From Excess Capacity to Dumsor 2.0

Critics From Excess Capacity to Dumsor 2.0

Ghana’s journey towards energy sustainability started right after independence. At the time (circa 1960), project sponsors, i.e. World Bank & the US considered a hydroelectric dam the size of the Akosombo Dam and the power output (1000+MW) beyond Ghana’s immediate needs, thereby making the project economically unattractive.

This initial assessment nearly stalled funding but for the insistence of Dr. Kwame Nkrumah and the unsung K A Gbedemah, then Finance Minister who presented a business case of Aluminum Smelting for the Kaiser family’s VALCO. By contract terms, GOG ended up paying over 50% of the GBP 130 million-project cost.

Bottom-line, Nkrumah invested in excess energy capacity. This excess capacity investment, described as wasteful and “unnecessary” by the naysayers of the day, became the dock anchor of his regime’s popular industrialization drive. With the completion of the Akosombo Dam project, Ghana became energy sufficient and could export power to neighboring countries for foreign exchange. What a double gain! Fast-forward, after nearly two decades of minimal added capacity (H Limann’s Kpong Dam) and increased industrial and economic demand, Ghana began experiencing power supply challenges with a crisis peak circa 1984. The drought of the early 80s was also to blame as we were solely reliant on hydroelectric dams or power.

Due to further increase in demand exacerbated by J J Rawlings’ rural electrification project, power supply challenges revisited in the middle 90s. Government reacted with the establishment of the Aboadze Thermal Power Station. By the middle of J A Kuffour’s tenure, we were back in the trenches again with erratic power supply again largely due to climate change and the concentration risk of relying on hydropower. Albeit late, this perhaps prompted J A Kuffour to initiate foundational works for the commencement of the 400MW Bui Dam project in 2009 which would be later guided by J E Attah-Mills.

Although Bui Dam opened in 2013 with a paltry 100MW, installed capacity deficit had grown exponentially between Aboadze TPS in 1997 and Bui Dam in 2013. It is therefore permissible to assert that the power supply challenges in the ensuing years (2013-2016) that notoriously became known as Dumsor 1.0 is a legacy/heritage crisis as a result of delayed intervention by the J A Kuffour regime triggered by the damage to the West Africa Gas Pipeline.

Perhaps the notoriety of Dumsor I inspired J D Mahama to take a long-term approach of bridging the capacity deficit gap into surplus with over 2000MW capacity addition. Although fossil-based generators may fail the SDG’s environmental sustainability test, the cleaner hydropower has become woefully unreliable due to shifty hydrological conditions. The regime therefore prosecuted a heavy investment in thermal plants (Karpowership and AMERI). The addition of these two generators to the national grid amounted to excess capacity huge enough for the N A D Akufo-Addo-led opposition to question the investment decision. A scenario not different from Kwame Nkrumah’s Akosombo Dam project.

However, if history and the factors of production in basic economics are anything to go by, then excess energy capacity should be a good news for the vanguards of moving from taxation to production. What does excess capacity mean for the next phase of “aggressive industrialization and production” through the One-District-One-Factory initiative? The situation where power supply equates demand (equilibrium) cannot sustain industrialization. Excess power supply always serves as the dandling carrot that attract industrialization and production.

Having self-confessed they inherited an economy supported by excess energy supply, the Nana Addo Danquah Akufo-Addo regime only had a primary duty to manage the energy sector, and to plan for additional capacity to enable us stay ahead of power demand going forward. Liquidity, which is today’s power supply problem, is the lubricant for the power and energy sector. The recalcitrant stance of denying Dumsor 2.0 is upon us, and sweeping the causes under the carpet denies us both interim measures and a concerted effort toward a sustainable solution.

Our of total installed capacity of 5134MW as at Dec, 2023, only 4710MW is available due to hydrological conditions as well as infrastructure and liquidity challenges.

Ghana’s peak energy demand forecast for 2025 suggests we will cross the 5000MW mark. Therefore, rather than move AMERI to Kumasi alongside the alleged $76 million cost of movement to the taxpayer, it would have been a better service to God and Country if we had planned an altogether new additional capacity installation for Kumasi.

Having ignored this thought process, it is intellectual to daresay that we are once again delaying installed capacity intervention, and as such, a bigger DUMSOR 3.0 is loading for whoever takes power 7th January, 2025. A stitch in time saves nine.