By Classfmonline.com on 2019-05-07 14:14:00
The Return of “Dumsor”
Aside the country being significantly endowed with natural gas to fuel power plants which are largely dual-fueled, the Volta Lake is also currently recording a decent level of over 77 metres (as at April 12th 2019); compared to the prior year level of 75 metres, and far above its minimum operating level of 73...
The Return of “Dumsor”
Aside the country being significantly endowed with natural gas to fuel power plants which are largely dual-fueled, the Volta Lake is also currently recording a decent level of over 77 metres (as at April 12th 2019); compared to the prior year level of 75 metres, and far above its minimum operating level of 73.15 metres by the end of the dry season. The Installed power generation capacity has moved from a paltry 1,730 megawatts (MW) in 2006 to over 4,750 MW. More so, the current Dependable capacity is approximately 4,320 MW; far in excess of its current Peak demand of roughly 2,670 MW.
These positive scenarios are recipe for an aggressive and rapid industrialisation, to provide economic opportunities for its growing population, and also nipping in the bud the recurrence of “a persistent, irregular, and unpredictable electric power outage” called “Dumsor” in local parlance.
However, since November 2018 to date, Ghana has been experiencing recurring power outages even though the Installed generation capacity is far in excess of the country’s peak demand.
But for the recent decent level recorded by the Volta Lake, the situation could have been worse. To the extent that since November 2018 to date the country has largely been supported by hydro-electric power, with Akosombo, Bui and Kpong running almost all turbine units to generate over 50 percent of electricity for the country; in sharp contrast to recommended mode of operation for 2018/2019.
It is worth noting that, the failure to adhere to the recommended plan for hydro-electric power production as captured in the “2018 Energy (Supply and Demand) Outlook for Ghana” could significantly compromise reservoir integrity for subsequent years.
The return of “Dumsor” has been made possible due to the numerous challenges confronting the power sector. Aside the technical, regulatory, and procurement reasons, the key factor impacting on the reliability of electricity supply in Ghana, is the sector’s poor financial health which is driven largely by mounting legacy debt, operational inefficiencies, poor revenue collection, exchange rate fluctuations, and the poor tariff structure. Political interference in decision making and poor planning are also to blame for the inability of the power sector to deliver reliable supply of electricity in recent times.
• Poor Financial Health
Central to the recent power sector’s inability to provide reliable electricity supply is the weak financial position of the power utilities which impacts on the availability of funds to procure the required quantity of fuel for power plants in a timely manner, carry out maintenance services to ensure the availability of the required plant capacities, and maintain/expand transmission and distribution infrastructure to ensure system efficiency that may lead to reduced system and revenue losses.
The tariffs and service charges collected by the power utilities from consumers and bulk customers, yields liquidity for the entire value chain ― the capital so much needed to offset costs related with the generation, transmission, and distribution of electricity, and more importantly the fuel supply cost.
Aside the current Tariff Structure not being cost reflective to generate the needed capital, the power sector is also susceptible to Foreign exchange exposure.
The low tariff regime have left both transmission and distribution companies in perilous financial positions, as prices per kilowatt hour (KWh) of electricity transmitted or sold to customers still fall short of actual cost; rendering it impossible for the transmission and distribution companies to recover costs and expand infrastructure. Foreign exchange volatility is also accumulating huge debts in the books of the utilities, especially the distributor who pays Independent Power Producers (IPPs) in Dollar equivalent while collecting revenue in Ghana Cedis. More so, the costs associated with investments in transmission and distribution network infrastructure are also in foreign currencies, increasing the foreign exchange exposure. And as a result of this foreign exchange risk, further debts are being accumulated due to the non-application of the Automatic Adjustment Formula (AAF) aimed at sustaining the real value of the tariffs.
The high transmission and distribution losses between the point of supply and the point of consumption, arising from operational inefficiencies as well as poor collection of revenue from consumers, is another critical aspect that must be addressed in the power supply chain since it contributes greatly to the illiquidity in the sector.
Over the last decade and on annual basis, approximately 28 percent of gross electricity generated is lost through the transmission and distribution process. While transmission losses for the period only averaged 4.2 percent, distribution losses which is a mix of technical and commercial losses averaged 24.2 percent on annual basis.
Fig 1. Transmission and Distribution Losses: 2008 – 2017
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