… who is set to deliver?
Energy plays a critical role in contributing to economic growth in two ways. First, energy is globally considered as an essential sector of the economy through the process of creating jobs and value by transforming and distributing energy goods and services.
Second, energy underpins the rest of the economy because it is an input for almost all goods and services. With these two important roles of energy in our daily routines, energy is indeed not an end in itself, rather a means of providing services.
From an economic perspective, energy systems are always driven by the demand for energy services.
Consequently, the demand for energy services is also determined by population, demographic trends, levels of economic activity, income, and technological and structural changes.
The provision of energy services encompasses strategic investment approaches to augment the establishment of necessary infrastructures.
Technically, what eludes some energy experts is that the current state of an economy is also the financier of energy systems and its components and energy flows.
Therefore, it is wrong to only argue that energy fuels the economy, rather the current state of an economy also has a causal effect on energy systems.
The most critical question arising from these two scenarios is: how much energy do economies need to function smoothly to improve social development and well-being? Surprisingly, such an important question miraculously escaped the manifestoes of the New Patriotic Party (NPP) and the National Democratic Congress (NDC).
However, what existed in the manifestos of these two leading political parties are mere policy pronouncements with zero justification for its achievement.
As this article argues on the basis that the current state of an economy affects energy systems, certainly as policy analysts, making a comparative analysis as to the viability of the promises made is critical to energy sector reforms.
The Promise: NPP
Taking a critical look into the NPP’s manifesto, its priority for the energy and petroleum sector to increase efficiency and ensure value-for-money for all activities, including reliable and affordable power generation and distribution, and further development of the oil and gas sector, as well as renewable sources.
The NPP plans to pursue this goal through enforcing competitive procurement of power, the least cost fuel procurement, and minimizing excess capacity charges through the ongoing renegotiation exercise to improve upon the financial health of the sector.
They also plan to reduce losses, particularly in power distribution, by ensuring ECG and NEDCo implement incentive-based loss reduction targets for all District Managers.
Additionally, NPP will significantly improve revenue collection with the implementation of remote sensing technology which is currently being piloted by ECG.
Also, NPP promises to complete rural electrification projects to ensure the transformation of our rural economies. Furthermore, NPP will continue its Auction-Based Licensing strategy for exploratory Oil Blocks to ensure value for money.
Finally, NPP will enforce local content policies for the Upstream and Downstream sub-sectors.
The Promise: NDC
The NDC plans to aggressively develop, modernize, and expand petroleum products delivery infrastructure to make Ghana an attractive oil and gas hub. NDC promises to expand thermal and renewable power generation to match its growing demand.
Furthermore, NDC plots to review gas pricing to remove inflated charges. Additionally, NDC promises to provide incentives for investment in the manufacture of solar panels and accessories in Ghana, including the removal of import duties on solar equipment and accessories.
If voted into power, NDC will accelerate the development of grid-connected solar, wind, and biomass plants. They also hope to steadily expand mini-hydro, thermal, and renewable power generation to match growth.
Finally, NDC through the Light Up Ghana initiative will enhance public safety, security and boost the night economy by ensuring that every city, town, or village has access to street lights.
The arising questions, the commonness, the comparative, and the viability according to the historical trend
From a theoretical perspective, the NDC presents a well-detailed manifesto with promises in every niche of the energy sector. NPP’s manifesto in the energy sector is not too detailed.
Arguably, this may be probably due to the promises already achieved in the accounting for the stewardship section.
Both parties agree to embark on electrification projects in all areas of the economy which will indeed transform rural economies.
Surprisingly, what is missing in both manifestoes concerning the energy sector is a thorough revenue stream measures needed to undertake all these aforementioned projects.
With a more comprehensive manifesto, the next NDC government faces a daunting task in securing funds needed to make all their promises in the energy sector a reality. What we cannot tell is the commonness in ensuring expansion in the power sector.
As it can be fairly argued that surges in population require expansion in power generation infrastructure, what is conspicuously missing is projections in energy demand that may have warranted the decision to make some promises.
Perhaps the NPP and the NDC made energy demand projections (with data-driven tools and policy sequencing approaches) but decided not to include them in their manifestos. If that is the case, was the “bottom-up” approach to evaluating the mix of economic activities and the energy intensity of these activities for each sector of the economy taken into consideration? Was there any case where the nexus between future demand for energy services and efficiency improvements in service provisions was considered? Was there a detailed projection of energy services pricing, economic development, and the consumption of energy services? Failing to account for projections that align with the needs of the people may result in signing unnecessary energy infrastructure projects without any use.
A typical example was when the NDC Government signed power contracts on a Take-or-Pay basis of which less than 40% of the contracted Take-or-Pay capacity is being used.
In essence, although manifestos are futuristic, there can not be an accurate analysis selecting which party will be a better manager of the energy sector. As a result, we will resort to a synopsis of historical trends in the past decade.
From the year 2012 to the year 2016, the era of dumsor affected most businesses in the country when the persistent on and off nature of power supply in the country became very abhorrent. In 2014, the disruptions in the power supply were estimated to have caused the Ghanaian economy an estimated US$680 million.
Domestic gas price has been reduced from $8.40 per mbtu from when the NDC was in government to $6.08 currently. In 2016, the amount of money owed by BOST to its suppliers has been reduced from $624 million to $57 million as of February this year.
Furthermore, due to the projected gas oversupply of 200 to 300 mmscf per day by 2023 by the NDC of which about 640 mmscf of the contracted gas supply is on a Take-or-Pay basis, Ghana now faces an average annual excess gas capacity charge of US$700 million annually.
Irrespective of the recent increase in petroleum price which runs steadily in all government, the NPP has proven to be better managers of the energy sector although NDC has a somewhat convincing manifesto from the outlook in the energy sector.
Therefore, as non-partisan policy analysts and experts in the energy sector, it is only fair if the NPP continues to manage Ghana’s energy sector for the next four years.
Authors:
Bismark AMEYAW: energy economist, data scientist, and policy analyst. Email: [email protected]
Eugene ABROKWAH: HR expert, business consultant, and policy analyst. Email: [email protected]
