In part one of chapter two, a detailed analysis of the electricity sector of Ghana as a whole was considered. In this chapter and under this section, the focus is on the distribution sector with the aim to dovetail into the essentials that concern the running of an efficient distribution network. The goal is to understand the distribution subsector for onward utilisation in achieving the objectives set out in the introduction of the chapter.
Ghana’s agenda to achieve universal access to electricity by the 2020 was initiated in the late 1980s. In 1989 the National Electrification Scheme was established to serve as the principal agent or instrument to front the extension of electricity to all parts of the country in a space of 30years. The most recent access review suggests a national access rate of 82.5% in 2016 from as low as about 20% in 1990. With an annual growth rate of 2.6%, the performance of the scheme can be viewed as satisfactory especially when compared to its peers in West Africa, however, it appears Ghana may not be able to achieve universal access to electricity by 2020. As confirmed by Kumi (2017), there must be a special drive to attain full access by 2020 and that comes with a herculean task of huge investments in all segments of the industry. Additional generation, reinforcement and grid extension must be carried out in the next three years for the 2020 target to be achieved.
146
Figure 5.6: Electricity Access Rates of Ghana
Source: Kumi (2017)
In the National Electrification Master Plan, a special scheme called the SHEP (Self Help Electrification) Scheme contributed immensely to the increase in accessibility. In this scheme, communities were willing to support in terms of logistics and labour as part of their equity in extending electricity lines to them before the planned time as suggested by Kemausuor and Ackom (2017) Government was therefore supported particularly in terms of electricity pole and meter procurement as the communities financed that from their internal resources. Apart from the supply of poles, the communities were committed to connecting 30% of households with installed meters to the grid.
Electricity consumption continues to increase and the evidence of suppressed demand in the figure below suggests same. In periods, where the consumption detracts should not be misrepresented as a reduction in demand but rather a reduction in supply capacity. Though there is adequate installed capacity, the available capacity is always less than the actual demand. There is a deficit in the supply and actual demand. The required margins are depleted exposing the system to high risk. In 2016 the consumption levels stood at 17700 GWh after the system suffered a shock in 2015 as a result of unavailable capacity due to unplanned repair schedules, fuel related issues and other factors. The implications are much serious for the economy especially as over 55% of total consumption is the suppressed demand for the Industrial and commercial segments. To appreciate the extent to which the supply-demand gap poses significant risk, the energy requirements of the country is expected
147
to increase given the many policies of industrialisation yet to be realised by every regime of government. However, with an ambitious vision of one factory in every district, it is time to address issues relating to reliability, security and affordable power. Without a supporting power sector, the country will be heading for many redundant assets and waste of the limited resources. Like in other jurisdictions, captive power and community energy for industrial zones may have to be encouraged using if possible renewable sources.
Table 5.1: Electricity Consumption by Customer Classes
Source: Energy Statistics from Energy Commission of Ghana 2017
Figure 5.7: Electricity Demand by Sectors and Losses
148
Figure 5.8: End-User Average Prices of Electricity
Source: Energy Commission (2017)
From figure 5.7, it is agreeable that the distribution system is overwhelmed with a considerable level of losses in transmission and distribution. From the figure above, total losses would be about 20%. This is really huge and are considered unaccounted power which continue to put the distribution companies in financial distress. High related tariffs make consumers unyielding to further increases as utilities propose cost-reflective tariffs. From figure 5.8 above, end user tariffs are running into 25 cents per kWh and the implications of that includes social exclusion and poor competitiveness of the Ghanaian producer to its international competitors. If the system is allowed to run in the manner in which it is managed, the sustainability of it will eventually become an impossibility. There is therefore a sense of urgency in reducing inefficiency in the system. The narratives seem to support what is on ground as the network companies continue to suffer from revenue theft, power theft, mismanagement and lack of investment. The supply infrastructure needs reinforcement and capital injection to conform to modern practices that have led to reduced inefficiency. Chapter two explored the structure of the Ghanaian Electricity sector and showed the various stakeholders and their respective roles. Figure 5.9 below does same to recapitulate the players in the sector.
149
Figure 5.9: Power Sector Stakeholders
Source: Kumi (2017)
The power industry is segmented into generation, transmission and distribution. The generation segment is dominated by Volta River Authority, Bui Power Authority and various Independent Power Producers. A combination of hydro and thermal plants constitute the energy mix. Renewables is almost missing in this mix even though the country can boast of a 5mw solar plant and potential solar and wind projects on the drawing board Generation is the most competitive of the segments and power from private participation accounts for over 25%. Transmission is executed by Ghana Grid Company (Gridco) which is responsible for transporting power from the generators to distribution points. The distribution segment are therefore also responsible for retailing and there is not competition at that point of the value chain. Two main distribution companies exist and they are ECG and NEDCo. The former covers the southern sector while the latter is in charge of distribution in the norther sector of Ghana. Enclave power is a small network that is specialised for a few energy intensive industrial customers.
There are national commitments supervised by the national regulatory bodies which are Energy Commission and Public Utilities Regulatory Commission. Regional (ECOWAS) regulators include WAPP, ECREEE and ERERA. Power sector reforms count from the moment of its proposal to establishment of a regulatory framework where EC and PURC were borne.
150
Unbundling of Volta River Authority followed then the establishment of the unregulated market for IPPs. Later on performance contracts for ECG and VRA including NEDCo were designed to be implemented. The creation of five demarcated regions of electricity distribution with only thee one in the Tema Enclave established and operational. Finally the rules and the technical issues spelt out in a regulatory framework or codes for grid operations were established to make the market work. There has been a call for reforms ever since with increasing inefficiency of the two main distribution companies. The usual rescue plan of privatisation of publicly owned utilities was proposed and ECG especially is going through the process to hand management to a private company. Manilla from Philippines has won the bid and is expected to operate the main distribution company of Ghana for a period of 25 years. The state of affairs calls for retrospection dwelling on an effort to unpack the narratives regarding politics of the power sector. The idea is to link the narratives to implications on realistic pricing, independent regulation, strategic investment decisions, and corruption in the sector.