One lesson Ghanaians ought to have learnt from the extended power crisis suffered recently, is that the pace of our country’s development will be slow and uncompetitive, if it is not supported by a strong and efficient power sector. Ghana is today set on an industrial development path; propelling improvements in the economic and social lives of Ghanaians in the not-too-distant future.
It is for this reason that Government has taken bold initiatives aimed at arresting what had become perennial power availability challenges and the value-destroying phenomenon of dumsor.
Energy as a Catalyst for Development
There is no doubt that the energy sector is the engine for development. In Ghana, power has been identified as a binding constraint to business growth and socio-economic activities. Economists point to a correlation between a nation’s economic development and the amount of power it consumes. There is evidence to show that this is the case with Ghana.
According to the Institute of Statistical Social and Economic Research (ISSER) Ghana’s economy lost over $24 billion as a result of dumsor, between 2010 and 2016. To paint a more vivid picture, the lack of sufficient and reliable power cost each citizen in the country access to good roads, quality health care, education and other important infrastructure and social amenities that would improve the quality of our living standards. The Ghana Employers Association (GEA) has reported that over 13,000 people lost their jobs during the power crisis in 2015. Those hardest hit by dumsor were small-scale businesses and economic enclaves, encompassing food vendors, carpenters, market women, artisans and other small and medium size enterprises.
In discussing the power sector and its role as a catalyst for accelerated development, the potential and capacity for the northern regions of the country to emerge as the food basket and industrial hub of Ghana assumes a priority position.
Government’s Policy to Develop the North
The relevance of the MCA Power Compact Program to the Northern Sector is more heightened when the Government’s policy drive for the accelerated development of the northern regions comes into mind. Over the years, several initiatives and development interventions have been introduced into the North of Ghana, many of which have not yet yielded the intended outcomes and impact due to several factors, among which is sustainable and effective power. Many parts of the North of Ghana have lacked electricity for decades, and the three regions of the North collectively average no more than 50% access to electricity, compared to over 95% penetration in the Greater Accra Region alone.
Power and Agriculture
While agriculture remains the dominant economic activity in NEDCo’s operational area, the recurrent inadequacies in the supply of water and the lateness of rains to enable farmers to till the farmlands and harvest crops all-year-round to feed Ghanaians and industries contribute to the endemic poverty situations in the northern regions. For this reason, every intervention that supports policy reforms and facilitates projects such as the One-Village-One-Dam (OVOD) and the One-District-One Factory policies present excellent commercial opportunities capable of lifting the people out of poverty and improving their economic situations. To be efficient and effective, these irrigation schemes would require reliable and sufficient power supply.
These policies and projects could be facilitated better by NEDCo, which was weaned off the VRA in 2005 to develop and manage the distribution of power in the Upper East, Upper West, Brong Ahafo and Northern Regions of Ghana. It is the recognition of the absence of significant investments into NEDCo’s operations over the years, that the NEDCo Financial and Operational Turnaround (NFOT) Project under the Power Compact Program, was conceptualised. The MCA Ghana Program is therefore a God-sent intervention for the provision of power for development.
The NEDCo Project, MiDA’s Timely Intervention
The NEDCo Financial and Operational Turnaround Project, one of six Projects under the Power Compact Program being implemented by MiDA, with a budget of US$65.7 million, consists of four Sub-Project Activities. They include improvement in electricity services to the Central Business Area of Tamale, the commercial capital of Northern Ghana; and also improving the customer mix in NEDCo’s operational area by attracting and serving more commercial customers.
Ultimately, MiDA’s interventions under the Project seek to develop NEDCo into an efficient and self-sustaining power utility that will spearhead economic growth in the northern part of Ghana, by investing in building the capacity of the Utility Company to recover its operational costs and provide quality service to customers at affordable prices.
NEDCo, as the counterpart of the Electricity Company of Ghana (ECG) in the South, is no doubt a critical electricity distributor. Central to its financial and operational viability is the role of an MCC-funded Services Provider, in the form of a world class private sector energy services Consultant. The Consultant will work with the Management of NEDCo to build their capacity and embed operational efficiencies over a three year time span. At the end of the Consultant’s engagement, NEDCo’s potential to operate as a self-sustaining company with capacity to offer secured employment and sustain profitability will be evident.
Anticipated Impact of the NEDCo Project
The MCA’s US$65.7million grant funds, being invested into the NEDCo operations, is timely. The entire NEDCo network area, which covers vibrant commercial centres such as Techiman, Sunyani, Kintampo, Wa, Bolgatanga and Sawla will all benefit from these interventions. The four proposed projects have the potential to increase NEDCo’s electricity sales by an average of approximately US$11 million per year between 2018 and 2025, (representing approximately 4 percent of total electricity sales and will increase total annual revenue by approximately 9 percent per year). Sustainable power will lead to an expanded customer base that would include a significant number of industrial customers; a major boost to NEDCo’s sustainability.
Commercial Zone Development; the AgDevCo Connection
Besides improving the efficiency of their operations in the Tamale Metropolis, the Compact’s intervention will particularly support the agricultural industry by providing power to factories, agribusiness processing operations, and farms. It will provide reliable medium voltage electric service to the newly-established 5,700 hectare AgDevCo Farming Hub, located close to Babator in the Bole District of the Northern Region.
When this is done, AgDevCo, who seek to raise agricultural productivity, increase farmer incomes, create employment for our youth and, ultimately reduce food insecurity, hunger and poor nutrition in rural communities, would attract many other commercial farming businesses in the form of out growers, thereby offering more employment opportunities to the people in the District. Feasibility Studies on the Project indicate that over 150,000 farmers are likely to benefit from the AgDevco Connection. This will be a major complement to the Government’s Planting for Food and Jobs Program.
Local farmers can also take advantage of the electrical infrastructure provided and benefit from the irrigation resources available through the AgDevCo Program. With relatively cheaper, reliable and high quality electric power, AgDevCo would be assured of cost competitiveness in the commercial agricultural market space in Ghana and will in turn provide improved economic opportunities for all businesses related to the AgDevCo project.
In line with the national agenda to ensure universal electricity access by the year 2020, the village of Babator and some other villages along the road from Bamboi to the AgDevCo Site will soon benefit directly from some 37km of LV power to be extended under the Program. This has the potential to ignite various small-scale business activities, such as sheanut processing, and unleash the potential of the Mole National Park as a tourism destination.
Empowering Men and Women by Enhancing Access to Power
The provision of reliable power to markets and other economic enclaves will yield several economic benefits to communities working at getting out of poverty. The Tamale Central Market and the Tamale Timber Market are earmarked to benefit directly from the intervention to provide reliable and quality power to these important commercial hubs in the Tamale Metropolitan Assembly.
The long overdue Tamale Project will involve changing the old transformers that feed these social infrastructure, replacing the very old and sagging electrical cables and providing security lighting for the markets. Traders, both male and female, can now look forward to extended business hours. Cold Storage businesses, which offer services for the preservation of meat, fish and other items, can look forward to their trade fortunes rising. Mechanics, seamstresses, hairdressers, carpenters, barbers, and other artisans can be sure that access to reliable and quality electricity, which impacted negatively on their businesses, will eventually be no more.
Every programme that the Government has successfully implemented has called for strong partnership and commitments from Government Agencies and the citizenry. The US Government funded Compact I Program delivered a successful agricultural programme, through the collaboration of Ministries, Departments and Agencies such as Roads and Highways, Food and Agriculture, Lands Commission, Ghana Irrigation Development Authority (GDA), Environmental Protection Agency (EPA), Ministry of Education and some Metropolitan, Municipal and District Assemblies.
Implementing Entity Agreement (IEA)
An IEA is a condition precedent to the release and the channelling of Compact funds to a Project Implementer through the Accountable Entity. As with all MCC-funded projects, NEDCo will be required to sign an IEA with MiDA to facilitate the implementation of the project. The progress of work on the Projects envisaged under the NEDCo IEA will require the commitment and collaboration of the Accountable Entity, which is the Millennium Development Authority (MiDA), and other entities such as the Volta River Authority (VRA), Environmental Protection Agency (EPA), Lands Commission, PURC etc.