GRIDCo plans US$633m investment

…but warns against tariff-freeze

The Ghana Grid Company (GRIDCo) says its plans to invest US$633million in the next three years may be put on hold due to a delay in implementing the automatic tariff adjustment formula for electricity tariffs.

In a statement released by the power transmission company, it said not raising power tariffs further would scuttle the company’s long-term investment plans, which include adding 2,000km of transmission lines and 19 new substations to its existing infrastructure.

GRIDCo’s Head of Public Relations, Albert Quainoo, who signed the statement, said: “The new transmission service charge is grossly inadequate; therefore GRIDCo may have to scale down system reinforcement projects as it will be unable to secure the necessary funding.”

According to a proposal submitted to the Public Utilities Regulatory Commission (PURC), the company requested a 39.89% increase in its transmission service charge (TSC); however, it was granted a 13.5% increment effective October 1.

GRIDCo’s intended investment is to match the country’s annual 8 percent growth rate of electricity demand. Electricity supply is expected to top 2,764.2MW by 2015 from the current figure of 2,016MW.

The overall operations of GRIDCo may suffer a substantial breakdown, if the PURC should once again fail to grant them a tariff that will allow recovery of operational costs, and provide enough funds to cater for the strengthening of the existing network in the next review, the statement asserted.

The power transmission company said the urgent need to replace its obsolete power system and reinforce transmission network for increased reliability of power supply must be considered high on the agenda in the next tariff review.

“If we do not double our investments in the transmission system in particular, and the power sector in general, we would soon run into problems associated with transmission infrastructure -- which could manifest themselves as poor voltages and inability to evacuate power even if generation is adequate,” Mr. Quainoo said.

According to him, “our substation equipment generally have a lifespan of 30 years, and it is about time we replaced a number of these to enhance reliability of services.

“…We have to pursue an aggressive modernisation and expansion of the transmission network, build loops and create redundancies in order to have an electric grid of the future where customers will not experience outages because of problems in the transmission network,” he added.

The company also said that the regulator’s strict adherence to the automatic adjustment formula will ensure that it becomes financially viable and is able to service debts contracted since 2010.

GRIDCo’s demand for the implementation of the tariff adjustment formula comes after similar calls made by other power sector stakeholders -- Volta River Authority and Electricity Company of Ghana – that are demanding a review of tariffs at least every quarter.