Electricity tariffs too high, uncompetitive in the sub-region - Amin Adam

Ghana’s electricity tariffs are too high and uncompetitive for domestic and commercial consumers in the West African sub-region, according to the Deputy Minister-designate for Energy, Dr. Mohammed Anta Amin Adam.

“For the domestic consumer, the tariffs in Ghana is around 19-28 cents, La Cote d’Ivoire is 9 cents, Benin is 17 cents, Togo is 16 and Nigeria is 17 cents.

“But when you come to the commercial industrial consumer that is where the problem is. Ghana’s is 32.6 cents per kWh, Cote d’Ivoire is 13 cents, Benin is 19, Togo is 18 and Nigeria is 17 cents so in comparative terms tariffs in Ghana are higher in the sub-region,” he pointed.

Dr. Amin Adam made the revelation when he appeared before Parliament’s Appointments Committee for vetting Tuesday evening.

He attributed the high tariffs to lack of competitive procurement processes for power generation and obsolete power plants deployed in the country by some independent power producers among others.

This, he noted, does not only affect consumers in Ghana but also affects the generation companies if they want to take the excess to the sub-region.

The Mahama-led National Democratic Congress (NDC) administration has been accused of signing bad contracts with power producers like Ameri, leading to high electricity tariffs and possible financial loss to the state.

According to Dr. Amin Anta who is also the Executive Director of think-Tank, Africa Centre for Energy Policy (ACEP); the state is paying heavily for some of these contracts.

“…the contracts we signed and the government consent of the support agreements we signed now ‘the put-call-option agreement we signed with the companies show that the capacity will be paid for whether we use it or not. It’s a ‘take or pay’.

“So what do we do with it? It’s going to be excess capacity not producing power but consumers would be paying for it and the World Bank estimates that we would be paying about $600 million every year for capacity not producing power.

“And so if Ghana’s tariffs are higher apart from the burden it imposes on consumers, we are unable to sell off the excess in the sub-region where Nigeria is doing 6 cents to Benin per kWh of power and where we give domestic or commercial 32 cents. It doesn’t make sense for good business.”

Dr. Amin Anta said something drastic has to be done about it.

“I will support my minister to consider ways of reducing the cost of generation. At the moment, we can’t do anything about the capacity that we already have but future generation addition must take into consideration, a number of elements- Number 1: the efficiency levels of the plants must be looked at.

“Most of the plants we have are old before they come here and so in terms of efficiency, they are already suffering, availability is low and so if we begin to engage plants that have high efficiency level and therefore high availability level because of the benefits of economies of scale, the cost of generation will come down and that will impact on tariffs.

“A competitive process for procuring power, additional capacity and with that competition, I believe the cost of capacity will come down and that will greatly impact on tariffs.”