Accra — In Ghana, providing a reliable and stable energy supply to both the population and businesses is a constant challenge for the government. Recently the country has been facing severe economic woes, evidenced by the sliding value of the cedi, their national currency, and coupled with growing inflation, partly due to the rising energy costs that affect industry costs.
On top of this, Ghana's growth and ability to invest in public service have been severely hampered by the ongoing power deficit and increasing demand for electricity that outstrips supply. Despite growing investor attention and attraction to opportunities, the lack of capacity to generate enough power for industrial growth has been a disincentive.
Ghana gets part of its energy supplied from Nigeria through the West African Gas Pipeline, which has been inconsistent and below contracted levels for a variety of political and economic reasons Ghana is estimated to spend about $1 billion annually on light crude oil for power generation, resulting in an uncompetitive private sector characterized by high cost of production, and high price of goods and services.
In September 2014, The African Centre for Energy Policy (ACEP), a non-profit think tank based in Accra, released a press statement to articulate its position on Ghana's current energy crisis. They looked at the efforts exerted by Ghana's government to address the governance and efficiency of the energy sector, and provided additional information on the review and passage of the much needed Petroleum (Exploration and Production) Bill. At the time of the release, in September, the Bill had not been presented to parliament, but today ACEP's statement remains timely. The Bill has now been laid to parliament, and while it could be a transformative piece of legislation, it still falls short on a number of key points.
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As ACEP points out in its release, the Bill is still not up to par in three main areas: open contracting(the norms and practices for increased disclosure and participation in public contracting, including tendering, performance and completion); the incorporation of beneficial ownership declaration (declaring who is the ultimate beneficiary of a company or enterprise); and local content and local participation (a law looking to ensure that local companies are part of the value chain in the oil and gas industry). ACEP proposes a moratorium on all new licenses until this new Bill is passed.
ACEP's release also serves as a good benchmark to understand some dynamics in Ghana's power sector. It is particularly useful in how it speaks to the sustainability of Ghana's energy supply agreements, and due diligence of the government in assessing the ability of current companies to produce enough energy to meet the demand.
For more information on ACEP's work, and the support provided by OSIWA on the review of the Petroleum Bill, as well as on anti-corruption in the oil and gas sector in Ghana more generally, please visit www.acepghna.com
