{"id":159576,"date":"2015-10-14T08:27:21","date_gmt":"2015-10-14T08:27:21","guid":{"rendered":"http:\/\/4cd.e16.myftpupload.com\/?p=159576"},"modified":"2015-10-14T08:27:21","modified_gmt":"2015-10-14T08:27:21","slug":"tarzan-asks-what-at-all-is-wrong-with-ecg-that-needs-fixing","status":"publish","type":"post","link":"https:\/\/citifmonline.com\/2015\/10\/tarzan-asks-what-at-all-is-wrong-with-ecg-that-needs-fixing\/","title":{"rendered":"Tarzan asks: What at all is wrong with ECG that needs fixing?\u00a0"},"content":{"rendered":"

The Power Sector has been very much in the news this past week. News of the scheduled October arrival of the first of two power barges from Turkey is now shrouded in its own DUMSOR.<\/p>\n

Power supply to the Koforidua and Kumasi Polytechnics were restored after the two institutions realized that electricity is not part of \u2018free\u2019 education politicians of all shades keep promising.<\/p>\n

The Millennium Development Corporation broke its long silence on the 2nd<\/sup> Compact of its partnership with the Government of Ghana.<\/p>\n

[contextly_sidebar id=”ugGQ89ORv7p4EU9CHApHTGdfVWKYzc6D”]And last but not least, the PURC\u2019s \u00a0travelling road-show on \u2018realistic\u2019 tariffs\u2019 arrived in Takoradi and was \u2018chased \u00a0out of town\u2019, as it has been everywhere else it has been so far.<\/p>\n

The common string holding all of the above events together is the Electricity Corporation of Ghana (ECG); which unfortunately seems to have become the butt of everybody\u2019s complaint or blame, whether fair or foul.\u00a0\u00a0 In addition to all the above woes, ECG has borne the brunt of the people\u2019s fury and exasperation for DUMSOR, which though is about to enter its 4th<\/sup> year, is described as \u201cthe temporary power situation\u201d by a politically-correct radio advert.\u00a0 As I am tired of repeating ad nausea, ECG can only share what VRA and other generators; produce. No more, but a little less.<\/p>\n

For years, ECG has been seen as the \u2018ugly\u2019 sister of the Volta River Authority (VRA), whose unwillingness to stand up to the dictates of various governments, \u00a0has led to serious technical mismanagement of the Akosombo & Kpong Dams, as well as the Takoradi thermal plant. Thus it is rather VRA, and successive governments, who must thus take the largest large share of the blame for the perennial failure to \u2018fix\u2019, rather than manage, the recurring on \u2013off DUMSOR for more than 30 years.<\/p>\n

Ironically, instead of successive governments accepting that their inertia to invest in and interference on technical matters are primarily responsible for the failure to generate power sustainably and reliably for more than 30 years, they have sought to deflect the blame onto the VRA.\u00a0 The result has been an increasingly irrational progression to turn ECG\u2019s focus away from its seemingly challenged responsibility to distribute power, into a parallel bulk power generator. \u00a0.<\/p>\n

Karpower, which is supplying the power barges from Turkey, is only one of almost 30 Independent Power Producers (IPPs) who have signed Power Purchase Agreements (PPAs) with ECG. At the moment, four (4) of the 29 IPPs, including Asogli and CENIT, are supplying power directly to ECG, through GRIDCO, by-passing the traditional; arrangement of letting VRA handle generation issues, whether public or through IPPs. \u00a0Nowhere in my near 30- year work in Ghana\u2019s Energy Sector have I been involved in or read about the rhyme or reason for this substantial policy change that has turned ECG\u2019s attention from its primary mission of efficiently distributing power to various end-users. I can speculate about non-rational reasons, but I prefer to hold my counsel for now. \u00a0.<\/p>\n

Now hold on to your braces and read this carefully> If all of the 29 PPAs that the ECG has been coerced to sign come into fruition, ECG will become the largest power generator in Ghana, if not Africa. ECG will be saddled with nearly 6600 MW generation capacity when\u00a0\u00a0 its current peak demand for distribution is 1500MW. And by the way, Ghana total peak load demand is of just about 2000MW, including exports to Togo, Benin and supplies to the mines, all done by VRA.<\/p>\n

For the avoidance of doubt, \u00a0ECG, which is set up to primarily distribute power the primary responsibility for distributing power, is inexorably having to turn its attention and energies to having the responsibility of managing \u00a0a generation reserve margin which will be equivalent to over 4times its present peak load demand. \u00a0\u00a0\u00a0ECG is moving away from being a DISTRIBUTION company into becoming THE MAJOR MANAGER OF POWER GENERATION in Ghana.<\/p>\n

All the above will be additional to VRA\u2019s current installed generation capacity of approximately 2200 MW. So we are now in this seemingly mad and inexplicable situation of Ghana\u2019s committed power generation capacity ballooning to nearly 9000MW for a current Dumsor-free peak load demand of just about 2000MW. No wonder we see Ghana\u2019s power priorities as one of exporting power like we do for cocoa and gold, instead of using it as the facilitator of the country\u2019s drive towards value-addition to our commodities.<\/p>\n

So where is this illusion coming from that the primarily purpose of the MDA Compact 2 is to spend nearly US$500 million to improve ECG\u2019s DISTRIBUTION system through \u201cPRIVATISATION\u201d? \u00a0According to media reports of the MDA\u2019s briefing last week, Ing. Owura Safo (a former Chief Executive of VRA) informed Ghanaians that the MDA Power Compact \u201caims at transforming ECG in terms of technology and efficiency in power distribution to become a stronger company able to meet the current and future needs of Ghanaian families\u201d<\/p>\n

It is my contention view that the MDA will have to square the circle of\u00a0 improving DISTRIBUTION with the emerging reality of ECG fast becoming saddled with the major GENERATION mandate AS WELL. I would also venture to suggest that no sane private company, invited to address a DISTRIBUTION PROBLEM, will be amused to find a different reality. It is just as well that Ing. Sarfo informed us that the MDA has yet to prepare the tender document that would invite prospective private companies<\/p>\n

One of the most enduring legacies left to us by our founding father, the Osagyefo, is an instinctive belief in state ownership as the best means of production. \u00a0Long after 1)Kutu Acheampong\u2019s\u00a0 \u201cseizure of the commanding heights of the economy\u201d, 2) the collapse of Soviet Communism; 3) the British Labour abandonment of Clause IV; and 4) the impressive transformation of China primarily through private production; most Ghanaians have \u00a0pavlovian rejection of the notion of \u2018private involvement in state owned assets.\u00a0\u00a0\u00a0 So it has been so far to last week\u2019s briefing by the MDA into the imminent future of the ECG.<\/p>\n

I have always held the view that whether we are dealing with state-owned or private companies, we should be more interested in the efficient delivery of services at an optimum cost than rather than an ideological obsession with the form of ownership s, period.\u00a0 However, there is a fundamental concern about public ownership, which is the tendency for unbridled interference by politicians in the management of state-owned enterprises at all, levels, from investment to procurement, from management to employment. \u00a0It is in this respect that I would welcome a totally hands off \u2018and fully accountable independent \u2018management of ECG, assuming we can decide what it is to do.<\/p>\n

As I argued more than 20 years ago, we need to separate ownership from management when discussing publicly \u2013owned assets. \u00a0I argued then, and I repeat now; we should retain GHANAIAN OWWNERSHIP OF ECG by floating it on the Ghana Stock Exchange for the majority of shares to be purchased by Ghanaians. \u00a0That will allow ECG to be truly Ghanaian owned but not government controlled entity.<\/p>\n

The sale of shares would bring the added benefit of raising the much needed funds to invest in the much needed improvements in technology and infrastructure that the so-called concessionaire is expected to bring to the table. A Ghanaian-owned entity will still have to be run by the most competent independent management, whether Ghanaian or foreign or mixed. All of us as shareholders will reap the benefits of good services and handsome returns from a well run ECG or baby ECGs as is deemed appropriate.<\/p>\n

One of the key impediments identified hindering the start of the Compact is the massive indebtedness by the Government of Ghana to ECG. This is quite insane and unacceptable and has become one of the major albatrosses choking ECG\u2019s performance.\u00a0 And yet the same Government goes on to label Egg\u2019s Ghanaian management as incompetent and incapable and gives this as the principal excuse to bring in private, almost certainly foreign stewardship.<\/p>\n

In the interest of fairness to the current ECG, the Government of Ghana must pay its debts first and allow ECG to show it can manage its own affairs; and then call its bluff on the perceived inefficiencies in the local management that can only be solved by a foreign concessionaire. After all, Ing Owura Sarfo, the MDA\u2019s Chief Executive (and fellow former CEO of VRA) confirmed the payment of the huge debt as a prerequisite for the start of Compact 2,<\/p>\n

\u00a0Having read the whole of the Compact 2 document, I cannot see any convincing case beyond the politicians desire to get hold of \u2018freebie\u2019 funds for the precedent insistence to turn over ECG management into private foreign funds. We have been down this road before and we need to revisit the outcomes before we plunge headlong into another experiment.<\/p>\n

Yes, let\u2019s remove the interfering political claws that have bedeviled Ghana\u2019s power sector, by going for a Margaret Thatcher style share flotation to retain Ghanaian ownership of ECG and other players in the power sector. Then we can deal with the issue of private management on its own merits. It\u2019s important that we don\u2019t forget that France\u2019s EDF and Ireland\u2019s .ESBI, and many other global utilities are still public \u2013owned and still better managed as commercial entities,<\/p>\n

Ghanaians were worried when October came and the barges had not shown up, They need not be because the barges have quite frankly gone well past their \u2018sell-by dates\u2019, in respect of the imminent\u00a0 resolution of our \u2018temporary \u00a0power situation.\u2019 \u00a0I need to place on record that was a supporter and indeed cheer leader for the injection of power barge. However this support was premised on the promised that these would be injected by last April 2015. \u00a0The current reality is that even of the barges arrive now, it will unlikely that they could be deployed before January 2016, after the promised end of 2015 to end DUMSOR.<\/p>\n

Fortunately, we are now in the happy position that our own home grown thermal capacity which were down, have all been rehabilitated and in some cases had their capacities expanded.\u00a0\u00a0\u00a0 Our home grown working thermal capacity is over 1000 MW. This is in addition to our hydro capacity of almost 1600 MW. Additional home grown thermal capacities are on stream to be concluded in the near future.<\/p>\n

However we need to tamper the good news of better thermal capacity with the worrying problem of cash flow constrictions and overwhelming debt to both power generators, and fuel suppliers to produce adequate energy to complement the reduced hydro production on account of low water levels in the Akosombo lake.<\/p>\n

VRA currently owes over US$ 180 million to its Nigerian gas suppliers and the West African Gas Pipeline Coma my (WAPCO) the gas transporters.\u00a0 The suppliers have given notice that if they do not hear some commercially sensible commitments from our Government by this Wednesday, they will reduce the supply to the minimum level necessary to maintain its technical integrity, which will be one quarter of contracted supply.\u00a0 VRA also owes the Ghana Gas Company over US$ 100 million. If Ghana Gas runs out of money, all of Takoradi will shut down too.<\/p>\n

ECG is unable to pay the Asogli IPP several million dollars for the power it has already supplied. Therefore Asogli is unable to pay VRA for the Nigerian gas it uses too generate the power, which of course is largely why VRRA is unable to settle its gas debts. To all this, add the billions of unpaid bills by the Government to ECG<\/p>\n

Thus there is little likelihood of there being fuel to run neither the Turkish barge, nor any other thermal capacity in the so called emergency pipeline anyway. To compound the problem, the continuing closure of the TOR refinery means that the fuel originally targeted to run the barge is no longer available.<\/p>\n

For ECG, \u00a0the non arrival of the barge may turn out to be a blessing in disguise, delaying the need to find additional revenue to pay Karpower when it is still struggling to pay its huge debts to ASOGLI, VRA and the IPPs it is already been forced to work with.<\/p>\n

And what about the PURC road show on realistic tariffs?\u00a0 Poor ECG has been at the forefront of the case for charging realistic tariffs. It has to do so in the midst of DUMSOR that is perceived to be on account of its shortcomings, even though they are not the culprits. It\u2019s a tough and thankless task and it is not surprising that its very meritorious case has been roundly rejected everywhere it has been put.<\/p>\n

And the unkindest cut of all for ECG. When it tries to collect the debt that it is owed, somebody somewhere, usually a big politician, suddenly perceives a hemorrhaging of political support, resulting in an order to restore power that has not been paid for. I am all for ECG cutting off anybody and every institution which owes it for power consumed. This must be without any exception, not even for the so called security institutions. It is the responsibility of the Government to ensure that \u2018free goods and services\u2019 it promises \u2019are paid for. We cannot afford another episode of \u201ceven the few amenities\u2026.\u201d Dawn broadcast<\/p>\n

So it is imperative for we the people of Ghana to answer the fundamental question, namely \u201cWhat do we want ECG to do; What at all is wrong with the ECG; and. how best do we fix\u00a0 ECG\u2019s problems to ensure we can get the best from this strategic public asset? \u201c<\/p>\n

I am afraid we are yet to get clarity on the first let alone start to shape the relevant and appropriate path to credible solutions.<\/p>\n

BREAKING NEWS: October has shifted to the end of November for the arrival of the first of the Karpower barges. Will the people of Ghana spend Christmas in DUMSOR for a fourth successive year?, Will the Minister of Power be at post by the end of year?\u00a0 Watch this Space.<\/p>\n

–<\/p>\n

By:\u00a0Charles Wereko-Brobby (Dr.)<\/strong><\/p>\n

Chief Policy Analyst, GIPPO<\/strong><\/p>\n

Email: <\/strong>tarzan@eyetarzan.org<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The Power Sector has been very much in the news this past week. News of the scheduled October arrival of the first of two power barges from Turkey is now shrouded in its own DUMSOR. Power supply to the Koforidua and Kumasi Polytechnics were restored after the two institutions realized that electricity is not part […]<\/p>\n","protected":false},"author":24,"featured_media":140477,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[8],"yoast_head":"\nTarzan asks: What at all is wrong with ECG that needs fixing?\u00a0 - Citi 97.3 FM - Relevant Radio. 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