• Tuesday , 9 August 2022
  • What will it take for Ghana’s power sector to see investment and expansion?

What will it take for Ghana’s power sector to see investment and expansion?

In this interview with the then CEO of the Volta River Authority (VRA), (first broadcast in 2010) Kweku Awotwi makes a case for the utilities to be led by market forces arguing for more realistic tariffs if the power sector was to see any investment and expansion.

“If we want to stay poor, let’s keep subsidizing the tariff”. Awotwi added that “if we want to become a developed nation, we must get used to what is required”.

In defending his position, Awotwi said ” If we had a more market led sector where the government was not involved, you would have price signals that would signal the need for new investment, you would have price signals that said, there is a shortage or there is a surplus, and the market properly regulated, would provide for that power with very little government involvement. We think this would be good for VRA”.

He cited the reforms in the telecom sector as an example to follow. “I think the utility sector has a lot to learn from the telecom sector where 15 years ago, there was only one operator. About 300,000 people had lines. Today that number is over 12 million people and the cost of that has gone down as dramatically. When you bring in competition, that’s what happens. You focus on cost, quality and reliability; and there’s nothing that says that the utility sector cannot also explode, bring costs down and produce reliably”.

Awotwi adds: “The single most critical factor investors from outside are looking at, is the right price….you’ve got to take the tariff to a level where you make money and where those that come in make money, otherwise you won’t get the investment you are looking for”.

Is telecoms a good example? – Ghana’s telephones are some of the worst in the world and in reality improved very little in 15 years in comparison to the rest of the world. Most of the capital investment in telecoms is outside of Ghana (satellite, sub-sea cables etc.) and beyond the reach of government, yet the local element is still not fit for purpose. What other lessons should we learn from telecoms to avoid private power generation performing as poorly as our telecoms services sector currently does.

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