate electricity. Although with 420mscf/day gas supply is good, we still have a own gas of 420mscf to generate electricity. Although with 420mscf/day gas supply is good, we still have a short fall of 100-80mscf or even more based on what VRA said it needed in order to meet it demand. Nonetheless, if want to rely on the Nigeria gas to in order to meet the gas supply deficit, then we have to map plans modalities to pay our debt with the West Africa Gas Pipeline on time. Renewable energy - There are a number government and private sector initiatives to promote renewables. For instance, government has prorogated a renewable energy law, out of the law, two very important instruments are coming now. These are:

• (a) Feed-in-tariff scheme – a scheme that guarantees long-term purchase of electricity produced from private renewable sources (solar, wind, biomass etc) and sold to the grid). Because of this instrument, a lot of companies have started developing renewable energy projects. The last time I checked, the Energy Commission has nearly registered 3,500MW solar and wind applications in the pipeline seeking for licenses to start construction. As to whether or not this 3,500MW will translate to actual grid-connected generation is another piece of hurdle we have to cross. As we speak, VRA has 2.5Mgrid connected solar at Navorongo;

• (b)Renewable energy fund. Ghana has established a Renewable fund. The fund will make financial resources available to private sector businesses to be able them go into renewable energy enterprises. In order to replenish the fund, government has proposed to increase the energy fund levy on petroleum products from GP 0.05 to GP 1.0. In addition, ancillary services charge of GP 1.0/kwh of every electricity transmission will be deducted into the fund;

• (c) Government recently, announced, a renewable energy initiative "200,000 rooftop solar system program" which is expected to offer opportunity for private individual put solar PV on their roofs. The program is expected to saving 200MW each day.

• Electricity conservation and awareness program - no doubt, this is a viable option to cut waste in homes. However, I am not sure this solution is option to consider now, because if you don’t have access to power how do you conserve. 

• Infusion Coal Plant - Government decided to allow 700MW private sector coal plant to come on stream by 2017. The debate rages on in several fronts (environment quality standards, capacity to control vrs need to have access to energy for development. This discussion is for another day.

 

Way forward

 

 I have suggested the following points as the way forward.

 

• Ghana needs emergency power now? The profit logic behind sending strategic reserve plant to Sierra Leone is yet to manifest itself.

• Consistent and adequate investments in generation and transmission are infrastructure is crucial. The role of private sector is indispensable in this direction. As to whether or not the strategies government is putting in place to attain great private sector participation still remains debatable.

• Simply stick to long-term energy plan government produces from the energy commission

• Decentralize electricity management progressively - allow the regions or districts to start to generate and manage their own power

• All government offices must begin to take care of their electricity cost.

• See through the full implementation of the pre-paid meter in all government offices and homes.

• Invest in the transmission lines in order to cut transmission losses.

• Restructure ECG and eventually demonopolise the downstream electricity market and allow more private sector participation.

• ECG should collect all monies from all debtors including government (there should clear debt collection plan)

• VRA should quicken the process of off-taking the domestic gas for Atuabo.

 

Thank you. The future may be bright if we stick to our plan.