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The African Center for Energy Policy (ACEP) has published an advisory document on Ghana’s energy sector which basically looks at three key areas including: Power Generation, Power Transmission Challenges and Power Distribution Challenges.
The Center is demanding that the government take action on some of the concerns raised in the document.
On the issue of power generation, ACEP is concerned that the government has not been transparent regarding renegotiations of the PPAs. ACEP is concerned that the associated opacity is what caused the recent court debt imposed on Ghana for the termination of the emergency power agreement.
“The government has consistently indicated that it is negotiating PPAs to relieve the country of overcapacity charges. However, there is no transparency in the negotiations of these PPAs. The recent $ 134 million court debt against the government for the termination of the Emergency Power Agreement with Ghana Power Generation Company (GPGC) Limited is just one indication of the bad judgment that has characterized such negotiations, the result of the opacity it provided. little attention to the terms of the contract ”, indicated ACEP.
The group of policy experts demands it;
- The government must provide information on overcapacity based on declared availability for each of the plants for which the overcapacity charge is paid. This would enhance the credibility of the government’s claims about how much is paid for excess capacity.
- The government should prioritize the conversion of single cycle plants, particularly the KTPP and Ameri plants that are still in the initial stage of their life cycle, to combined cycle plants to improve the production and profitability of the plants to reduce the losses. consumer rates.
- The government must be transparent about the endless negotiations of the PPAs and ensure that they are meticulous to avoid the judicial debt for energy that is never consumed by the taxpayer.
On the challenges of energy transmission, ACEP argues that the transmission subsector has received less attention and, if not addressed properly, could pose serious threats to the security of energy supply in the country. This, they say, is the result of constant overloading of transmission lines and voltage violation in some substations due to weak transmission infrastructure.
“Transmission losses in particular have been a constant and recurring challenge of the transmission system over the years. In 2019, for example, the system lost 4.7 percent of the energy generated, an increase of 19.4 percent compared to 2018. Overall system losses at the end of the first half of 2020 increased to 5.28 percent of the total energy generated. Transmission losses are caused by constant overloading of transmission lines and major voltage violations at major substations due to weak and over-aged transmission infrastructure, and inadequate available transfer capacity to meet the demand requirements of major substations. load centers (from Accra, Kumasi, Tarkwa, etc.) especially at peak demand. These weaknesses in the transmission system have resulted in the inability of the network to recover quickly during major system disturbances leading to persistent power outages and low voltages as experienced in recent months, “he added.
The Center believes that the problem of power transmission challenges could be adequately addressed if the government could dedicate part of the ESLA’s revenues to investing in critical equipment in the transmission system and accelerate ongoing improvement works to alleviate power consumers from frequent outages and low voltage. it is currently being experimented on.
Referring to the challenge of energy distribution, ACEP indicated that inefficiencies in the system are the result of an outdated distribution infrastructure and weak revenue collection and management by distributors. It revealed that in the first quarter of 2020, the Electricity Supply Plan showed a reduction in power distribution of 26.63, which is approximately 3.43 percent higher than the benchmark of 23.2 percent. .
“Inefficiencies in the distribution sector contribute significantly to the constant default of the electricity sector with its payments and debt obligations, which subjects the sector to financial difficulties. The recently introduced cash cascade mechanism has proven, as ACEP predicted, to be an ineffective solution to the financial challenges of the sector. The mechanism only distributes what has been collected by ECG without any connection to address inefficiency problems in the energy value chain. So far, the mechanism has only been able to meet some 592 million dollars of the 1.3 billion dollars of obligations accrued in 2020. In addition, the function of guaranteeing a fair distribution of income can and should be fulfilled by the Regulatory Commission of Services Públicos (PURC), the commercial regulator that imposes the tariff, and not a separate bureaucratic company to further overload the system, ”the document revealed.
According to ACEP, the government should urgently “return to a transparent process to attract private capital to the distribution sector. If this is not done in the short or medium term, the entire energy sector will be seriously affected unless the government is willing to sacrifice other socio-economic investments to continue propping up the energy distribution sector in an unsustainable way ”.
See the full report below:
