Boakye Agyarko assures industry of cheap power

The Minister of Energy, Boakye Agyarko, has assured the business community that government is working hard to implement reforms in the power sector in order to provide sustainable and affordable power to grow the country’s private sector.

Amongst the reforms being undertaken is the review of over 30 power purchase agreements, placing a moratorium on others, and refinancing of energy sector debts.

“We now have a thorough understanding of the current indebtedness of the energy sector and have structured a refinancing package that will dislodge these debts from the books of the sector entities into an energy sector bond.

We have developed a mechanism for the transparent collection and distribution of revenues from power sale among participants in the electricity value chain including fuel suppliers,” Mr. Agyarko said at the opening session of the on-going two-day Ghana Energy Summit, organised by the Energy Ministry, in Accra.

The country has had to grapple with half a decade of power generation and supply challenges that necessitated a power rationing regime. At the height of the load-management period, government was forced to turn to emergency floating power vessel to address the shortfall.

At the core of the power challenge is finance and non-availability of fuel for power generation. The net energy sector debt stood at about US$2.4 billion as at February 2017.

The largest public power producer, the Volta River Authority (VRA) alone, has an installed capacity—hydro and thermal--of about 2,434MW; enough to meet the current demand of 2,225MW.

Financing challenges with retooling some of the old installations and the lack of fuel have been the main drawbacks.

For instance, a major blackout on Monday June 12, 2017 in major parts of the capital, Accra, was attributed to the shutting down of about 400MW generating units in the Aboadze power enclave in the Western Region because of a major trip on Ghana-Ivory Coast transmission line.

Ghana’s energy sector challenges are not unique on the continent. The World Bank has declared 32 of the 48 nations on the continent to be in an energy crisis.

Energy development has not kept pace with rising demand in developing regions, placing a large strain on the continent's existing resources over the first decade of the new century.

From 2001 to 2005, GDP for over half of the countries in Sub Saharan Africa rose by over 4.5percent annually, while generation capacity grew at a rate of 1.2percent.

According to the World Development Report published by the World Bank in 2012, Africa’s economy is about the size of the Netherlands' economy, which is equivalent to only approximately six percent of the U.S. economy.

Petroleum sector solutions

Mr. Agyarko, who has oversight responsibility of power, and oil and gas, said government will implement policies that will ensure that petroleum products are made available at affordable prices.

“We are working to ensure sustained availability of petroleum products at affordable prices, while minimising tariffs associated with industry, especially in the usage and handling of LPG. An LPG policy to address the disturbing safety challenges faced by the sector has been developed and it is under discussion by key stakeholders before being passed,” Mr. Agyarko said.

The Energy Minister further highlighted reforms government has taken to ensure that power is used efficiently by various public agencies to significantly reduce the government’s electricity bills.

“Rooftop solar systems will be promoted in all government buildings to reduce their electricity bills. In the petroleum sub-sector, the ministry is intensifying efforts to accelerate oil and gas resources development. We are equally accelerating a concurrent development of regulations to ensure seamless implementation of the New Petroleum Act in a transparent manner,” he said.

Mr. Agyarko added that government is committed to fighting the menace of illicit transactions that has recently hit the petroleum sector.

“We announced measures recently aimed at combating the illicit transactions of petroleum products that threaten the survival of well-meaning and honest players in the sector. Many of the challenges we face in the sector are, to a large extent, a result of policy failures and weakness.

We are committed to addressing these policy weaknesses in order to create an energy sector with a healthy balance sheet, that will make it possible for us to keep the lights on and keep transportation running,” he stated.

Also commenting on the importance of power to the economy, Deputy Finance Minister, Charles Adu Boahene, said power shortfalls have impacted negatively on the economy for the past few years, leading to a sharp decline economic growth from 14 percent in 2011 to 3.5 percent in 2016.

He said that government has prioritised tackling the challenges in the energy sector in order to embark on its industrialisation agenda which will bring the economy to the path of growth.

He announced that a bond will be issued next year to pay government’s indebtedness to banks in the energy sector.

The on-going Ghana Energy Summit, organised by the Ministry of Energy, is aimed at bringing together local and international business leaders, investors, policy makers, civil society organizations, development partners and industry leaders to exchange ideas and share experiences that would culminate into comprehensive energy sector policies and strategies to effectively govern and ensure coordinated investments and sustained growth of the sector.

The Summit will also discuss investment opportunities available in the sector and provide avenues for targeted and strategy driven investments rather than the current deal-driven approaches.