The newly commissioned Pokuase Bulk Supply Point (BSP), a U.S.-financed project, costing US$64.7 million (GHS391.9 million) improves Ghana’s transmission infrastructure, yet other challenges including energy sector legacy debt, among others persist.
The Pokuase Bulk Supply Point (BSP) was funded by the U.S. Millennium Challenge Corporation (MCC) electrical infrastructure project under the Ghana Power Compact.
At the inauguration on Wednesday, October 20, 2021, the U.S. Ambassador to Ghana Stephanie Sullivan remarked:
“The Pokuase Bulk Supply Point represents sustainable infrastructure investment by the United States with Ghana that will benefit hundreds of thousands of Ghanaians now and into the future.
“It will help deliver more reliable power to the people, places, and businesses of Accra that drive increased economic activity benefitting families, businesses, and communities.”Stephanie Sullivan, US Ambassador to Ghana
The Pokuase BSP is among a broad scheme of projects aimed at reducing power outages, help stabilize voltages, and improve the quality and reliability of power supplied to the northern parts of the capital city of Accra.
Furthermore, the BSP is intended to reduce technical losses in the power transmission and distribution system, contributing to the financial viability of the Electricity Company of Ghana (ECG) and the Ghana Grid Company (GRIDCo) in the long term.
The Pokuase BSP is now the largest-capacity BSP in Ghana at 580 megavolt amperes (MVA) and will directly benefit 350,000 utility customers. The Ghana Power compact is also funding a BSP at Kasoa and two primary substations at Kanda and Legon, in addition to other power sector investments, energy efficiency programs, and women’s empowerment programs within the power sector. The compact program will officially close on June 6, 2022.
Solve Challenges within the sector
The government has historically relied on development partners to fund major transmission projects such as the current Pokuase BSP, and according to energy economist, Dr Ishmael Ackah, “moving forward there will need to be a budget allocated for investments into this type of infrastructure, or partnerships with the private sector.”
While this project comes to ameliorate the perennial problems of: inadequate investment in transmission infrastructure and high commercial and technical losses, one problem that requires urgent attention is the rising legacy debt in the energy sector. Ghana’s energy sector legacy debt estimated at US$2.8 billion in 2020 is likely to hit US$12.5 billion by 2023, given existing actions by the government.
The IMF and World Bank have highlighted financial challenges as the biggest bane of the sector. Although the government has taken steps to reduce debts by implementing key aspects of the Energy Sector Recovery Programme’s including the cash waterfall system to mitigate payment risk, other areas such as PPA renegotiation, remain secretive and incomplete.
Also, the government can prevent the debt levels from escalating any further by optimizing natural gas infrastructure and pricing. By linking upstream and downstream sectors, Ghana’s huge domestic gas reserves can be channeled directly to the power sector and industry, while also addressing oversupply and underpricing of gas.
The government needs to show utmost commitment and resolve to make the energy sector thrive. While current efforts are laudable, more efforts should be geared towards tackling all components of the sector to ensure progress.