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04.05.2015 Opinion

Deregulation: The Only Solution To Dumsor

By Anthony Bentil (MBA) President & Founder (MeasureEase Consulting, USA)
Deregulation: The Only Solution To Dumsor
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The Restructuring of Electricity is one the new initiatives being carried in advanced countries to ensure consistent and efficient use of energy. Some of these programs are new but have been earmarked as one of the greatest things to happen to the energy industry. Considering the energy crisis Ghana is going through, it only makes sense to start looking into restructuring and deregulating our Energy industry. This is the only way to kick Dumsor out and Keep the lights on.

To be able to understand the Electricity industry, first we need to understand the components and fully separate them from each other: Generation, Transmission, and distribution. All these three components are different markets that the government doesn’t need to venture in. If anything, the government needs to put in the right laws to make these markets work efficiently.

For the past 50 years, the government has been too involved in these three vertically related sectors. The government always finds itself in trouble when power crisis arises. Generation and distribution of Power have been a monopoly game between VRA and ECG. ECG in return has only given Ghanaians poor service for their money.

It is time the government of Ghana gets itself out of the picture. The government needs to play the role of an overseer: it needs to collects tax from the bold companies who will venture in this industry. What is Deregulated Market? A Deregulated market is one that allows the consumers to choose their commodity supplier. Since Electricity is a commodity in Ghana now, I don’t know why Ghanaians are not having a choice who supplies it to them.

So let’s start with how these three components can be deregulated. From the current situation in Ghana, we have at least three Generation companies,thatunder full operation can generate more than the supposed 2500MW needed by Ghana. Thus the problem is obviously negligible on the power generation sector. When the power generation companies get their payments for the power they generate, they will be able to fund their expansion and maintenance projects without Government intervention. But as it stands, they are not getting their payment from the inefficient Transmission and Distribution Company.

Now back to the main problem. The Electricity Transmission and Distribution sector is the components that need immediate restructuring. When it comes to this sector it has remained the same since we saw electricity in our dear nation. The Electricity Company of Ghana (ECG) has been the monopoly in the game and always cries out for subsidies from the Government. This inefficiency and reliance on government need to change to fix this Dumsor menace once and for all. If the government of Ghana has not thought about deregulating the Energy sector then this is the time. As a concerned citizen, even though I am not in the Dumsor problem, I have listed below a few benefits of Deregulating the Distribution of Electricity and how it will help eradicate Dumsor:

  • Deregulating the energy distribution will give Ghanaians a choice to whom they choose to buy a commodity like electricity.
  • It will increase competition which will tend to bring efficiency in the power distribution. Distribution companies will try to find efficient ways of distributing power to their customers at lower price.
  • The drive for lower prices will ensure that distribution companies go for newly advanced cables. The new cables will transmit the energy efficiently and avoid waste through transmission.
  • More distribution companies also means more jobs for our increasing youth and college graduates who all look to ECG for jobs.
  • Private companies will ensure they find efficient ways to collect their payments for services rendered. This will give them the needed funds to be able to buy more power to distribute.
  • Finally, the power generation companies will be able to fund their maintenance and expansion projects from payments they collect.This will ensure consistent powerto avoid future Dumsor.

I know deregulating the energy sector is not something the government of Ghana has not thought of. We have intelligent men running the country. Their only problem is the harsh criticism that will come from the ordinary Ghanaian. But this is the time we need strong leaders to stand for what they know will benefit Ghanaians, rather than playing politics with the issue.

Dear Mr. President, please sell ECG, deregulate the sector, collect your taxes, dissociate yourself from it and Ghana will forever remember you for your bold leadership.

Anthony Bentil (MBA)
President & Founder (MeasureEase Consulting, USA)

Sr. Supply Chain Analyst

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