Former VRA boss Mr. Charles Wereko Brobbey has in detailed statement questioned the current mishaps within the Electricity of Ghana, in the statement the former boss of the Volta River Authority, indicated that, efficiency must come to bare when the debate of state owned or private companies is discussed.
He said: ‘’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. 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. It is in this respect that I would welcome a totally hands off ‘and fully accountable independent ‘management of ECG, assuming we can decide what it is to do.
As I argued more than 20 years ago, we need to separate ownership from management when discussing publicly –owned assets. I 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. That will allow ECG to be truly Ghanaian owned but not government controlled entity’’.
Below is the full statement
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 of ‘free’ education politicians of all shades keep promising.
The Millennium Development Corporation broke its long silence on the 2nd Compact of its partnership with the Government of Ghana.
And last but not least, the PURC’s travelling road-show on ‘realistic’ tariffs’ arrived in Takoradi and was ‘chased out of town’, as it has been everywhere else it has been so far.
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’s complaint or blame, whether fair or foul. In addition to all the above woes, ECG has borne the brunt of the people’s fury and exasperation for DUMSOR, which though is about to enter its 4th year, is described as “the temporary power situation” by a politically-correct radio advert. As I am tired of repeating ad nausea, ECG can only share what VRA and other generators; produce. No more, but a little less.
For years, ECG has been seen as the ‘ugly’ sister of the Volta River Authority (VRA), whose unwillingness to stand up to the dictates of various governments, has 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 ‘fix’, rather than manage, the recurring on –off DUMSOR for more than 30 years.
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. The result has been an increasingly irrational progression to turn ECG’s focus away from its seemingly challenged responsibility to distribute power, into a parallel bulk power generator. .
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. Nowhere in my near 30- year work in Ghana’s Energy Sector have I been involved in or read about the rhyme or reason for this substantial policy change that has turned ECG’s 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. .
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 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.
For the avoidance of doubt, ECG, 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 a generation reserve margin which will be equivalent to over 4times its present peak load demand. ECG is moving away from being a DISTRIBUTION company into becoming THE MAJOR MANAGER OF POWER GENERATION in Ghana.
All the above will be additional to VRA’s current installed generation capacity of approximately 2200 MW. So we are now in this seemingly mad and inexplicable situation of Ghana’s 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’s power priorities as one of exporting power like we do for cocoa and gold, instead of using it as the facilitator of the country’s drive towards value-addition to our commodities.
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’s DISTRIBUTION system through “PRIVATISATION”? According to media reports of the MDA’s briefing last week, Ing. Owura Safo (a former Chief Executive of VRA) informed Ghanaians that the MDA Power Compact “aims 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”
It is my contention view that the MDA will have to square the circle of 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
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. Long after 1)Kutu Acheampong’s “seizure of the commanding heights of the economy”, 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 pavlovian rejection of the notion of ‘private involvement in state owned assets. So it has been so far to last week’s briefing by the MDA into the imminent future of the ECG.
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. 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. It is in this respect that I would welcome a totally hands off ‘and fully accountable independent ‘management of ECG, assuming we can decide what it is to do.
As I argued more than 20 years ago, we need to separate ownership from management when discussing publicly –owned assets. I 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. That will allow ECG to be truly Ghanaian owned but not government controlled entity.
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.
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’s performance. And yet the same Government goes on to label Egg’s Ghanaian management as incompetent and incapable and gives this as the principal excuse to bring in private, almost certainly foreign stewardship.
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’s Chief Executive (and fellow former CEO of VRA) confirmed the payment of the huge debt as a prerequisite for the start of Compact 2,
Having read the whole of the Compact 2 document, I cannot see any convincing case beyond the politicians desire to get hold of ‘freebie’ 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.
Yes, let’s remove the interfering political claws that have bedeviled Ghana’s 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’s important that we don’t forget that France’s EDF and Ireland’s .ESBI, and many other global utilities are still public –owned and still better managed as commercial entities,
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 ‘sell-by dates’, in respect of the imminent resolution of our ‘temporary power situation.’ I 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. The 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.
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. 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.
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.
VRA currently owes over US$ 180 million to its Nigerian gas suppliers and the West African Gas Pipeline Coma my (WAPCO) the gas transporters. 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. 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.
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
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.
For ECG, the 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.
And what about the PURC road show on realistic tariffs? 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’s a tough and thankless task and it is not surprising that its very meritorious case has been roundly rejected everywhere it has been put.
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 ‘free goods and services’ it promises ’are paid for. We cannot afford another episode of “even the few amenities….” Dawn broadcast
So it is imperative for we the people of Ghana to answer the fundamental question, namely “What do we want ECG to do; What at all is wrong with the ECG; and. how best do we fix ECG’s problems to ensure we can get the best from this strategic public asset? “
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.
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? Watch this Space.
By: Charles Wereko-Brobby (Dr.)
Chief Policy Analyst, GIPPO