Utility price hikes : Time to act responsibly in energy administration
“Ghanaians are not angry enough,” someone remarked in reaction to the current price hikes in utilities, which the Public Utilities Regulatory Commission (PURC) announced on December 8, 2015, and which came into effect on December 14, 2015. Perhaps that remark captures the mood of ordinary Ghanaians and industry captains.
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The unexpected high percentage increases in both electricity and water tariffs and the “insensitivity” of the timing of the new tariffs make one wonder what might have triggered such stringent measures.
The absence of intentional public education on what really ails our energy supply sector, on the one hand, and the non-involvement of the public in informed debate on the way out of the nagging energy crisis, on the other hand, have led to the perception by Ghanaians that they have been taken for granted in the way utility price hikes have been slapped on them.
Again, public anger against the price hikes stem from the fact that the price hikes do not come with the expected improvement in services provided by the utility companies.
Why are we here?
There is more to the erratic supply of utility services, especially electricity. Snippets of information gathered from energy experts and administrators indicate that the energy crisis the country faces today dates back to 1983. By 1997, the dire consequences of Ghana’s energy future prompted the VRA and other energy experts to advise against the over-reliance on hydroelectricity for domestic and industrial use.
The VRA proposed the diversification of energy sources, especially with the introduction of thermal power. In their reasoning, thermal power production would have been the base of our energy supply, while hydropower would be a complement. It is pertinent to state that the Akosombo and Bui dams become fully operational only at the mercy of nature. Therefore, a shortfall in rainfall adversely affects the operational levels of the dams, and the consequences on the society and economy are obvious.
However, political interference obstructed the early take-off of this laudable expert advice in keeping our energy needs afloat on thermal to power industry to boost economic growth. According to the experts, Ghana’s annual energy growth of eight per cent could have been met in excess of today’s need, if 100 megawatts of energy was added to the national grid each year since 1997.
The net consequence of our inability to pay realistic tariffs for electricity, especially from 1997, is the creation of a huge debt portfolio for the VRA and the ECG, the major energy producer and supplier respectively. While VRA’s books are in the red because of huge sums of money owed it by the ECG, the ECG is also wobbling on weak financial legs because the government owes it astronomical debts.
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What have we done to get out of where we are?
The erratic power supply to consumers has dealt immeasurable blows to the private sector especially. The toll on small-scale business people such as barbers, hairdressers, iced water sellers, cold store operators etc. are devastating. The financial stress on such commercial operators in providing basic needs for themselves and their dependents is too painful to recount. These are the same people who are being asked to pay more for little or no service improvement.
We are told that the coming on board of the power barge and other measures being taken at halting the embarrassing “dumsor” phenomenon will ensure uninterrupted power supply in the short to long-term expectations of Ghanaians. However, what Ghanaians want to know is: How effective can their expectations be met in the face of financial constraints?
Where is government going to raise money to offset its huge indebtedness to ECG and VRA? How sustainable will be the uninterrupted supply of crude and gas to power the barges and thermal plants?
Policy recommendations
The energy crisis facing us as a nation is formidable; its toll on the average Ghanaian, especially, is disheartening. The unemployment rate is increasing and the social implications are too frightening to enumerate. To arrest its numbing effects on the livelihoods of ordinary Ghanaians, workers, industry productivity, social security, social protection, national economic growth, and also to sustain energy availability to power economic activities, calls for engaging dialogue and decisiveness. The way out of this crisis is what should exercise the minds of all and not the perfunctory price-hike sing-song. All hands must be on deck to exorcise this ghost called “dumsor” from our social and economic life as a nation.
To that end, I proffer the following policy suggestions:
As a starter, the new tariffs implementation date should be postponed until 2016. If implemented, the effect on the festive mood of the populace will be negative. The ECG’s books must be cleaned; without that the credibility of these two major energy nerve-centres will sink further and their operations will also grind to a halt.
Gas security must be made certain. The challenge for the nation’s ability to supply adequate energy to consumers is not capacity, but the capacity to pay for the gas to power the turbines and thermal plants that produce energy. Public education on the nation’s energy issues should be done on a continuous, sustainable and widespread basis to make the people understand the real issues at stake.
Monitoring and policing of power consumption seems to be ECG’s weakness. Power theft is so rife and visible to the extent that the public believes that officials of ECG are in collusion with perpetrators of that illegal act. A much more aggressive monitoring strategy must be found to detect and prosecute offenders, and also plug every loose end that encourages such fraud.
Other suggestions are for the usurpation of roles in energy matters by politicians to be discouraged. The perception of corruption in such deals is rife, especially when a credible energy agency like the VRA was sidelined in the search for power barges to solve our energy crisis. The AMERI deal is a case in point.
The independence of the PURC should be ensured, while the Energy Commission, which is the energy driver of the country’s energy vision, should come out with a clear road map for the sustenance of Ghana’s energy needs.
Conclusion
We must all stand up in civility and demand accountability in our energy sector. The face of Ghana’s energy situation will change for the better when we act in concert as service regulators, producers, providers and consumers in finding appropriate solutions to fixing the energy issues that confront us. However, as consumers, we shall vigorously demand the best service for every investment we make in the way of tariff payments, for no nation can really develop with a sleeping society. We believe that the obituary for Dumsor must be written now!
The writer is the President of Full Gospel Church International & Leadership Development and Transition Management Consultant