Amy.Offord_111 Aug 12

“THESE ARE EXCITING TIMES FOR REGULATORS”

“THESE ARE EXCITING TIMES FOR REGULATORS” image

Interview with Mami Dufie Ofori, Executive Secretary, Public Utilities Regulatory Commission, Ghana

Mami Dufie Ofori tells James Gavin about Ghana’s efforts to develop its energy sector and encourage investment into renewables.

 

The Public Utilities Regulatory Commission (PURC) has developed a long-term energy policy. How did this happen? 

The PURC was borne out of an energy crisis that Ghana experienced from 1995-96. Under the country’s economic reform programme the PURC – the economic regulator – and the Energy Commission – the technical regulator – were created. Between 1997 and 2010, regulations were put in place to direct the performance of the utilities.  

We developed a guideline to let the public know how we would set our rates. In our part of the world, it’s important that you get people to support you, especially when you are preparing to increase tariffs, to ensure the utilities were financially viable. We also established offices nationwide so that people could have access to us, as phone coverage is very low. It has enabled us to access information and, at the same time, become a referee between the utilities and the people, enhancing the collaboration between them.  We then used our experience to help put in place the National Energy Policy in 2010. This ensured that we had the legal, physical and regulatory environment to attract investment, especially in the renewable energy sector.

 

What are your policies on renewable energy?

The PURC’s key contribution was the establishment of a feed-in tariff mechanism to encourage people to invest in renewables, so that they can feed into the grid. People have set up solar systems to feed into the system. Our current target for renewables is to achieve 10% in the generation mix percentage by 2020. That may be overambitious as currently renewables make up just 1%, so it may take us a bit longer to reach it.

 

What about encouraging private-sector participation? 

Because the PURC was set up as an independent regulator, the tariff s we established have given investors the confidence to put money into power generation. In fact, in 1997 we had just one independent power producer. Now we have more than 10, which tells you how rapid the investment has been. In fact, electricity coverage in Ghana stands at 82%, one of the highest on the continent. 
We have encouraged a wide energy mix. Initially, those coming in were just thermal systems and hydro, but then gas was introduced after off shore oil and gas reserves were discovered. That has impacted positively on the price of power generation, as gas is cheaper than other sources. We now don’t even encourage single-cycle systems – we want dual or combined systems where we can use both gas and crude. This gives us options. 
Private-sector participation is something we have opened up to. At the PURC we advise the government on what the realistic proposals are in terms of pricing for the various power purchase agreements. That has been very beneficial to the government, enabling it to identify costs that are too high, or giving it leverage to negotiate a better deal. 

 

Why are investors interested in Ghana’s power sector?

The government has entered into a very aggressive programme for electrification expansion called SHEP (Self Help Electrification Programme), where it wants to connect more and more customers. This means investors reap the benefits of economies of scale through a wide customer base. 


With economic growth you also get cash cows, which are the industries, the mines and others. That is one of the things that we encourage. Our regulations are designed to support growth and are not just for regulation’s sake. Which is why we set prices for investors to come into a particular sector – especially the industrial and commercial sectors – and small- to medium-scale enterprises. 

 

What are the PURC’s future plans?

These are exciting times because we are setting up a wholesale electricity market. We will also encourage investors into the sector. At PURC, we’re moving through a phase of stability, growth and consolidation. We are still growing. We’ve had many investors come in and have expanded the base of customers, but now the challenge is to ensure it is sustainable. Because what happens if customers don’t pay their bills or the tariff s that they should?


The PURC is launching programmes to encourage the productive utilisation of the power to enable customers to pay realistic tariffs.
We are developing regulations that will foster competition and boost economic growth. This means policies will have to include both consumer and market protections. Getting that balance right isn’t easy, especially when income levels aren’t high.


It’s exciting for us as regulators. For the first time in the life of the Commission, we have published on our web-site the decision details of our 2018 tariff, which promotes transparency and enhances confidence from both investors and consumers. We will continue to improve on this transparency path, especially now that we have private-sector participation in the distribution sector. 

This article is an extract from the Africa Energy Yearbook 2019, a partnership between African Business and EnergyNet.