The Ghana & Tanzania Power Sectors: Opportunities & Challenges Presentation to Distributed Wind Energy Association Washington, DC February 13, 2013 1
Agenda I. Overview of USAID Approaches and Assets for Power Sector Reform II. Partnership for Growth: Overview III. Partnership for Growth: Ghana IV. Opportunities & Challenges in the Ghana Power Sector V. Partnership for Growth: Tanzania VI. Opportunities & Challenges in the Tanzania Power Sector VII. Discussion & Wrap-Up 2 2
Energy is a Critical Success Factor Energy supports multiple development objectives • Energy for Economic Growth • Key constraint, e.g., PFG Ghana and Tanzania • Key competitive factor • Failing energy sectors have large impacts in Afghanistan, Kosovo, Pakistan, Tajikistan, Kyrgyzstan, etc. • Energy is a key input to agriculture, education, and health The Bulk of USAID’s Energy Program now focuses on Interagency Priorities • At the frontline of Diplomacy, Defense, Development: • Since 2007 support for CPC’s and Haiti has grown; energy reconstruction is by far the largest component of USAID’s energy programming • Global Climate Change Energy Security is a key strategic concern for US Dept. of State’s new Energy Resources Bureau 3 3
USAID FY 2012 Energy Spending Energy Spending by Country/Region/Bureau E3 - $24.1 Africa - $20 Pakistan - $150 Million Haiti - $12.74 Liberia - $11.5 Afghanistan - $229 Million Total: $511 Million 4 4
Fixing Troubled Utilities DABM Gross Profit Afghanistan: Increasing Losses Our objective is to “turn - Projected around” deeply troubled 2007 2008 2009 2010 2011 2012 2013 2014 2015 - national electricity utilities, stop huge revenue and (50.0) energy losses, and expand Million USD (100.0) coverage (150.0) (200.0) (250.0) Base Case ICE Secretariat and AEIC Government of Haiti Payments to Electricity Sector US $ Millions 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 Transfers to $8 $9 $15 $27 $42 $36 electricity sector Total Gov of Haiti $216 $267 $374 $397 $580 $480 expenditures 5 % of budget 4% 3% 4% 7% 7% 8% 5
A Proven Theory of Change Grid or Off-grid, the underlying dynamic is that of a sustainable energy business. Intermediate Result End Result Donor & Partner Roles Utilities that do their job!! Sector Reform for Large Networked Utilities Better Service Broader National & Coverage Regional Sustainability Infrastructure Technology & Clean Energy Businesses Management Lower Cost Innovation Investment 6 6
A Proven New Approach In the new approach to energy, USAID focuses on changes needed to make investments sustainable - Our focus will be standing 1. Based on Strategic Analysis up a utility that can pay its 2. Support for Sector Reform - Analysis of Trends & Strategic Opportunities bills, sustain services, and 3. Commercialization - Regulatory capacity - Private Sector and build new infrastructure - Corporatization & good Donor Partners - Customer enumeration corporate governance - Develop Policy and needs analysis - Decentralized services - Management Options jointly with - Marketing, distribution contracts, concessions Host Country public and and business plans complement the larger grid & privatization private sectors - Innovations - B2B, mobile, metering, finance 4. Capital Development - Foundation: a flexible 5. Evaluation but strategically-driven 6. Hand off To Host plan Country - Rigorous evaluations - Attract private - Analyze interim results participation when - Use on-budget and host possible and adjust country contracting - Identify and train - Host country USAID/USG staff on - Establish agreements that contracting when best practices require sustainability possible - Invest in critical systems, such as SCADA, MIS/ERP, metering, CIS, and Billing Systems 7
Kabul Electricity Services Improvement Program Results 60% 50% 50% 40% Aggregate 37% 30% Technical & 20% Commercial Losses in Kabul 10% 43% Revenue Increase in 0% First Full Year Fiscal Year 2009 Fiscal Year 2010 $90,000,000 Reduction of total $80,000,000 electricity losses by $70,000,000 26% $60,000,000 $50,000,000 $81,659,574 $40,000,000 $30,000,000 $56,936,170 $20,000,000 $10,000,000 $0 8 8 Fiscal Year 2009 Fiscal Year 2010
Innovative Technology USAID electricity sector reform programs apply innovative technologies on a large scale Example: Kabul Electricity Sector Improvement Program (KESIP) Revenue Protection Initiative 50,000 optical port digital meters Clamp-on Ammeters to PDA Smart Phone for data identify theft and capture and transmission unregistered connections 9
Innovative Technology Application of Innovative SCADA Technology in Kabul Example: Substation & Junction Station Grid Metering • DABS can track supply and losses to zones & feeders • Scheduled load shedding improves quality of service • Voltage stability improves Fiber Optic Accurate Metering of Communications High Voltage Panel SCADA meter Original meter New meter 10
Innovative Technology Cell Phone Based Billing and Account Management in Kandahar Part of “ eBreshna ” initiative; user-friendly customer interface for billing, payment and service issues over mobile phone. Includes partnership between DABS, local telco operator (Etisalat) and two local banks (Pashtany Bank and Azizi Bank) that accept payments for DABS service. • Delivers customer bill by SMS • Increases number of bill payment points • Eliminates human data entry errors • Provides fast and accurate electronic reconciliation of bank and DABS payment records • Maximizes DABS revenue by ensuring timely delivery of accurate bills 11 11
Partnership for Growth (PFG) Overview • The Partnership for Growth is a White House initiative with four countries: Philippines, El Salvador, Ghana, and Tanzania. • In 2011, the USG, in partnership with each government, carried out a Constraints Analysis to identify “binding constraints” on economic growth. • Power was identified as a top constraint in Ghana (also Credit) and Tanzania (also Rural Roads). • In 2012, the USG negotiated Joint Country Action Plans (JCAP) with each partner government. • Implementation of the JCAPs for Ghana and Tanzania is to be formally started shortly; some activities are already underway. 12 12
PFG Ghana The JCAP for Power in Ghana is focused on 5 areas of action: 1) Strategy and Planning 2) Institutional, Regulatory, and Structural Reform 3) Electricity Demand and Generation Capacity 4) Transmission and Distribution Infrastructure and Operations 5) Rural Access The USG will bring inter-agency resources to bear, including USAID, MCC, USTDA, DOS, DOE, DOC, EXIM, and OPIC The USG will assist in attracting private investors to Ghana 13 13
Ghana: West Africa Overview 14 14
Ghana: Key Information • Political Leadership: President John Mahama (ascended at death of President Mills, then elected in December to new term) • Elections: Held December 7, 2012 • Population: 24.6 Million • GDP: $37.16 Billion (2011) • GDP Real Growth Rate: 13.6% (2011); Target 9.4% (2012) • Budget: $10.38 Billion (2011) • Central Bank Reserves: $4 Billion, fell 20% in 2012 (Gold, Cocoa, and Oil are major sources of hard currency) • Bank of Ghana Policy Rate: 15% • Inflation Rate: 9.5% • 5-Year GOG Bond: 26% • 2-Year Fixed Rate Note/Savings Account: 23% 15 15
Ghana: Power Sector Overview The state-owned Ghana power sector has been separated into Generation, Transmission, and Distribution: Volta River Authority (VRA) is the principal generator, with 1,040 MW of hydropower capacity and interests in 700 MW of thermal generation Grid Company of Ghana (GRIDCO) (formerly part of VRA) owns and operates the transmission system Electricity Company of Ghana (ECG) is the main distribution company, with 2.4 million customers Northern Electricity Distribution Company (NEDCO) (owned 100% by VRA) serves central and northern Ghana, with 400,000 customers The Public Utilities Regulatory Commission (PURC) regulates electricity and gas. As the owner of VRA, GRIDCO, ECG, and NEDCO (through VRA), the GOG exerts significant influence through CEO/MD and BOD appointments, but also derives benefits in the form of unpaid electricity bills and VAT revenue. GOG’s Ministries, Departments, and Agencies (MDAs) make up 25% of ECG’s billed revenue (and a similar proportion of NEDCO’s billed revenue) and the account is over 18 months in arrears, totaling 428 Million Ghana Cedis (approximately $225 Million at current exchange rates). 16 16
Ghana: Interconnected Transmission System 17 17
Ghana: Current Situation Ghana’s distribution system is in a serious state: • Reported collections, as low as 88% • GOG delays payment, accounts for 25% of ECG and NEDCO revenue • Technical and non-technical losses as high as 28.8% and rising • Aggregate Technical, Commercial, & Collections Losses for ECG are 43.48% and for NEDCO are 38.91%. • 150 MW load shedding, ongoing • 1,485 MW available with peak demand of 1,748 (2011) • Poor customer service (connection delays, metering delays, payment difficulties) • De-capitalization of the system. • Mismatched Revenue & Expenses: Foreign currency exposure accelerating downward slide 18 18
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