VALCO’s power demands go up by 8.5%

Load-shedding of power is set to continue throughout this year, with its severity hanging on VALCO’s plans as electricity demand rises, the Energy Commission has said.

The Commission, which advises government on energy issues, has forecasted that per the expected generation of electricity, load-shedding will continue this year, albeit on a limited scale as long as VALCO is restricted to operating one pot-line while expected supply shortfall is bridged by significant power imports.

However, the Commission says the load-shedding situation - which describes rationing of power due to supply shortfall - could get worse if VALCO scales-up its operations by operating even two pot-lines, especially as it has been estimated that transmission grid system peak demand will be between 2,477 and 2,500 megawatts, an about-8.5% growth over what was projected last year.

The projections by a Commission, which is mandated to ensure that energy supply meets demand at all times, are a blow to businesses and power consumers who must now brace themselves for continuation of the three-year old power crisis that has combined with a commodity price collapse to cut the country’s economic growth.

According to the Energy Commission, which is expected to launch its pocket-sized power data on Monday, the country this year requires a total of at least 16,700 gigawatt hours of electricity to be able to expand the economy by between 4 to 4.5 percent.

However, the Commission envisaged that growing the economy by more than 4.5 percent will require the country to ramp-up its electricity supply to a minimum of 18,158 gigawatt-hours, which is achievable as long as the planned capacity additions for this year are timely completed, and there is also adequate financial resources to procure all the fuel needed for running the thermal power plants even with higher utilisation factors.

Last year, the Commission asked managers of the economy to ensure that at least 14,150 gigawatt-hours of electricity was produced to guarantee at least 4.2 percent economic growth, which it failed -- resulting in a supply shortfall of between 17-21 percent below the forecasted minimum range required compared with 11-16 percent less for 2014 and 10-15 percent less for 2013, indicating a worsening trend for the past three years.

Indeed, in 2015 - when load-shedding reached its peak over a three-year period - the economy recorded its lowest growth in 15 years: expanding by 3.9 percent mainly on the back of a slump in commodities prices and energy supply deficit, which affected the manufacturing, industries and services sectors…the biggest contributors to the country’s GDP.

The World Bank last year indicated that electricity shortage is the second-most important constraint to business activities in the country, and that Ghana lost about 1.8 percent of GDP during the 2007 power crisis.

Additionally, the Institute of Statistical, Social and Economic Research (ISSER) in its 2014 study indicated that on average the country is losing production worth about US$2.1million per day (or US$55.8million per month) through the power crisis alone.

As an example, the country lost about US$680million in 2014 - translating to about 2% of GDP - due to the power crisis. It further indicated that firms that do not get access to sufficient electricity have lower output/sales, and not having sufficient electricity lowers a firm’s annual sales by about 37-48 percent.

The Energy Commission added: “Stable and sufficient electricity supply is thus undoubtedly a key input to firms’ growth, expansion and development. Ghana’s annual electricity consumption per capita since 2010 has been averagely below 400 kilowatt-hours, compared to the global minimum average of 500 kilowatt-hours for lower middle-income developing countries”.