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Ghana: possible privatisation of power sector in sight

The Akosombo Dam. Ghana. Pic credit ALAMY
Amidst chronic power cuts, Ghanaians are debating whether privatisation of the electricity sector will provide stable supplies of electricity. Akosombo hydro dam, with a capacity of 1,202MW, has been operating at low levels due to poor rainfall. Pic credits: 12/Alamy

In West Africa, failure to conduct regular maintenance and upgrades at power plants has put additional strain on Ghana’s hydroelectric dams, which generate most of the country’s electricity. This at a time when the country is debating privatisation of the electricity supply industry, according to The Africa Report on Tuesday.

Two of the country’s largest dams – Akosombo and Kpong – have been operating at low levels since last year, but with the Harmattan season (a cold-dry and dusty trade wind that blows across the West African sub-region) almost over, the country could see a reprieve, as the rainy season will soon begin.

Mohammed Amin Adam, executive director of the Accra-based Africa Centre for Energy Policy (ACEP), explains that Ghana, in addition to the low rainfall challenge, has nationwide distribution losses of about 21%, largely as a result of faulty equipment and power theft.

Ghana currently generates roughly 2,125MW and has an approximate deficit of 500MW.

Promise from government

In his February State of the Nation address, President John Mahama promised to fix the country’s power problems before 2017, listing a series of independent projects – including Cenpower’s 350MW project at Kpone and Jacobsen Elektro’s proposed 360MW power plant at Inchaban – that are set to boost production over the next few years.

Adam told The Africa Report that: “Between 25 and 30 companies have been given licences to produce power. Some of them have power purchasing agreements, but this is not being translated into power production.”

He adds that only two private power plants are regularly in service, that being Asogli (200MW) and CENIT Energy’s plant (126MW).

However, ongoing repair works to the Asogli plant coupled with a low supply of gas have kept production down.

CENIT’s plant is not operating at full capacity owing to the weak supply of light crude oil from the state­owned Volta River Authority.

US agreement

In August 2014, the government signed a $498.2 million (ZAR6.05 billion) Millennium Challenge Corporation (MCC) compact with the US government to transform Ghana’s power sector.

Under its conditions, Ghana must encourage more efficiency in the sector and the privatisation of some of the Electricity Company of Ghana’s (ECG) operations. As well as collect outstanding debts, reduce distribution losses and improve generation capacity.

In March, deputy finance minister Mona Quartey told The Africa Report that the government would only privatise the revenue and bill collection arm of the ECG.

Adam suggests that separating units of the ECG would not be ideal due to the company’s relatively low customer base, stating that Ghana could pursue three options.

Adam’s suggested options

One is to float the ECG, allowing the government to be a minority share­holder. Another is to arrange a lease agreement, and the third option would be for the government to agree on a management contract with a private company.

However, Adam says the population might not support the latter option, since government faced a furore over the management contract for the Ghana Water Company with the joint Dutch and South African venture Aqua Vitens Rand in 2006.

Although Washington was due to disburse the MCC funds at the beginning of this year, the Ghanaian government has not met some of the provisions, including drawing up a plan for paying its debts to the ECG.

It should also have published a call for proposals for the planned privatisation.

Nicolette Pombo-van Zyl
As the Editor of ESI Africa, my passion is on sustainability and placing African countries on the international stage. I take a keen interest in the trends shaping the power & water utility market along with the projects and local innovations making headline news. Watch my short weekly video on our YouTube channel ESIAfricaTV and speak with me on what has your attention.


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