The Energy Sector Challenges Should Be The “Opening Prayer” Of The Government Of Ghana
1.0 INTRODUCTION
The Africa Centre for Energy Policy (ACEP) would like to congratulate the President of the Republic of Ghana and the Government on the electoral victory in the December elections. We wish the Government well and hope that the aspirations of the Ghanaian people will drive governance processes to make Ghana a better nation. Recognizing that our challenges are many as a country, a new government such as we have today cannot enjoy any honeymoon particularly in relation to the energy sector which is a critical nerve of the Ghanaian economy.
ACEP has consistently supported the government of Ghana and public discourse with policy alternatives in the energy sector. This, we will continue to do in accordance with our objective of ensuring good governance anchored on transparency, accountability and dedication to nation building. The challenges of the energy sector are many, with alarming signals that could derail the national economy into distress for a very long time. We also recognize, at the same time, that the potential of the sector to transform the economy is enormous. This “double edged sword” situation requires efficient leadership that can carefully align the energy sector decisions with the rest of the economy. The energy sector situation, as articulated below, requires that the government takes significant interest in aligning the sector to the growth of the economy.
The Power Sector
The power sector challenges are far from over regardless of the relative stability in supply to consumers today. The additional generation capacity to the grid, no doubt, helped to provide power to replace unavailable power from T3 thermal plant, Akosombo, Kpong Hydro Plant, Asogli and others. However, the other challenges such as financial distress of the utility companies, fuel supply security, high tariff, and suppressed demand, do not only threaten the stability of power supply, but explosion of the economy as a whole.
Financial Challenges
The utility companies continue to reel under financial distress. The recent attempts at restructuring their indebtedness to the banks has not yet translated to improved relationship and confidence in the sector by the banks. The Volta River Authority (VRA) for instance, still struggles to secure letters of credit to procure fuel for its plants. This is worrisome, particularly in the light of huge burden on consumers through the energy sector levies to normalize the situation. As a result of its financial challenges, VRA has missed important maintenance schedules which now threatens supply stability in the short term. The T1 plant will have to shut down because of noncompliance with maintenance agreement with Ansaldo, VRA’s technical contractor, to which VRA owes about €2m. Also, the GT2 of the T1 plant will have to shut down for about two months when Ansaldo returns to work.
