Ghana Energy Future Sample Essay

A satellite image of Africa at dark. compared to other continents is straitening. Bright visible radiations are few and far between. Africa’s energy crisis comes on top of an already weak energy sector on the continent. We are confronting a serious aftermath up call for Africa in general and Ghana in peculiar. What is needed is a comprehensive peal Energy Action Plan that is implemented with asperity and preciseness. Experience from successful energy reforms in other states confirms that such a program of action will affect proficient. economic. fiscal. regional. societal and political considerations. The implied complexness is non an alibi for slippages and cheapjack execution. It is instead a call to convey the appropriate proficient. managerial and political accomplishments to the challenge.

The oncoming of the energy crisis in Ghana. in 2006. was most instantly sparked off by worsening rainfall in an energy sector dominated by hydro power. Load casting. combined with exigency investings and a greater trust on regional energy supplies from our neighbours have together ameliorated the state of affairs. Load casting appears to be. for now. behind us. Citizens’ defeats have been high. Even so. we should non concentrate on who is to fault for the energy crisis. The more of import inquiries are: What else is to be done? How can we guarantee. through an appropriate Action Plan. that energy is harnessed to ease growing in Ghana that is shared. accelerated and sustainable? In what follows. we draw upon the experience of developing states around the universe to turn to three related subjects: ( 1 ) pull offing the societal and political effects of energy reforms ; ( 2 ) equilibrating equal energy supplies with financial prudence ; and ( 3 ) guaranting a well-organized and cost-efficient execution of an Action Plan to concrete consequences.

( 1 ) What are the societal and political effects of energy reforms and how can they be attenuated? The key lesson here is that all successful reforms have paid strong attending to three dimensions: First hapless families need to be offered a basic supply of electricity at lifeline rates. that is at low-cost monetary values. Lifeline rates have been in topographic point for over a decennary. even though the benefits of these lower rates are non wholly accruing to the poorest. Recent analysis shows that approximately 50 % of the implied subsidy accrues to the non-poor. The reform therefore must guarantee that lifeline rates are directed to the hapless. It besides has to be financially sustainable over clip. through cross-subsidies financed by bear downing higher rates for high-end residential users. Management of line of life rates. with simple marks that are monitored and on a regular basis published. must be an indispensable portion of the Action Plan. The following dimension is entree to electricity. In Ghana. entree rates. at 54 % in 2005. are respectable in the context of SSA states. However. this rate breaks down to an urban rate of 82 % and a rural rate of 21 % . Other states such as Sri Lanka. Vietnam and Bangladesh have quickly expanded rural entree. doing important usage of non-grid

solutions. On a recent visit to a small town in one of the poorest states in China. I was struck by how cleverly and consistently the rural Chinese used renewable resources: biomass for heating. solar for cooking. rain H2O reaping. etc. Our ain renewable resources are an plus to tackle. The Action Plan must include a plan to broaden entree to rural countries. and to trust on renewable energy beginnings such as solar ( still expensive. but the monetary value is quickly falling as engineering improves ) . air current ( progressively efficient ) . biomass ( where clime permits ) . etc Finally the 3rd dimension is political. Reforms typically involve a combination of higher monetary values to do possible better entree and dependability. The political economic system of energy reforms brings into concentrate the impact on the victors and also-rans. The victors include those in trade. services. industry. agro-business. excavation and families that have been deprived of a dependable beginning of electricity.

The also-rans tend to be privileged urban based pay and salaried citizens and the in-between categories whose entree to electricity is less affected by the crisis. Losers are better able to form protests against monetary value additions. Winners. on the other manus. are excessively legion to form support in favour of assured supplies. Interestingly. the Ghana Industrial Association sees itself as on the gainers’ side. and had long called for higher electricity monetary values to guarantee more dependable and plentiful supplies. They besides see the new monetary values as more low-cost than the option of diesel-run generators. There is besides the added hazard that other parties will seek to take advantage of the protests from the also-rans to abash the Government.

In the political economic system country. experience shows that successful execution should hold the undermentioned constituents: openness ; good airing of information about what is being done to cover with the crisis ; and candor about the hazards. This allows Governments to transport public sentiment with them. The Action Plan must hence be based on a committedness to good execution with maximal information to the populace. There is besides the demand to get the better of any residuary political vacillation and to include in the Action Plan. a matter-of-fact attack to regional or cross-country parts to energy supplies. Ghana’s trust on Cote d’Ivoire is a all right illustration of this. as is the West Africa Gas Pipeline option that is envisaged to come on watercourse. even if with some hold. ( 2 ) How can future investings in energy be financed while guaranting an low-cost impact on the budget?

For cash-strapped energy public-service corporations to be able to finance future investings and keep current works and equipment. monetary values must cover ( long tally ) costs including the life line duty subsidy. There is no flight from this rule. Pricing below this degree merely means future burden casting or worse. Where there are budgetary deductions of societal or political jussive moods ( protection of hapless people. strategic industries ) . these must be explicitly paid for from grosss or through cross subsidies. However. bounds must ever be built in. since what is spent on energy subsidies is non available for roads. schools or wellness attention. . In all states that have succeeded in stilling energy crises. this rule has been adhered to. Examples include Chile. Argentina. and in SSA. Uganda most late. In Ghana. the supply of power to VALCO at discriminatory rates has both costs

and benefits that need to be revised. and the analysis publically shared and debated. The Action Plan must therefore include steps to guarantee the fiscal viability of energy public-service corporations. and a thorough analysis of cross-subsidies. budgetary transportations. and the full principle for long term subsidies to any activities such as VALCO. Equally of import. non all energy investings need to be financed by Government. Successful energy reforms have been accompanied by country-specific efforts at researching and implementing Public Private Partnerships ( PPPs ) in energy investings. Global experience indicates that. at best. the private sector is improbable to finance more than about a 3rd of new investings. But to acquire this possible one-third requires difficult work by Government in finding the regulations of the game for the private sector. and guaranting that execution is predictable and believable. Countries that have used this attack with some success include Chile. China. Egypt. India. Malaysia. Morocco. Thailand. Tunisia. and Vietnam.

Despite attempts made by the Government. Ghana appears to be dawdling behind other SSA states in its success in courting private engagement in energy investings. Of four signed private power understandings. merely one is active. Apparently there is a grapevine of interested operators expecting understandings with the Government. A serious business-like attack to acquiring private investings into coevals. and subsequently into transmittal and distribution. is still desiring. Whether PPPs are done through ordinance or single contracts is really much a state determination. What is besides clear is that unless there is international benchmarking ( utilizing Latin American and Asiatic states ) of hazard sharing and predictability about cardinal determinations such as duties. the private sector will non put. or will make so with footings that compensate for the hazards. Appropriate and predictable hazard sharing between the public and private sectors is the cardinal issue to be managed here. The Action Plan must interrupt from the past and Ussher in a business-oriented attack to PPPs. utilizing international benchmarking and lucidity and predictability of the regulations of the game to acquire the best footings possible for Ghana.

Recent inconsistent actions related to the duty determinations of the PURC have to be offset by believable future committednesss in order to pull the private sector into energy investings. ( 3 ) How do we implement the Action Plan to take to concrete and sustainable consequences? Energy is an indispensable constituent of a successful scheme of accelerated. shared and sustainable growing. It is. 1 might state. excessively of import to be left merely to the Energy Ministry. It besides requires a laser beam-like focal point by Government. It requires a businesslike attack. At the same clip. its cardinal societal and political every bit good as economic and proficient facets must be good balanced.

This will guarantee better service quality for growing industries and for consumers every bit good as improved entree for the hapless and for rural Ghanaians. And it will besides guarantee betterments in the impact of the energy sector on the Government’s budget. It besides requires that clip lines be monitored and managed expeditiously. Energy reform is a procedure. non an event. This attempt must be led by one of our most effectual directors. with private and public sector experience. chairing a multi-stakeholder Energy Commission. which will develop a Rolling Energy Action Plan. This will necessitate full Presidential support and Cabinet-level execution committedness. It will besides necessitate that the Energy Commission issue an Energy Scorecard twice a twelvemonth to the populace. comparing consequences with planned results.

Conclusion Ghana’s commendable purpose to be a MIC by 2015 requires a growing rate of at least 8-10 % per annum over the following 8 old ages. The deductions of this for energy demand direction. supply planning and execution. and institutional edifice are tremendous. In add-on to the inquiries addressed here. energy preservation. renewable energy and energy sustainability will necessitate to be taken up by the Commission. The thought of a atomic energy option has besides been raised in Ghana. and is under survey. This is a commendable longer term end. As with other options. the proficient. economic. fiscal. societal and political dimensions will necessitate careful analysis before a determination and timeline are arrived at. While we should analyze this option. we should be seting our more urgent energy sector house in order before we can seriously and meaningfully concentrate on a atomic option. As we contemplate our current energy challenge: will we catch the bull by the horns this clip. or look back in choler when the following crisis hits?