There is no doubt that the energy sector is the engine for socio-economic development. This was clearly manifested when the country suffered prolonged power crisis from 2012 to 2016 culminating in the collapse of many businesses, slowing down economic growth and making the national economy uncompetitive.
The debilitating energy crisis, popularly known in local parlance as “Dumsor,” attracted international and local attention, and became a prominent topic in national discourse, especially during the 2016 electioneering.
One major lesson Ghanaians ought to have learnt from the power crisis is that the pace of the country’s development slowed down considerably and made the economy uncompetitive.
It is worthy to note that the national economy would not make any meaningful headway if it is not supported by a strong and efficient power sector.
The Ghana Employers Association (GEA) has reported that more 13,000 people lost their jobs during the power crisis in 2015 alone. Those hardest hit were small-scale businesses and economic enclaves encompassing food vendors, carpenters, market women and artisans.
It is for these reasons that the Government has taken some bold initiatives intended to arrest the power challenge once and for all.
Energy as a Catalyst for Development
Ghana is said to be on the path of industrial development with high expectations that it would propel improvements in the economic and social lives of the people in the not-too-distant future.
Power has been identified as a binding enforcer to business growth and socio-economic activities. Economists point to a correlation between a nation’s economic development and the amount of power it consumes. This is evident in Ghana, especially as the nation is gradually emerging from an energy crisis.
A Report by the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana, shows that the country lost over $24 billion as a result of the power crisis between 2010 and 2016.
To paint a more vivid picture, the lack of sufficient and reliable power denied Ghanaians access to quality healthcare, education and other important infrastructure and social amenities.
Therefore the energy sector and its role as a catalyst for accelerating national development cannot be overemphasised. In that regard, the potential and capacity of the northern regions of Ghana emerging as the food basket and industrial hub of Ghana assumes a priority position.
Government’s Policy to develop the three regions of the north
The Millennium Challenge Account (MCA) Power Compact Programme to the northern sector is, therefore, crucial. This is because in the past government had introduced several initiatives and development interventions into the three regions of the north, many of which have not yielded the intended outcomes due to several factors, including lack of sustainability and sufficient electricity supply.
Many parts of the three regions of the north have lacked electricity for decades, with an average of not more than 50 percent access to electricity, compared to over 95 percent penetration in the Greater Accra Region alone.
Although agriculture remains the dominant economic activity in the Northern Electricity Distribution Company (NEDCo) operational area, however, the recurrent inadequacies in the supply of water and erratic rainfall patterns contributed largely to the endemic poverty situation in the three regions.
For this reason, every intervention that supports policy reforms and facilitates projects such as the One-Village, One-Dam and the One-District One- Factory presents excellent commercial opportunities capable of lifting the people out of poverty and improving their economic situations.
One such intervention is the irrigation schemes, which would require the reliable and sufficient power supply to ensure their effective operations, and this is where NEDCo comes in.
NEDCo, which was weaned off the Volta River Authority (VRA) in 2005, was established to develop and manage the distribution of power in the Upper East, Upper West, Brong Ahafo and the three regions of the north.
However, the absence of significant investments in NEDCo’s operations over the years, led to the NEDCo Financial and Operational Turnaround (NFOT) project being conceptualised under the MCA’s Power Compact Programme.
MiDA’s Timely Intervention
According to the Business Plan of NEDCo, the NFOT project is one of six projects under the Power Compact Programme being implemented by the Millennium Development Authority (MiDA), with a budget of US$65.7 million, which comprised four sub-project activities.
They include improvement in electricity services to the Central Business District of Tamale and improving the customer mix in NEDCo’s operational area by attracting and serving more commercial customers.
Ultimately, the MiDA interventions under the NFOT project sought to develop NEDCo into an efficient and self-sustaining power utility that would spearhead economic growth in northern Ghana.
Mr Mawunyo Rubson, the MiDA Director in charge of Generation Project, noted that NEDCo, like the Electricity Company of Ghana, is a critical electricity distributor and pivotal to its financial and operational viability is the role of the Millennium Challenge Corporation’s funded Service Provider, which is serving as a world-class private sector energy services consultant.
He said the consultant was supposed to work with the Management of NEDCo to build their capacity and entrench operational efficiencies over a three-year period.
Mr Rubson indicated that at the end of the consultant’s engagement, NEDCo’s potential to operate as a self-sustaining company with the capacity to offer secured employment and sustained profitability would be evident.
Anticipated Impact of the NEDCo Project
Mr Rubson said MCA’s US$65.7 million grant fund, which was being invested into the NEDCo operations was timely because it would improve its network areas, covering commercial centres like Techiman, Sunyani, Kintampo, Wa, Bolgatanga and Sawla.
He said the proposed projects have the potential of increasing NEDCo’s electricity sales by an average of US$11 million annually between 2018 and 2025, (representing approximately four percent of total electricity sales and would increase the total annual revenue of the firm by nine percent per year).
He said sustainable power would lead to increase in NEDCo’s customer base and provide a major boost to its sustainability.
Mr Rubson noted that apart from improving the efficiency of their operations in the Tamale Metropolis, the Compact’s intervention would particularly support the agricultural industry by providing power to factories, agribusiness processing operations and farms.
Besides it would provide reliable medium voltage electric service to the newly established 5,700 hectares AgDevCo Farming Hub, located close to Babator in the Bole District of the Northern Region.
When this is done, AgDevCo, which seeks to raise agricultural productivity, increase farmer incomes, create employment for our youth and, ultimately, reduce food insecurity, hunger and poor nutrition in rural communities, would attract many other commercial farming businesses in the form of out growers and offer employment opportunities to the people.
Feasibility Studies on the Project indicate that over 150,000 farmers are likely to benefit from the AgDevco Farming Hub. This will be a major complement to the Government’s Planting for Food and Jobs Programme.
Local farmers can also take advantage of the electrical infrastructure provided and benefit from the irrigation resources available through the AgDevCo Programme.
With relatively cheaper, reliable and high-quality electric power, AgDevCo would be assured of cost competitiveness in the commercial agricultural market space in Ghana and would, in turn, provide improved economic opportunities for all related businesses.
In line with the national agenda to ensuring universal electricity access by the year 2020, the village of Babator and some other villages along the road from Bamboi to the AgDevCo site would soon benefit directly from some 37km of LV power to be extended under the programme.
This has the potential to ignite various small-scale business activities such as shea nut processing and unleash the potential of the Mole National Park as a tourism destination.
Empowering Men and Women by Enhancing Access to Power
The provision of reliable power to markets and other economic enclaves would yield several benefits to communities working at getting out of poverty.
The Tamale Central Market and the Tamale Timber Market are earmarked to benefit directly from the intervention to provide reliable and quality power to these important commercial hubs in the Tamale Metropolitan Assembly.
The long-awaited Tamale Project would involve the changing of the old transformers that feed the social infrastructure, replacing the very old and sagging electrical cables and provide security lighting for the markets.
Traders can now look forward to extended business hours. Cold Storage businesses, which offer services for the preservation of meat, fish and other items, can look forward to their trade fortunes rising. Mechanics, seamstresses, hairdressers, carpenters, barbers, and other artisans can be sure that access to reliable and quality electricity, which impacted on their businesses, will improve.
Every programme that the Government has successfully implemented has called for stronger partnership and commitments from government agencies and the citizenry. The US Government funded Compact I Programme delivered a successful agricultural programme, through the collaboration of the Ministries, Departments and Agencies such as the Roads and Highways, Food and Agriculture, Lands Commission, Ghana Irrigation Development Authority, Environmental Protection Agency, Ministry of Education and some metropolitan, municipal and district assemblies.
Implementing Entity Agreement (IEA)
An IEA is a condition precedent to the release and the channelling of compact funds to a project implemented through the Accountable Entity. As with all MCC-funded projects, NEDCo will be required to sign an IEA with MiDA to facilitate the implementation of the project.
The progress of work on the projects envisaged under the NEDCo IEA will require the commitment and collaboration of the Accountable Entity, made up of MiDA and other entities including the Volta River Authority, Environmental Protection Agency, Lands Commission and the Public Utilities Regulatory Commission.