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Opinions of Friday, 20 July 2007

Columnist: Mensah-Biney, Robert

Reflecting on the Power/Energy Crisis in Ghana

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Reflecting (thinking outside the box) on the Power/Energy Crisis in Ghana

“Seek ye first the continuous and sustainable supply of electrical power and water resources and all other industrialization would be added unto thee”

The main driving force for industrialization is water resources management, the internal combustion engine and the steam turbine vis-à-vis, electrical power generation. Industrialization of modern human societies is mostly based on some water resources, internal-combustion engine and the steam turbine. In the special case of Africa where the indigenous people have shown beyond reasonable doubt that they do not have the capacity to indigenously industrialize without foreign help, it becomes imperative to secure these resources in order to expect any form of industrialization. This is true because any form of industrial resources that will be provided by external sources will assume the availability of water, internal combustion engine and the steam turbine for electrical power generation.

The current electrical power crisis has demonstrated the folly of “419 elitism” in Ghana toward any form of industrialization. We learned from secondary school (high school)that to be able to solve any pure mathematics problem, we must understand the problem, define the problem, set the boundary conditions, identify the various alternative approaches, and have the necessary resources to be able to use any of the alternative approaches to solve the problem. To be able to solve the recurring electrical power generating problem in Ghana, it is important that we understand the problem, define the problem, set the necessary boundary conditions, consider different alternative approaches and look at the available resources to solve the problem.

Let us evaluate critically (outside the box) the current recurring problem of power crisis in Ghana. Firstly, we need to define the problem through a simple house clearing exercise: Let us consider the total capacity of power generation available in Ghana today under ideal operating conditions. The total power generation capacity in Ghana today (from available VRA data) is as follows: 1020 MW (megawatts)from Akosombo hydro electric plant, 160 MW from Kpong hydro electric plant, and 550 MW from the Aboadzie thermal plant resulting in a total of 1730 MW of generating capacity. Under ideal conditions this total power generation capacity will approximately be equal to 15,155 GWhr (or 13 - 15 billion kWh) per year. It is instructive to note that this ideal power generating capacity from the hydro electric plants at Akosombo and Kpong is similar to the power generation capacity from the hydro plants operated by TVA in USA (approximately 10.0 billion kWh per year). At the lowest electrical retail price of $0.05 per kWh (based on the lowest electrical retail price for TVA in USA), the annual income from this power generating capacity is about $757 million. (According to the budget statement for 2006, crude oil imports were fixed at $697.21 million). Is this electrical retail price real or imaginary for Ghana? What is the cost of generating power in Ghana by VRA in Mills per kWh (A mill is 1/10 of one cent)? Is this estimated revenue real for a country like Ghana with the gross domestic product of about $6.2 billion? Is the gross domestic product of Ghana capable of sustaining such revenue for the cost of electrical power? Remember this income to purchase electrical power will represent about 9.30% of the GDP of the country. Is this real and reasonable or a fantasy, like many things in Ghana? If VRA were able to produce this amount of electricity, would the economy of Ghana be able to sustain the purchase of all the power and generate this revenue for VRA? What is the current total annual expenditure (operating, fuel, maintenance and cost of capital) for VRA? What is the total cost to VRA to produce the ideal amount of electrical power? Can VRA economically produce and sell electricity at the stated retail price of $0.05 per kWh? Next, what is the total current electrical power demand for the population of Ghana (including residential, industrial and commercial)?

The real situation is completely different from the ideal situation. Based on economic data obtained from Ghanaweb, the electricity production in 1999 from VRA was 5.5 billion kWh per year. The consumption was 5.57 billion kWh per year. A June 4, article on Ghanaweb by Mr. Ato Ahwoi, stated that electricity production from VRA for sale to ECG in Jan 2007 and March 2007 were 455 GWh and 470 GWh respectively. These figures for 2006 were very similar to those in 2007. These figures are equivalent to about 5.5 billion kWh per year which is the same as the figures for 1999. Mr. Ahwoi stated further that in the short term, the government would have to resort to more power generation with small generators (1.0 to 2.5 MW capacities) at unit cost of $0.24 per kWh. Does this suggest that the cost of electricity in Ghana is in the range of $0.15 to $0.25 per kWh? Is this suggested figure correct? If it is correct, then it is significantly higher than the average retail price of electricity in USA (the average retail price is about $0.09 per kWh). I have just found out (SIL Ghanaweb) that the cost of electricity for May 2007 in Ghana was 1,625 cedis per kWh. This is equivalent to $0.17 per kWh. Certainly something is wrong with the electrical power industry of Ghana and some drastic measures need to be taken to arrest the situation. It would not surprise me to find out (after a review of power generation data from VRA and ECG) that the electricity generation and supply to Ghana have always been around the figures quoted above. Also, the same data would show that ECG has not been able to provide continuous and sustained electricity supply during its existence. So my dear good people of Ghana, the electrical power crisis in Ghana today is not due solely to the current low level of the Volta Lake. The fact of the matter is that VRA has in all probability been producing the same amount of power for the consumption of the people of Ghana since its existence. Therefore, it does not make sense to blame the current crisis solely on the level of water in the Volta Lake. If the good people of Ghana would get rid of the mental block that allows them to accept mediocrity and had challenged the ruling elites, they would have learned earlier that these “419 elites” have no answer to the crisis and the crisis would not end soon if they continue to rely on their expertise.

The next series of questions to be answered by VRA and ECG include the following: management of the companies VRA and ECG, maintenance of the assets, facilities and infrastructure, planning, innovation, accountability, and commercialization to provide and sustain continuous supply of electrical power for consumption by the good people of Ghana. Does the ECG have the management skills available in Ghana to be able to provide continuous and sustainable electrical power for consumption by the good people of Ghana if VRA can produce it? Do these two companies possess the business skills and savvy to maintain, preserve and sustain the assets, facilities and infrastructure of these companies to allow them to continue to provide continuous and sustainable electrical power for consumption by the good people of Ghana?

These are some of the initial common sense critical questions that the CEO of VRA, the CEO of ECG and the so-called energy experts in Ghana should answer before we begin to tackle the problem of water level in the Volta Lake. If we cannot find common sense and real answers to these questions then other issues become irrelevant. Because if VRA cannot generate enough income to operate their plants then whether the water level is high or low becomes a mute point.

If these questions can be answered in a positive, sensible and realistic manner then we can come back to evaluate the resources available for us to solve this problem. It may turn out that this problem cannot be solved at this stage of Ghana’s development given the nature of the problem. In that case the good people of Ghana would have to accept the fact that continuous and sustainable supply of electrical power is beyond their reach and would have to live with that fact for now. After all, the good people of Ghana have lived with this problem and other simple problems (clean and potable water, toilet and sanitation facilities) of basic necessities of live for almost 50 years.

The good people of Ghana should demand their government to establish a new department of energy and water resources management to deal with this problem in order to have any chance of industrialization. This is warranted, even if it means bringing in expatriates to operate and manage the energy and water resources of the country. The home-based elites have had their chances and blew them. The government should allocate at least $20 million (the same amount that was wasted in celebrating the 50th anniversary of the “scam of independence”) research and development funds to support indigenous research and development to find permanent and sustainable solutions to the power/energy problem in the country.

It is interesting to read on these forums and the local media about the blame game that goes on in Ghana about the power crisis. In the 60's while attending secondary school (boarding) in Kumasi, we used to experience power outages and it sometimes resulted in cancellation of examinations and early school dismissals (vacations). But there were no nationwide complaints about the crisis because majority of the people in Ghana did not have access to power and they cared less about power outages. In addition, there were only three or four newspapers and one radio station in the country controlled by the government. Therefore, power outages were not an important issue. When I lived at UST in Kumasi in 1979 and 1980, we did experience constant power outages coupled with water shortages. Whenever I have traveled to Ghana for vacation (in the 80’s 90’s and 00’s) I have experienced power outages and water shortages both in Accra and the other places that I have visited. So, for the young and unsuspecting ones that may have the chance to read this article, take it from me that the power crisis is not a creation of the current (NPP) government, nor that of the previous (NDC) government. Please, do not expect that any government that will succeed the present government can solve the power/energy problem under our existing system of governance because you know that they cannot. And, one more thing, the ruling elites in Ghana have no clue as to how to solve this problem. If they did, they would have solved it a long time ago. After all, they have had over forty years to solve it and have not been successful. All the ad-hoc and temporary measures that they are taking now will not do any good and the crisis will still persist in the foreseeable future.

Lastly, if the economics of generating power for consumption in Ghana by VRA and ECG are not favorable, then the first step to make them favorable is either to cut the expenditure for VRA and ECG or increase the revenue from sale of electricity. The obvious logical expenditure reduction will be to reduce personnel cost, eliminate the insane perks offered to management at VRA and other such organizations. The other critical information that the CEO of VRA should provide is this: What are the real implications of the level of water in the Volta Lake for power generation (explain for the layman)? Does the low level of water mean operation of fewer generating units or reduction in the power generated by each unit? Are there any conservation measures that VRA could take to alleviate the suffering of the people of Ghana caused by the shortage of power generated at this stage?

This problem (power/energy crisis) would require short term, medium term and long term solutions. Are the ruling elites and the so-called experts in Ghana capable of solving this problem? Answers to all of the above questions would allow for suggestions of appropriate solution(s) to the problem. Let us put our heads together and come up with real and common sense solutions to solve this problem.

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.

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