High tariffs thwart power export agenda

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High tariffs thwart power export agenda   

Ghana’s struggles to find markets for its excess power capacity has been blamed on the high cost of generation relative to other countries within the sub-region.

With total installed capacity of 5,083MW and a peak demand of 2,7000MW, the country is desperately seeking to export the excesses to electricity-starved neighbours like Benin, Nigeria and Burkina Faso – but with little success.

The need to find buyers is exacerbated by the fact that 2,300MW of the installed capacity has been contracted on a take or pay basis, for which government pays about US$500million annually without any usage.

But the reason for the country’s inability to off-load the excess power despite an apparent need for it by some its neighbours is because it is “simply too expensive and uncompetitive”, says Dr. A Ofosu Ahenkorah, an energy consultant and former Executive Secretary at the Energy Commission.

Dr. Ahenkorah spoke in Accra at an event dubbed ‘experts’ panel energy dialogue’, and said whereas Cote d’Ivoire sells its power at 10 cents per kilowatt hour, Ghana’s is 12.9 cents. The event was organised by the Abeeku Hammond Memorial Foundation, in honour of the late Prof. Abeeku Brew-Hammond – an energy expert who passed away in March 2013.

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Explaining why efforts to export the excess power have been in vain, he said the fixed and variable costs component of power plants in Ghana alone make up 67.9 percent of the cost for electricity, while it makes up 43.9% in Cote d’Ivoire and 30.9% percent in Nigeria.

This, according to him, makes it almost impossible for the country to compete with the likes of Cote d’Ivoire, which is also in the power export business within the West African region.

“What this means is that we are paying more for plant than in other countries. So, if you compare 67.9 percent to 43.9 percent, Cote d’Ivoire will beat you in any price competition. So, the high cost of power purchase agreements in Ghana is the most significant barrier,” he lamented.

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“While Ghana can generate and sell, other countries can generate and sell in the same market. We buy power from Cote d’Ivoire when we have shortage. They sell to us at 10 cents and it means that they can sell to Togo, Burkina Faso, Benin and the rest at the same price. Our power is more than 10 cents, so we simply cannot compete with them.

“We have been exporting to Burkina Faso at 9 cents, which comes as a loss to us because of the high cost of production. So yes, we can export – but at what price?” he added.

On why Ghanaians are paying more for power than others in the sub-region, he said most of the country’s plants were procured through uncompetitive bidding. “All the power plants in Ghana – the Independent Power Producers (IPPs) – were procured through unsolicited proposals.”

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The post High tariffs thwart power export agenda    appeared first on The Business & Financial Times.

SOURCE: thebftonline.com

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