Could you give us a brief overview of your professional career before being appointed as Energy Minister?
I am basically a chartered accountant and I worked for Panell Kerr Forster, an international accounting firm based in UK. I was in charge of the audit of some utilities along the west coast of Africa. I spent 8 years doing that and I spent another 8 years as the Director of Finance in the Electricity Company of Ghana in Accra. When I left the Electricity Company of Ghana I moved into parliament and I become the “shadow” Minister for Mines and Energy. Over a working period of 20 years I have spent quite some time in the sector.
You have recently declared: “Studies show an increase in trend in the country electrical consumption but this is not proportional with electrical generation”. How will the Bui Dam that is in the budget outbalance this?
Today, we have supply capacity that is less than the demand in the country as a result of which we need to import from Ivory Coast during the peak period between 6 and 10 pm to meet the national demand. We consider that unacceptable, and within the shortest possible time we want to have sufficient supply capacity in Ghana to meet the national demand and also to have a reserve margin. We are expecting that the plant in Takoradi, which is now 550 megawatts, will be increased by another 110 megawatts to provide a total of 660 megawatts. When that would have been done, we would have been able to balance the supply and demand. We are also talking to other investors who want to take advantage of the West African gas pipeline when it is available to use gas to generate electricity. We are talking of some 300 megawatts there. When we would have done that, we think that we should be able to add more hydro resources. We think we will want to develop the Bui hydropower project.
Is this a governmental initiative, from a financial point of view?
As much as possible we are hoping that the investment in the generation infrastructure will be coming from private investors.
You have also mentioned the possibility of dividing the Electricity Company of Ghana into strategic business units to enable it to operate efficiently. Which units will it be divided into?
Today we have two distribution companies in Ghana. One called the Northern Electricity Department (NED), which serves the Northern regions of Ghana, and then we have the Electricity Company of Ghana, which serves the more densely populated southern region of Ghana. They have a customer base of about 650,000. We want to break the Electricity Company of Ghana into 4 companies, which we will call strategic business units and we would be preparing them for possible takeover by the private sector. This is part of the power sector reforms.
When will this take place?
We have given the commitment to our donor partners, and we are in the process of preparing the environment to entice private investors into these areas. Before the private sector will venture into an area which has predominantly been government monopolies they would want to make sure there is in existence a regulatory agency to take care of pricing such that they can always be assured of economic price for their products, and such that there will be less governmental interference with the pricing. We set up a couple of years ago what we call the Public Utilities Regulatory Commission, which is now the agency that determines electricity pricing in this country. We have still not been able to perfect that system. We are in the process of perfecting it to allow what we call the public Utilities Regulatory Commission to be able to play the role that has been assigned to it. Beyond the pricing, we also need to ensure that the legal and other physical reviews, and the engineering reviews that go with it, are also properly regulated. So, we do have an energy commission that has been set up to make sure than an acceptable framework is put in place that will be acceptable to the private sector. So, we are preparing the environment for private sector participation by putting in place an independent agency to regulate prices to ensure that the utilities can always recover their cost in full. We have also put in place an agency to ensure that the necessary regulatory framework is in place to satisfy the energy demands of the private sector.
To what extent can the private sector complement the operations of the Volta River Authority?
The Volta River Authority is a state-owned company that is basically in charge of the hydro generation in this country and they have been doing it very well, generating at a much lower rate because most of the capital investments has been written off. We intend to retain that but to complement it with thermal generation, and we need to get the private sector to come there. When we do go into other hydro generation we would want the private sector to take responsibility for that also. Future investments in providing the necessary infrastructure for generation are also expected to come from the private sector. | There has been a tremendous fluctuation of oil prices on the world market in the past 2 years, and this has affected the economy of Ghana. In the Budget 2001, the Government and the Ministry of Energy are planning on building a strategic oil stock. When will this take place?
As a country, we believe that there is a need for us to have some petroleum products in reserve so that if we have a difficulty in the refinery or with the supply of oil products, we will be able to fall on these reserves. To us, it is something that is compulsory and we want to ensure that we have such reserves in place. We are hoping to finance that through levies that we have imposed on the export prices. We are hoping that we can raise sufficient money through this over the years to hold strategic stocks of the essential petroleum products.
The Ghana National Petroleum Company is going to be stripped from its secondary objectives in order to concentrate on oil exploration. This process has been on since the 80s. What prospects do you foresee?
We believe that there are hydrocarbons in Ghana. It is just a matter of when to locate them. We set up the GNPC years ago with the primary objective of exploring and developing the hydrocarbon potential in this country. Over the years, they have been obliged to go into a whole lot of other activities to raise funding to support their primary objective. Somehow, they found these areas attractive and over concentrated there. What we have done is to get them out of there to concentrate on their primary objective. The GNPC today is a 750-men organization. We are hoping that after the restructuring it will be a maximum of 60 employees who will create the right platform to attract private and foreign investors who will come and lead the search for the hydrocarbon.
The government virtually controls the price of petroleum. What are your current plans in liberalizing the market?
We think that the government should not be directly involved in the pricing of petroleum products. We should just set guidelines and get out of it and allow a regulatory commission to do that, as it has happened in the case of electricity and water. Somehow the previous government did not permit this. What we have done, is to come up with a formula, which will always guarantee full cost recovery at the ex-refinery level by the refinery. I have also imposed certain levies, which we consider very necessary. The margin that goes to the oil marketing companies is normally the subject of negotiation between the government and the oil marketing companies. When the pricing mechanism is placed in the hands of a regulatory commission I expect that commission to play the role of determining in consultation with the oil marketing companies what should be the margin that should go to them.
How do you expect the construction of the West African Pipeline, which will be completed in 2003, to contribute to the national economy?
In our effort to create wealth and encourage industrialization, we will need the right amount of energy to go with it and the availability and usage of electricity will be very crucial in our economic efforts. This will depend on how affordable the price is. We generate electricity from hydro and thermal. Whenever we have relied on the thermal, we have used crude oil and prices of crude oil have been volatile which makes the production of electricity very expensive in Ghana. We are hoping that with the gas pipeline we will be able to save Nigeria from the environmental effects of flaring of the natural gas and we will all be able to use the gas to generate cheaper electricity.
The Ministry has allocated 207 billion cedis in the budget, out of which 186 billion are from donors. Who are these donors?
One of the major activities that the Ministry has been undertaking is the rural electrification programs, which the government considers very necessary as part of its poverty alleviation program. These projects have normally been supported by loans that are supplied by the donor community. That is why it becomes necessary to take that much money from the donor communities to undertake the rural electrification projects.
What would be your final message to our readers?
Putting in place the right infrastructure to provide the energy needs of the country and to support our economic efforts is what we see as our ambition. There are tremendous opportunities for investment in the provision of the infrastructure for the various sub-sectors. We promise all investors that they can have very transparent and honest dealings with the ministry. We will enter into positive partnership with them, which will be of mutual benefit to both of the investors and the country. We extend a warm welcome to all investors. |
V.I.P. INTERVIEWS 
