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The extensive consultations leading to the selection of power as the binding constraint and focus for the 2nd Millennium Challenge Compact (MCC II) will have to continue into the implementation phase of the Compact.
According to Dr Mohammed Amin Adam, Executive Director of the Ghana Chapter of the Africa Centre for Energy Policy (ACEP Ghana), public consensus was required on certain conditionalities in the Compact Agreement.
Dr Adam said the conditions precedent to the disbursement of Program Funding and Compact Implementation Funding— collectively referred to in the Compact as “MCC Funding”—required important policy reforms, the initiation of which, in turn, required public debate to arrive at a common decision in the interest of all Ghanaians.
Some of the policy reforms, he said, would involve Management Reform in the Electricity Company of Ghana, Franchising or Concessions or Private Sector (PS) Asset Ownership as well as in Procurement as prescribed by the programme conditions.
He was speaking at a multi-stakeholder forum on MCC ll in Accra, last week.
In a presentation, Mr Ishmael Edjekumhene, Executive Director, Kumasi Institute of Technology, Energy & Environment (KITE-Ghana), criticized some of the six projects that are to be implemented under MCC ll and offered some recommendations.
The six projects are ECG Financial and Operational Turnaround Project; Northern Electricity Distribution Company (NEDCo) Financial and Operational Turnaround Project; Regulatory Strengthening and Capacity Building Project; Access Project; Power Generation Sector Improvement Project (PIP); and the Energy Efficiency and Demand Side Management (EE/DSM) Project—all of which respond to constraints to economic growth by aiming to improve the reliability and quality of power in Ghana.
The Access Project, for example, aims at improving access to reliable electricity among Micro, Small and Medium Enterprises (MSMEs) in selected markets and economic enclaves in urban and peri-urban areas in the Electricity Company of Ghana (ECG) and NEDCo target regions.
However, according to Mr Edjekumhene, the provision of access in and of itself would not ensure that the MSMEs would be able to continue to use the electricity provided to them unless other key conditions were simultaneously provided.
He said the major challenge faced by MSMEs, as far as electricity was concerned, was unreliability of supply and unaffordability of the tariff charged, and not access.
He, therefore, recommended that a more conclusive analysis should be conducted, once the selected markets and targeted enclaves have been selected, and that some percentage of the earmarked funds (about 10%) could be set aside to provide holistic support to selected MSMEs with huge potential, adding that the GIZ’s Energising Development (Endev) programme could offer some useful lessons to be drawn upon in the final design of the project.
Under the PIP, Mr Adjekumhene said activities under the project were expected to address issues related to inadequate and unreliable gas supply, lack of a gas sector master plan and credible off- taker, unco-ordinated capital expansion, as well as an unclear framework for Independent Power Producers (IPPs).
He said while such support would be useful, they might not be sufficient to catalyse and attract the much-needed investment in the establishment of the Liquefied Natural Gas (LNG) Regasification Infrastructure, which, he said, was, arguably, one of the most important infrastructure required to help secure additional natural gas supplies.
He expressed doubts about justification for or relevance of the 3rd component of the project, considering the nature of the proposed interventions.
Mr Adjekumhene said the proposed Integrated Resource Planning (IRP) framework to be developed and implemented was not new in Ghana, having been in use since 2004 when the Strategic National Energy Plan (SNEP) was launched.
Furthermore, he said, the issue was not that of capacity to plan but the capacity to implement the plans, once prepared, because the Core staff at the Energy Commission (EC) who were trained in the use of the IRP were still available and that EC had already prepared model Power Purchase Agreement for conventional IPPs as for RE-based systems while a proposed IPP Solicitation Plan had been in place since 2011.
Touching on the EE/DSM Project, he said the EE/DSM project aimed to reduce energy wastage by consumers, and was, therefore, one of the most important aspects of MCC ll, given that an estimated 30% of electricity produced in Ghana was wasted.
However, he said, it was important to stress that the proposed interventions were not new to Ghana and that the project did not appear to give much credit to the previous achievements and progress already made in Ghana as far as energy efficiency and conservation was concerned.
For example, he said, Ghana already had minimum efficiency standards and labels for three appliances – lighting, room air-conditioners and refrigerators.
Mr Adjekumhene, therefore, recommended that the budgeted amount of $6.6 million should rather be channelled into implementation and enforcement of the standards.
He said the amount could be used to support the Refrigerator Rebate Project currently being implemented by the EC with the support of the UNDP and some financial institutions.
He also recommended that the capacity of the Energy Foundation (EF) to provide the intended services should first be assessed before any parallel capacity enhancing/training programme would be introduced, adding that It might be cost-effective to strengthen the EF to provide the services rather than creating new establishments.
Mr Adjekumhene noted that the proposal to pilot test and demonstrate distributed applications focused on government electricity customers would not be necessary since such embedded applications had already been well-tested and demonstrated in government institutions, and, therefore, all monies earmarked for this project could be channelled into other areas.
On the M&E Framework for EE&DSM, he said the M&E plan for this project appeared to be incomplete since it sought to track the outcome of only one of the four project activities.
Source: ISD (G.D. Zaney)