Create separate ministries for power, oil and gas — Think tank

The Institute for Energy Policies and Research (INSTEPR), an energy sector think tank, has called for the creation of two new ministries to handle power and oil and gas to ensure the effective management of the sectors.

“We strongly believe that the time has come for the creation of two new ministries, Ministry of Power and Ministry for Oil and Gas, to properly manage the sector,” the institute suggested.

In its 2021 outlook and expectations in the energy sector, the institute observed that the growth of the sector had made it impossible for a single ministry to properly manage the entire energy sector.

Over the past decade, Ghana’s energy sector has grown to become the backbone of the economy, with the discovery of oil and gas in commercial quantities affording the government extra revenue beside the country’s traditional exports.

“The sector now contributes immensely to our Gross Domestic Products (GDP) and reduces reliance on importation of gas for power generation,” the institute said but noted with concern that “due to lack of planning by successive governments, the sector experienced power outages in 2012 which lasted for four years”.

Outlook

In a 16-point report of the 2021 Outlook, signed by the Executive Director of INSTEPR, Mr Kwadow N. Poku, the institute suggested that the proposed Ministry of Power should oversee activities of the Ghana Grid Company Limited (GRIDCo), the Electricity Company of Ghana (ECG), NEDCo, the Volta River Authority (VRA), the Independent Power Producers (IPPs), the Bui Power Authority (BPA) as well as the yet to be established Renewable Authority which was stated in the Amended Act 832.

It also suggested the Ministry of Oil and Gas should oversee the Ghana National Petroleum Corporation (GNPC), IOCs, the Petroleum Commission, Tema Oil Refinery (TOR), BOST, National Petroleum Authority (NPA) and GCMC.

Power

The institute identified the power sector as the area which needed serious attention, as well as resources, explaining that the Energy Sector Recovery Programme (ESRP) stipulated that if no action was taken, the indebtedness within the power sector could reach $12,524 million by 2023.

According to the report, such a debt which would be 18.7 per cent of Ghana’s GDP could collapse the economy post COVID-19.

The country has a total dependable power of 4,657 MW as of June 2020 and a peak demand of 2,957 MW.

The peak demand is growing approximately 10 per cent on year, the institute noted, adding that the ongoing One-district, One-factory (1D1F) and the high gold prices would make the local mining companies increase the demand for electricity.

Oil and gas

On oil and gas, the institute said the government was projected to lose 51 per cent of its oil revenue this year due to low crude prices and reduced production due to the collapse of the oil industry as a result of the COVID-19 pandemic.

“There are challenges ahead in 2021 for the Oil and Gas Industry since the world economy post COVID-19 is forecast to slow down until 2022,” it said and added that those could be overcome by proper planning and management.

It added that the INSTEPR would in January next year review the Tema Oil Refinery (TOR), the Bulk Oil Storage and Transportation (BOST), the Electricity Company of Ghana (ECG) and the Ghana Gas Company Ltd to outline the challenges those state-owned organisations were facing and engage management and the government to discuss proposed solutions.

The report added that the INSTEPR would publish a barometer every six months to measure successes in the implementation of the Strategic National Energy Plan (SNEP 2030) and the ESRP.