The current utilities crises: How our past caught up with us
Feature Article of Monday, 11 March 2013
Columnist: Thompson, Nii Moi
Crises don’t just happen; they are often the culmination of a series of events (some visible, others not so visible) that take place over time and are typically ignored or inadequately dealt with. Resolving contemporary crises – and averting new ones – therefore requires a disciplined understanding of what went wrong in the past and why.
What we are experiencing under the current utilities crises (especially that of electricity, because it affects everything, including water production) is the result of years, indeed decades, of neglect and failure to plan adequately with the future in mind.
Available statistics show that electricity consumption per capita in Ghana peaked at 421.6 KWh in 1980. It then fell steadily to 92 KWh in 1984, largely on account of the severe drought of the early 1980s and its deleterious effect on the Akosombo dam, the main source of electricity in the country.
The return of the rains and the launching of sectoral reforms led to a gradual recovery in electricity generation and consumption, which reached 387.9 KWh per capita in 1997 only to begin another downward drift afterwards. Between 1998 and 2009, per capita electricity consumption averaged 280.4 KWh, according to the World Bank’s World Development Indicators (WDI). The figure is likely to be significantly lower under the current energy crisis. (For purposes of comparison, the figure for China in 2009 was 2,631.4 KWh, up from 281.6 KWh in 1980).
All of this means that electricity generation over the years did not keep pace with population growth and its associated increase in economic and social activities. Between 1970 and 2009, for example, Ghana’s population increased from 8.6 million to nearly 24 million, and the proportion of those living in urban areas rose from about 29.0% to 50.1%.
Credit: Nii Moi Thompson The latter part of this period saw rapid growth in ownership of appliances like television sets, fridges and air-conditioners, all of which consume a lot of energy. The inevitable increase in electricity-based industrial and commercial activities that come with urbanisation only aggravated the situation.
It is easy to blame the lapses of the past on inadequate capital investment (and that may to some extent be the case), but one cannot overlook the role of institutional rot in what eventually led to the current crisis. Between 1971 and 1999, for instance, electricity transmission and distribution losses, as a percentage of total generation, averaged 4.2% per year, according to the WDI. For reasons that are not entirely clear, in 2000, the loss rate jumped to 18.9% from 2.1% the previous year; it has lingered around high double-digits ever since, averaging 22.4% per year between 2000 and 2009. It was only a matter of time before we were hit with the current crisis.
At a recent meeting between ECG’s staff and the Minister of Energy, the ECG boss reportedly told the minister that ECG “continues to witness the declining trend in system losses from a high rate of about 26.2 per cent in 2011 to about 19.8 per cent by the end of 2012”.
This is still unacceptably high. For a 2,000 MW output, for example, it would mean a loss of nearly 400 MW – double the reported deficit in generation prompted by the rupture of the gas pipeline that precipitated the crisis.
Compare this to Singapore, for instance, where transmission and distribution losses in 2010 were only 7.0%, the highest on record, with an average annual loss rate of only 5.1% over four decades.
For Ghana, whose population is expected to double to nearly 50 million in about 30 years, the imperative eliminating waste, diversifying risk, having the systems to cope with them seamlessly when they arise, and adequately planning for our future needs cannot be over-emphasised.
In this regard, government’s decision to invest all the funds from the next phase of the Millennium Challenge Account in the energy sector, in addition to numerous other initiatives currently under way to address the crisis, is indeed appropriate. At the very least, it should address the question of investment substantially.
But more investment without comprehensive institutional reforms will, at best, provide temporary relief and expose us to long-term vulnerabilities, such as we are experiencing now.
The Minister of Energy, in his meeting with the ECG staff, alluded to some reforms, but he must be firm and unequivocal about his intentions; he must be prepared to purge the sector of dead wood and set it on the path to managerial rectitude and technical efficiency. “Transparency and accountability” may be clichés now but they become very relevant in this case.
He may consider instituting performance contracts for managers at all levels in the public sphere of the energy sector (ECG, GRIDCO, VRA, etc.) and publishing such contracts to facilitate both transparency and civic auditing from the public before even the professional auditors step in. Such contracts must include, among other things, clearly specified targets (such as reductions in transmission losses and the ultimate elimination of power outages), relevant performance deliverables, and realistic timelines.
Quarterly publication of technical and financial performance of ECG and other players in the sector must also be made mandatory and used as an objective basis for dealing with those who perform below expectation – without fear or favour.