Business News of 2014-06-25

ACEP demands coherence between ECG and Energy C’ssion

The Africa Centre for Energy Policy (ACEP) is calling for coherence between the Electricity Company of Ghana (ECG) and the Energy Commission to address the energy challenges facing the country.
The call is on the back of a recent arrangement between Karadeniz Holding of Turkey and ECG under which the latter is to supply electricity to country’s electricity grid through floating power stations at the blind side of the Energy Commission according to ACEP.
In a statement issued and signed by the Executive Director of ACEP, Mohammed Amin Adam, the centre said: “Even though the Energy Commission is supposed to approve the Power Purchase Agreement, it is not aware of ECG’s arrangement with Karadeniz Holding. This is not the best way of handling a crisis of this nature. It only highlights certain disjointedness in the institutional arrangement.”
That notwithstanding, the centre lauded the partnership, describing it as a major step in efforts to comprehensively deal with the short to medium-term effects of the power crisis, which Ghanaians have endured since 2011.
Karadeniz Holding, which is a reputable power company in Turkey with a track record of supplying power through floating ships which berth on the shore, will supply 450 megawatts of power to the grid annually for a 10-year period.
According to ACEP, its policy recommendation throughout the crisis period has been a clear strategy to increase generation through investment attraction and institutional reforms that present the utilities as credible entities capable of meeting their commitments to investors and consumers.
“The arrangement with Karadeniz Holding is a plus to investment attraction to the sector. What remains sceptical is the institutional capacity to make the arrangement sustainable,” the statement said.
It also added that tariff setting was an issue that was of concern to many Ghanaians, adding that the public confidence in the utilities to provide a stable supply of power with increased tariff has consistently waned on the back of failed promises.
It also added that “the challenge now is to show credible operational measures of improving on the distribution system which ensures that available power can reach the consumer. The reality is that floating power stations are a more expensive power generation option. It therefore requires higher and sustained tariffs sufficient to compensate for higher investment and operational costs.”
It also urged the ECG not to default in its payment for the power to be generated as anything of that nature would lead to the investor being dissatisfied and would look for alternative markets elsewhere.
It further explained that power supply deficit in the Africa region alone stood at an estimated 100,000MW which could make floating power stations attractive to many other countries as a short-term measure to provide needed power to cushion their demand.
“ACEP urges ECG to make this new effort a reality, which would improve the power situation in a shorter time frame compared to other efforts in the pipeline,” it added.