Interview : Jonathan Amoako-Baah
How can investment be tailored to meet the increase in demand for electricity?
JONATHAN AMOAKO-BAAH: The increase in electricity demand can be attributed to industrial growth, real estate development and increased economic activity. Energy growth over the last five years has averaged about 7-10%. Investment must match this increase in demand, which is not always easy in a low-liquidity market such as Ghana. We are successfully working to avoid the emergency power shortfall scenarios we have faced in the recent past. We are therefore introducing market mechanisms to encourage investors to venture into the power generation business. Ghana is politically stable, and investor confidence in our legal system and the right to repatriate profits will make our economy more attractive to international investors.
What are the key advances in the infrastructure of the West Africa Power Pool (WAPP)?
AMOAKO-BAAH: WAPP is an ECOWAS directive that aims to integrate the national power systems of 14 countries across West Africa to create a reliable and competitive electricity market. This can only be possible with the construction of interconnectors among the various countries. A number of these projects linking Côte d’Ivoire, Liberia, Sierra Leone, Guinea, Nigeria and Niger are at various stages of completion. GridCo has constructed a 330-KV interconnection line between Ghana and Togo-Benin which adds to the existing transmission interconnection. We have also commenced power exports to Burkina Faso following the commissioning of an interconnection line between the two countries. In the end we expect to have a vast, interconnected West African power grid in place.
What form will the regional electricity market take, and what stage of readiness is it at?
AMOAKO-BAAH: The first phase of the West Africa Electricity Market was launched by the ECOWAS Regional Electricity Regulatory Authority (ERERA) in June 2018. This phase involves existing transactions among neighbouring countries, such as Ghana, Togo, Côte d’Ivoire, Burkina Faso, Nigeria and Niger. The second stage of the market will extend to cover trading with countries which do not share borders. ERERA is also implementing transmission pricing mechanisms, and the resulting competition among providers will help bring prices down, promoting socio-economic development. Crucially, the market will facilitate the movement of energy from high resource regions to low resource regions. WAPP and ERERA are in the advanced stages of stakeholder consultation and are overseeing the building of an electricity exchange in Benin. We expect to have one West African market in the near future.
How will a decrease in electricity tariffs affect the wider operating environment?
AMOAKO-BAAH: The current reduction in end-user tariffs, in sharp contrast with the previous increases, have put a lot of pressure on utility companies. However, the cost of electricity in West Africa as a whole is high. There is therefore a need for measures to significantly reduce tariffs. This can be achieved by shifting the domestic energy mix from oil to gas and renewables, which should help drive prices down and ensure stable supply of the available abundant gas and renewable resources in the sub-region. The reduction in tariffs announced by the Public Utilities Regulatory Commission could result in increased electricity demand. However, it may also make large scale infrastructure investment less attractive as a result of an anticipated reduction in returns. Therefore, what we need is an economic tariff that is favourable to both consumers and providers, to ensure that adequate infrastructure will always be in place to reflect rising demand going into the future. Utility companies must work to be efficient and reduce system losses to help achieve prices which are beneficial for providers as well as consumers.
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