Business News of 2014-01-01

Local content policy for power sector

The government will extend the local content policy to the power sub-sector to encourage more local participation, the Minister of Energy and Petroleum, Mr Armah Kofi-Buah, has disclosed.

According to him, the move is to ensure that Ghanaians and indigenous businesses participated in power generation, construction works and allied services to encourage transfer of skills and prevent capital flight.

Mr Kofi-Buah, who announced this at an end-of-year meeting with journalists, said the policy drafting consultations were already taking place, with a caravan visiting regions to take inputs, as was the case of the Local Content and Local Participation Policy in the petroleum sector.

The minister said the petroleum sector’s Local Content Policy was so far going well and receiving support from oil-producing partners and should, therefore, be extended to the power sector because it constitutes a large chunk of the energy sector.

“The support we have received from the upstream is an example and a leverage for us. We want to extend it to other sectors once we agree on a timetable with our partners there,” Mr Kofi-Buah said.

The power sector is large, comprising generation, transmission and distribution that attract a lot of investments. Currently, the Energy Ministry is implementing the Ghana Energy Development Programme (GEDAP), a multi-million dollar programme to revamp the distribution infrastructure of the sub-sector.

To facilitate such a huge outflow into the sector, the government deems it appropriate to encourage local participation for skills transfer and retention of funds in the local economy.

The 2014 budget, for instance, envisages a spending envelope of Ghc1.34 billion for the entire energy sector, out of which Ghc72.73 million will come from the government, Ghc430.95 million from the Annual Budget Funding Amount (proceeds from oil), with Ghc837.23 million coming from development partners.

The energy minister said in line with the government’s effort to achieve universal access to electricity by 2016, a total of 1,566 communities would be connected to the national grid to close the gap from 75 percent access to 80 percent.

Last year, more than 1,000 such communities were connected to the grid under the Rural Electrification Project.

Mr Kofi-Buah is hopeful that once electricity tariffs are being scaled up, it would attract investors to add to the generation capacity which is expected to reach 5,000 megawatts by 2016, saying; “when we get the tariffs right, we will get investors to come in.”

Some management and operational functions of the Electricity Company of Ghana would also be decentralised. This would, for instance, ensure audit of electricity losses under a district or region and not account for losses as a wholesale phenomenon.