Treat energy as business, not for social purposes – experts

The country’s energy sector must be treated as a business that supports all aspects of the economy and not as a social tool, says Harriette Amissah-Arthur, Executive Partner at Arthur Energy Advisors – a consultancy that focuses on energy and power.

“When we sit down and look at the sector [energy], it is not seen as a business industry that can be grown to support the economy and contribute to growth. We treat it more like a social good and look at affordability – which means we take monies from elsewhere to fund it,” she said.

Speaking at a forum on energy finance and the economy organised by Thomson Reuters in Accra, Mrs.  Amissah-Arthur noted that the reason many interventions have not worked for years in the energy sector is that the industry is not treated as a business.

“If you run the sector as a business and you take the whole spectrum of business principles into consideration, you will reap the benefits that can sustainably take care of the poor and vulnerable. But if you do not do it right, you will jeopardise the whole system and you can no longer support the poor as intended,” she added.

In adding his voice, Senyo Hosi-Chief Executive Officer of the Chamber of Bulk Oil Distributors (CBOD), noted that policymaking in Ghana is now seen and undertaken through the lenses of politics and emotions.

“We do not seem to be thorough in our policymaking, but rather subject to the whims of political dictates and sentiments. We give Ghanaians 1 pesewa in one hand and take GH¢20 in perpetuity. The Tema Oil Refinery (TOR) Debt Recovery Levy is still being paid. Policy must be properly structured,” he said.

As a US$6billion industry, the experts believe that a credible plan for energy production, distribution and consumption that has the buy-in of all stakeholders is key to solving the sector’s perennial challenges.

“We have a few interventions we at the petroleum sector are developing, and these are market-oriented solutions. At the petroleum and BDC side, what we are doing is making sure we get to where we are going by looking at the entire funding chain.

“We got a bank exposure of about GH¢4-5billion as a result of market dynamics and government debt. We do not want to get back there, and so we want to make sure that the operations are self sustainable,” Mr. Hosi added.

Mrs. Amissah-Arthur explained that one way to make the sector efficient is to look at whether the cost of delivering the service is efficient enough, and therefore competitive.

“If it is not, not only do our indigenous business people suffer, but it becomes difficult to attract investors from outside into our economy. With electricity being a critical component of business, if it is too expensive it will be difficult to use Ghana as a base to produce for the domestic market or even export,” she said.

Abass Tasunti, Head of Pricing at the National Petroleum Authority who was also on the panel, noted that the Authority is looking at policies that will ensure the Bulk Oil Distributing Companies (BDCs) and Oil Marketing Companies (OMCs) have the ability to get financing from their banks.

“This is one of the reasons we deregulated the industry in 2015 – to take away the issue of subsidies so that they can get direct financing from the banks,” he said, adding that the regulator is also ensuring fair pricing in the market.

“We will continue to regulate and ensure that the BDCs are undertaking fair pricing. We are operating a system that ensures full-cost-recovery. This means as an importer, he or she must recover fully what was incurred in the business; but this does not mean they can include costs that are not part of the business.

“We are working with BDCs to ensure that they undertake fair pricing and consumers pay the fair price on the market,” he added.