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SUSTAINABLE ENERGY REGULATION AND POLICYMAKING TRAINING MANUALpage 9.906. Use available public resources to improve the cost effectiveness of transmissionand distribution projects under the National Electrification Scheme.These reforms were expected to lead to increased access to electricity in all sectorsof the economy and increased efficiency in the delivery of power to consumers.Some achievements of the reforms include the conversion of theElectricity Corporation of Ghana into a limited liability company under theStatutory Corporations Act (1993). In addition, thermal power generation has beenopened up for private sector participation and competition. The expected influxof private investment to the electricity sector has not yet occurred, in spite of thehigh growth in demand and the need for additional capacity. So far, there hasbeen only one private sector power generation plant; the Takoradi InternationalPower Company (TICO), with a 220 MW capacity. It was constructed in 2000, andis owned jointly by VRA (10 per cent) and CMS Energy (90 per cent). It draws itssource from the Takoradi thermal plant, which is owned fully by VRA.The reforms also led to the creation of a new classification of “bulk customers”by the Energy Commission. Beginning 2004, the EC defined bulk customers ofelectricity in the mining and manufacturing industries as those customers whoare able to negotiate power supply contracts directly with VRA and ECG or anyother licensed independent power producer with a framework of wheelingcharges and other guidelines determined by the PURC. This is expected to givesuch customers more flexibility and better pricing based on their high levels ofconsumption.The power sector reforms have also led to the introduction of the EmbeddedGeneration Facility (EGF) concept. By definition, an EGF is a power generation unitsupplying power at low to medium voltage to an electricity substation within aparticular distribution system. For example, during the 1997-98 power crises, twoprivate companies—Aggreko Ltd. and Cummins Ltd.—each provided 30 MW powerfrom diesel generation sets directly into the 33 kV distribution network. TheEmbedded Generation Facility also allows for renewable energy power producersto supply power at local levels.2.3. Rural electrificationGhana’s Government embarked upon the Economic Recovery Programme (ERP) inthe 1980s. These reforms included the establishment of a National ElectrificationScheme (NES) in 1989 with the aim of providing nationwide access to electricityby 2020. Under this scheme all communities with populations above 500were to have access to electricity. Over the years, funding for NES has beenmainly through grants, concessionary credit, government sources, and the
MODULE 9: RENEWABLE ENERGY: REGULATORY AND POLICY OPTIONSpage 9.91national electrification fund levy. The levy of ¢1.7/KWh (US¢ 0.02/KWh) is paidby grid electricity consumers and generates about ¢9.8 billion (US$ 1.1 million)per year. However, heavy donor reliance has meant that specific electrificationprojects have been undertaken only when funding became available.An extension to the NES for rural electrification is the Self Help ElectrificationProject (SHEP). SHEP allows for the electrification of communities not directly coveredunder NES but which are within 20 km of an existing or planned 11 kV or33 kV transmission line. The community is required to provide a certain minimumcontribution to the project, usually in the form of wooden poles for the distributionwires. Government would then provide additional assistance to complete theproject. The average tariff for electricity for urban consumers is between 5.2-8.2 US¢/kWh, but rural subscribers pay about US$ 1.00 as a connection fee tothe electricity supplier and then a subsidized lifeline tariff of about $2.00/monthfor consumption of up to 50 KWh/month. This amounts to about US¢ 4.0/KWh.The extra costs for connecting rural communities (transmission, distribution andservice drop costs) are covered by Government under the NES.Before the launch of NES in 1990, only 478 (11 per cent) out of 4,221 identifiedcommunities nationwide had access to electricity. Of the 110 district capitals atthe time, only 46 were on the national grid. Between 1991 and 1994, the initialphases of SHEP 1 and SHEP 2 were completed, with the connection of 50 and250 communities to the grid respectively. SHEP 3 was launched in 1995, and coveredalmost 1,400 communities nationwide. By the end of 1999, all 110 districtcapitals were electrified; and over 450 communities (52 per cent) also had power.By 2004, 3,500 communities had access to power, representing 65 per cent ofthe total. Presently, all communities with populations greater than 3,000 are connectedto the grid. As a result of the ongoing electrification scheme, access toelectricity in the country had reached about 48 per cent by 2003, which is amongthe highest in sub-Saharan Africa.The rural electrification drive may receive a boost with the recent announcementby the Minister of Energy of the arrival of US$ 15 million worth of equipment,with an additional US$ 30 million earmarked to support the project. 5 Also, theGovernment recently announced its intention to shift the focus of the NationalElectrification Scheme (NES) to ensure that rural communities used the suppliedpower to boost economic activities. 6So far, many rural communities have benefited from the available electric power,even though power supply to the rural areas has been unreliable with frequent5“All Set For Bui Dam To Take Off”, Daily Graphic, October 28, 2005.6“Government To Shift Focus Of National Electrification Scheme”, Daily Graphic, Sept. 28, 2005.
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