Ghana’s ambition to provide cheaper electricity for industries and accelerate its industrialisation agenda could remain an elusive dream if the country fails to address persistent inefficiencies within its electricity distribution system.
This is the view of the former Power Minister and former chairman of the Energy and Mines Committee of Parliament, Dr. Kwabena Donkor who bemoans the high technical and commercial losses recorded by the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCo) as inimical to industrialization.
While discussions about industrial competitiveness often focus on the cost of power generation and electricity tariffs, Dr. Kwabena Donkor, believes the country must pay equal attention to the amount of electricity lost through technical inefficiencies, illegal connections and other commercial losses.
In an exclusive interview with The High Street Journal, Dr. Donkor argued that Ghana cannot sustainably lower electricity costs for households and industries without first making its power generation and distribution more efficient.
Reduce Distribution Losses to Create Room for Cheaper Electricity
According to Dr. Donkor, one of the biggest problems confronting Ghana’s electricity distribution companies is the significant proportion of electricity they lose after purchasing it from generators.
He explained that when ECG and NEDCo lose between 25% and 30% of the electricity they purchase, the resulting financial gap places enormous pressure on their operations, regardless of the tariffs approved by regulators.
“If you’re losing 25 to 30 percent of what you buy, no matter what tariff you are given, you have a hole, a big hole,” he observed.
He believes reducing technical and commercial losses by just three percentage points could make a meaningful difference to the financial position of the utilities, potentially creating room to reduce electricity prices for consumers or avoid frequent demands for tariff increases.
For him, the Public Utilities Regulatory Commission (PURC), alongside the boards and management of ECG, NEDCo and electricity generators, must place greater emphasis on operational efficiency. The objective, he stressed, should be to reduce costs without compromising the quality and reliability of electricity supply.
Invest in Technology and Confront Electricity Theft
However, Dr. Donkor believes reducing electricity losses will require more than management directives and promises of improved performance. He identified inadequate investment in modern technology, automated systems and loss-reduction infrastructure as part of the problem.
He called for real-time electricity monitoring systems that would enable distribution companies to detect illegal connections and electricity theft almost immediately.
“We need to invest in new technology. We need to invest in loss-reducing systems. We need to invest in more automation,” he explained.
Beyond technology, he raised concerns about possible complicity by some utility employees and contractors in illegal electricity connections. He argued that management must demonstrate the willingness to confront internal misconduct, while consumers must also accept responsibility for their role in electricity theft.
“We as consumers must also be a part of this,” he emphasised, calling for a collective effort to address illegal connections and other practices that undermine the financial sustainability of the power sector.
Make Efficiency a National Priority for Industrial Competitiveness
For Dr. Donkor, improving efficiency is not merely about strengthening the finances of ECG and NEDCo. It is fundamental to Ghana’s broader industrialisation ambitions.
He expressed concern about the cost of electricity facing local manufacturers, recounting an instance where an industrialist told him that he paid as much as US$0.23 per kilowatt-hour for electricity. He described this as excessively expensive, arguing that such costs make it difficult for Ghanaian industries to compete effectively.
He therefore wants government, PURC, electricity distributors and generators to look beyond tariff adjustments and pursue deliberate investments and operational reforms that bring down the actual cost of supplying electricity.
The Bottomline
Ultimately, Dr. Donkor believes that Ghana cannot build a competitive industrial economy on expensive and inefficient electricity distribution.
The country may have cheaper generation options, including its existing hydroelectric resources, but unless the electricity sector addresses its losses, theft and management weaknesses, the ambition of making power affordable for industries could remain largely on paper.
