Dr. Nii Darko Asante, a chartered engineer and energy consultant, has observed that while the Electricity Company of Ghana (ECG) has reportedly made progress in reducing its technical losses, the more significant challenge lies in addressing commercial losses.
According to him, ECG’s investments have likely lowered technical inefficiencies to a more manageable level.
“If ECG’s claims are accurate, they have made significant investments in reducing their technical losses to more manageable levels. However, the real challenge lies in addressing their commercial losses”
Dr. Nii Darko Asante, Chartered Engineer & Energy Consultant
He argued that without substantial investment in measuring losses, it remains difficult to ascertain the exact breakdown between technical and commercial losses.
Commercial losses, which typically stem from issues such as power theft and billing inefficiencies, remains a major problem for ECG.
While the company has taken steps to address these inefficiencies, there was still work to be done in ensuring that the electricity supply chain functioned effectively.
“I think commercial losses are the main problem.” Dr. Asante noted that separating the two categories of losses is crucial.
“You can’t really measure which is technical, and which is distribution without quite some investments in measurement of losses”
Dr. Nii Darko Asante, Chartered Engineer & Energy Consultant
Monopoly in Electricity Distribution
Dr. Asante explained that electricity distribution naturally operated as a monopoly.
“Essentially, the nature of electricity distribution is that it will tend to be a monopoly. So option two, instead of having one single monopoly, is to have several smaller monopolies”
Dr. Nii Darko Asante, Chartered Engineer & Energy Consultant
He pointed out that breaking up ECG’s service areas into smaller monopolies rather than maintaining a single national one would not necessarily introduce true competition but could bring about certain operational efficiencies.
Unlike in normal markets, where poorly performing service providers lose customers to better-performing competitors, electricity distribution would still operate under a protected system.
Consumers would remain tied to the supplier in their designated area unless regulators stepped in to remove an underperforming operator.
“So it’s not competition in the normal sense of the word where somebody who doesn’t perform well will lose market to somebody else because his market is protected”
Dr. Nii Darko Asante, Chartered Engineer & Energy Consultant
Dr. Asante explained that under such a system, a resident of Dansoman, for example, would continue to receive electricity from the designated supplier for that area, regardless of whether the service was poor or not.
The only way such a supplier would be removed was if the regulator determined that their performance was unacceptable.
Privatization and Ghanaian Ownership
Dr. Asante acknowledged that dividing ECG into smaller operational zones could lower capital entry barriers, allowing more players to participate in the sector.
“However, as mentioned, you could allow other players to come in. It’s smaller, so smaller capital”
Dr. Nii Darko Asante, Chartered Engineer & Energy Consultant
While this approach would not necessarily resolve ECG’s losses, it could serve as a policy-driven initiative to promote local ownership of electricity concessions.
He viewed this route as part of a broader economic strategy “imperative to get Ghanaian ownership of these concessions.”
He argued that the key to reducing losses, particularly commercial losses, lay in ensuring that any private operator taking over portions of ECG’s operations had a vested interest in minimizing these inefficiencies.
“This would mean that they would have to buy bulk power from ECG or whoever, and then sell it onto we, the consumers”
Dr. Nii Darko Asante, Chartered Engineer & Energy Consultant
By structuring the system in such a way, there would be a natural incentive for private entities to minimize commercial losses and improve efficiency.
This, he suggested, could be an effective way of addressing the persistent issue of revenue leakage in ECG’s operations.
Dr. Asante highlighted the pressing need for a strategic approach to ECG’s inefficiencies.
While technical losses had reportedly improved, commercial losses continued to pose a major threat to the company’s financial sustainability.
The discussion around restructuring ECG, whether through breaking it into smaller monopolies or introducing more private sector participation, underscored the complexity of the issue.
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