On the front page of this edition of Goldstreet Business, we carry a story based on information provided by a usually reliable source in the Ministry of Energy to the effect that government has already taken a firm decision to terminate the 20 year concession agreement it has with Power Distribution Services (PDS) to act as electricity distributor in the southern zone of Ghana; and that the ongoing investigation into the alleged material breaches of the terms of the agreement on the part of PDS is simply a smoke-screen being employed to justify a decision that has already been made and for different reasons from the ones being given the public.
We readily admit that our source’s information is not cast in stone, and could possibly turn out to be untrue. However, the fact that we have carried the story – and the expected belief in its veracity by our readers despite any documentary supporting it – are simply evidence that the state’s handling of Ghana’s energy sector lacks credibility. Here, we emphasize the state rather than any particular political administration, because of the recent ones have contributed in no small measure to this sorry state of affairs.
The fact that Ghana has turned around its power generation shortfalls is supposed to be cause for good cheer. However, it has emerged that this is costing the country some US$500 million annually which is being paid to power producers for power not actually being used, this resulting from the take or pay contracts which were used to entice them into a country where there are only two off-takers: Electricity Company of Ghana and the Northern Electricity Department, both of them state owned. In turn, this has been presented as the rationale for an increase in the energy levy introduced by the previous administration to pay down legacy debts accruing from uneconomic power pricing in the past.
Increasing the energy levy rather than charging economic rates based on current energy generation and distribution costs is simply another effort to side step crucial public pricing issues – past such mistakes having taken us to the current unwanted circumstances.
On a wider scale, the jury of the general public is still out on whether the acute, nationwide power shortages that occurred a few months ago were the result of yet not fully resolved financial issues as claimed by the political opposition and independent power sector analysts, or the result of temporary technical issues that were quickly resolved as claimed by government. Again, this debate illustrates a crisis of confidence in and credibility of the state with regards to energy matters.
This newspaper has sadly come to the conclusion that Ghana lacks the capacity to manage its own energy sector, due a combination of technical incapacity, financial shortcomings, emphasis on political; exigencies rather than economic realities, and sheer corruption on the part of public officials and their private sector collaborators.
It therefore appears that just as Ghana had to resort to the International Monetary Fund to resolve our macro-economic problems, the country may have to resort to outsiders – the World Bank being the best bet – to resolve it energy sector shambles.
Nationalistic, patriotic thinking would balk at this. But the realities on the ground, exhibited time and again over the past two decades suggest that national pride should take a back seat to national prudence and realism.