The Africa Report - - CONTENTS - Bil­lie Ad­woa Mcter­nan in Ac­cra

Slow progress on pri­vati­sa­tion

The gov­ern­ment is re­ly­ing on pri­vate power projects and help from the United States to turn around the elec­tric­ity sec­tor be­fore elec­tions in De­cem­ber 2016

Amidst chronic power cuts, Ghana­ians are de­bat­ing whether the pri­vate sec­tor will do a bet­ter job than the gov­ern­ment in pro­vid­ing sta­ble sup­plies of elec­tric­ity. The fail­ure to con­duct regular main­te­nance and up­grad­ing at en­ergy plants has put ad­di­tional strain on ghana’s hy­dro­elec­tric dams, which gen­er­ate most of the coun­try’s elec­tric­ity. Na­ture could bring a re­prieve, as the dry and windy Har­mat­tan sea­son has gone and the rainy sea­son will soon begin. Two of the coun­try’s largest dams – Ako­sombo and Kpong – have been op­er­at­ing at low lev­els since last year. The ex­ec­u­tive direc­tor of the Ac­cra-based Africa Cen­tre for En­ergy Pol­icy (ACEP), Mo­hammed Amin Adam, ex­plains that Ghana has many other prob­lems in ad­di­tion to weak rain­fall. He says that na­tion­wide dis­tri­bu­tion losses, largely as a re­sult of faulty equip­ment and power theft, amount to about 21% of gen­er­ated power. Ghana cur­rently gen­er­ates roughly 2,125MW and has an ap­prox­i­mate deficit of 500MW. Pres­i­dent John Ma­hama promisedtofix the­coun­try’s pow­er­prob­lems be­fore 2017 in his Fe­bru­ary State of the Na­tion ad­dress. He listed aseries of in­de­pen­dent projects – in­clud­ing Cen­power’s 350MW project at Kpone and Ja­cob­sen Elek­tro’s pro­posed 360Mw­power plant at Inch­a­ban – that are set to boost pro­duc­tion over the next few years. ACEP’S Adam says: “Be­tween 25 and 30 com­pa­nies have been given li­cences to pro­duce power. Some of them have power pur­chas­ing agree­ments, but this is not be­ing trans­lated into power pro­duc­tion.” He adds that only two pri­vate power plants are reg­u­larly in ser­vice: Asogli, with the ca­pac­ity to pro­vide 200MW; and CENIT En­ergy’s plant, which can pro­duce 126MW. How­ever, on- go­ing re­pair works to the Asogli plant cou­pled with a low sup­ply of gas have kept pro­duc­tion down. CENIT’S project is not op­er­at­ing at full ca­pac­ity ow­ing to the weak sup­ply of light crude oil from the state-owned Volta River Author­ity.


In Au­gust 2014, the gov­ern­ment signed a $498.2m Mil­len­nium Chal­lenge Cor­po­ra­tion (MCC) com­pact with the US gov­ern­ment to trans­form Ghana’s power sec­tor. Un­der its con­di­tions, Ghana must en­cour­age more ef­fi­ciency in the sec­tor, pri­va­tise some of the Elec­tric­ity Com­pany of Ghana’s (ECG) op­er­a­tions, col­lect out­stand­ing debts, re­duce some of the dis­tri­bu­tion losses and im­prove gen­er­a­tion. The gov­ern­ment has not re­leased de­tails about the pro­gramme, which has sti­fled public de­bate. Pri­vatis­ing an­other state as­set just 18 months be­fore a gen­eral elec­tion is po­lit­i­cally risky. In March, deputy fi­nance min­is­ter Mona quartey told The Africa Re­port that the gov­ern­ment would only pri­va­tise the rev­enue and bill col­lec­tion arm of the ECG, but ACEP’S Adam sug­gests that sep­a­rat­ing units of the ECG would not be ideal due to the com­pany’s rel­a­tively low cus­tomer base. Adam says that Ghana could pur­sue three op­tions. One is to float the ECG, al­low­ing the gov­ern­ment to be a mi­nor­ity share­holder. An­other is to ar­range a lease agree­ment, and the third op­tion would be for the gov­ern­ment to agree on a man­age­ment con­tract with a pri­vate com­pany. Adam says the pop­u­la­tion might not sup­port the lat­ter pos­si­bil­ity. The gov­ern­ment faced a furore over the man­age­ment con­tract for the Ghana Wa­ter Com­pany with the joint Dutch and South African ven­ture Aqua Vitens Rand in 2006. Although Wash­ing­ton was due to dis­burse the MCC funds at the be­gin­ning of this year, the Ghana­ian gov­ern­ment has not met some of the pro­vi­sions, in­clud­ing drawing up a plan for pay­ing its debts to the ECG. It should also have pub­lished a call for pro­pos­als for the planned pri­vati­sa­tion. The Mcc com­pact in­cludes tax ex­emp­tion for pri­vate-sec­tor com­pa­nies in­volved in its ac­tiv­i­ties in Ghana. ghana’s public util­ity work­ers’ Union and the Public Ser­vices Work­ers Union es­ti­mate that the Ac­cra gov­ern­ment will lose $133m through that part of the deal. Un­der the agree­ment, Pres­i­dent John Ma­hama’s gov­ern­ment will also have to put up $37.4m.

The Ako­sombo dam, with a ca­pac­ity for 1,020MW, has been op­er­at­ing at low lev­els be­cause of poor rain­fall

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