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The African Center for Energy Policy (ACEP) has published a consultative paper on Ghana’s electricity sector essentially analyzing three key areas, including power generation, the challenges of power transmission and the challenges of power distribution.
The Center is calling on the government to take action to address some of the concerns it raised in the document.
On the issue of power generation, ACEP fears that the government has not been transparent with regard to PPA renegotiations. CAPE fears that the associated opacity is the cause of the recent judicial debt imposed on Ghana following the termination of the emergency electricity deal.
“The government has always indicated that it is negotiating PPAs to relieve the country of excess capacity burdens. However, there is no transparency around the negotiations of these PPAs. The recent $ 134 million judicial debt against the government following the termination of the emergency electricity deal with Ghana Power Generation Company (GPGC) Limited is only one indication of the bad judgment that has characterized these negotiations, the result of an opacity that paid limited attention to the terms of the contract, ”CAPE said.
The policy think tank demands it;
- The government must provide information on excess capacity based on the declared availability for each of the plants for which an excess capacity charge is paid. This would improve the credibility of government claims on the amount paid for excess capacity.
- The government should prioritize the conversion of single cycle factories, especially the KTPP and Ameri factories which are still at the beginning of their life cycle, to combined cycle factories to improve the production and profitability of the factories in order to reduce consumer tariffs.
- The government should be transparent about the endless PPA negotiations and ensure they are meticulous to avoid judgment debt for energy that is never consumed by the taxpayer.
Regarding the challenges of electricity transmission, ACEP argues that the transmission sub-sector has received less attention and, if not properly addressed, could pose serious threats to security of supply. electric in the country. This, they say, is the result of constant overloading of transmission lines and voltage violation in some substations due to weak transmission infrastructure.
“Transmission losing in particular has been a constant and recurring challenge of the transportation system over the years. In 2019, for example, the system lost 4.7% of the electricity produced, an increase of 19.4% over 2018. The overall system losses at the end of the first half of 2020 increased to 5.28 % of total electricity produced. Transmission losses are caused by constant overloading of transmission lines and major voltage violations in major substations due to overloaded and weak transmission infrastructure, and insufficient available transfer capacity to meet requirements. demand from the main load centers (Accra, Kumasi, Tarkwa, etc.) especially during peak periods. These weaknesses in the transmission system have resulted in the inability of the grid to recover quickly during major system disruptions, leading to persistent power cuts and low voltages as has been the case in recent months, ”he said. he adds.
The Center believes that the issue of the challenges of power transmission could be properly addressed if the government could devote a portion of the HALS proceeds to investment in critical equipment in the transmission system and expedite the work of upgrading. upgraded to relieve electricity consumers from frequent blackouts and low voltage. currently experienced.
Addressing the challenge of electricity distribution, ACEP said system inefficiencies are the result of outdated distribution infrastructure and poor revenue collection and management by distributors. It revealed that in the first quarter of 2020, the electricity supply plan showed a reduction in electricity distribution of 26.63, which is about 3.43% above the benchmark of 23.2 %.
“Inefficiencies in the distribution sector contribute significantly to the electricity sector’s continued non-compliance with its payments and debts, which puts the sector in financial difficulty. The recently introduced liquidity cascade mechanism has proven to be, as predicted by CAPE, an ineffective solution to the sector’s financial challenges. The mechanism only distributes what has been collected by ECG unrelated to addressing relevant inefficiency issues in the energy value chain. So far, the mechanism could only honor about $ 592 million out of the $ 1.3 billion in obligations accrued in 2020. In addition, the function of ensuring an equitable distribution of income can and should be fulfilled. by the Utilities Regulatory Commission (PURC), the trade regulator that imposes the tariff, not a separate bureaucratic enterprise to make the system even more cumbersome, ”the newspaper revealed.
According to CAPE, the government should urgently “return to a transparent process for attracting private capital into the distribution sector.” If this is not done in the short to medium term, the entire power sector would be in serious distress unless the government is prepared to sacrifice other socio-economic investments to continue to support non-profit. sustainable electricity distribution sector ”.
See the full report below:
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