Time to take Ghana's Energy Sector Private

In the wake of Ghana's latest, even more repressive electricity conservation plan the leader of one of the nation’s most prominent business organisations is calling upon the national government to privatise the generation market.

Speaking at a news-conference, Tony Oteng-Gyasi, the president of the Association of Ghana Industries says the government should consider adopting as a long-term goal the "liberalisation” of the market.

The AGI leader pointed at the success the telecommunications and fuel industries experienced when they were liberalised as part of the rationale for making such a move.

Mr Oteng-Gyasi believes privatisation will lead to increased competition, and will help to drive an expansion of the nation’s generation abilities, which so far have been unable to keep up with national demand.

However, Mr Oteng-Gyasi did not lay the fault for the current crisis solely at the feet of the government. After meeting with the Electricity Company of Ghana and the Volta River Authority last week, Mr Oteng-Gyasi left convinced that tariffs for electricity are too low. “They are not realistic” he says, “the utilities are selling electricity for less than it costs them to make it”.

He also felt the low electricity prices have lead Ghanaians to misuse the resource, saying people were leaving lights on, and keeping the TV on even when nobody was watching. “When something is cheap” he says “you do not value it properly”.

While he acknowledged higher prices could hurt small business, and some regions of the country he believes it is better to have “market-prices”, and then “decide how to solve the problems” created by the change. Mr Oteng-Gyasi says it would be better for Ghana to “subsidise small groups” instead of the “whole country”.

The Minister of Energy, and the Public Utilities Regulatory Commission were unavailable to comment to The Statesman on Mr Oteng-Gyasi’s proposal.

The AGI’s conference follows the ECG and VRA’s announcement of a change to the load-shedding cycle.

The new cycle will last for four days - and will see power cut for 12 hours during the day, and then 12 hours on a separate night. Currently the nation’s electricity is only supposed to be out for 12 hours every five days.

Mr Oteng-Gyasi also confirmed the utilities have requested Association members cut back on their power usage by 25-percent.

The new rules have Ghanaian business on the defensive, and fearful at what this might do to their sales. “We are alarmed,” said Mr Oteng-Gyasi. “Even if manufacturers do not pass on higher costs to consumers, the reduced supply of goods will mean prices will increase”.

Mr Oteng-Gyasi used the cement market as an example, saying the electricity crisis has already caused industry heavyweight Ghacem to cut production by as much as twenty-percent, leading to higher costs for the building material.

However, while he said the crisis was costing Ghanaian companies “a considerable amount” he said the exact amount was “difficult to quantify”. He was also unable to say how much production would be lost by members of the Association due to the 25-percent consumption cut.

This is not the first time the utilities have called on Ghanaian businesses to scale back their electricity usage. Back in August when the energy crisis began the AGI was also asked to cut back on usage by 25-percent, however the group says it was unable to meet the utilities’ request at that time.

But, Mr Oteng-Gyasi says his Association is “playing its bit” when it comes to conservation. He says members are working to reduce consumption by running stand-by generators, as well as taking energy saving measures such as shutting off air-conditioning, and idling machinery.

The President also said his organisation favoured a “clustered approach”. The AGI would help to facilitate the meeting of entire industry groups. These meetings would allow industries to create energy saving plans that could be used across the board, and would hopefully allow the best conservation ideas to flourish.

But, in the end he says the situation must be improved; “electricity is no longer a luxury in Ghana, it is a necessity”.

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