Executive Director, Africa Center for Energy Policy, ACEP “Transparency is important, it’s key. Transparency around resource contracts and revenue expenditure is important so that the public can appreciate how the resources are governed. We urge the government to be transparent about how they govern the natural resources of our country, and how they use the output of the extraction of resources,” – Ben Boakye, ACEP
RISING through the ranks of organizational structure, Benjamin Boakye was previously the Director of Operations at ACEP. Subsequently filling the position of Deputy Executive Director, he is currently the Executive Director.
In this interview with EMG, he shares expert views on current happenings in the energy sector of Ghana; energy governance, power, politics, and electricity as well as the energy bond.
Tell us about your Roles as the Executive Director;
As the Executive Director, I run the organization. I am the Executive Head of the organization appointed by the board. So effectively, I report to the board of ACEP on operational matters. All the units in the organization report to me, and then I also report to the board.
I have the power to run the organization on behalf of the board, ensuring that I prepare the annual report of operational activities. We put it together as a report sanctioned by the board for the go-ahead to implement it. So that’s it as the Executive Director or Chief Executive if you’ll put it that way, of the organization.
We’re a five-member board comprised of individuals who are experts in the industry that oversee the broad operations of ACEP, an advisory board essentially. So, we have to share what we’re doing with them.
They would advise and approve our activities and budget over the year so that it is not just the Executive Director taking all the decisions, but there is a group of people who oversee what the Executive Director is doing.
As a think tank that has been keenly involved in the country’s energy governance, what do you think has been the government’s performance in the sector so far?
“Our foremost responsibility is to the ordinary person in Ghana. So, we see ourselves as representatives of the people in the governance of the extractive sector.” I think we have worked very well with the government, we do not chase the government around; we cooperate with the government and the public. Our foremost responsibility is to the ordinary person in Ghana.
So, we see ourselves as representatives of the people in the governance of the extractive sector. So, whatever we do, we engage the public and the ministry and government as a whole.
People often hear us exchanging issues with the government, but I would say that we have many engagements that do not come out into the public domain because that is where we often get the results.
But when things are a bit more contentious and you still demand that there should be a change, then you have nothing to do but to go to the public and let the masses who will have the ultimate power of government know about it.
And of course, as experts in the industry, if the media has a challenge in understanding anything in the sector, they often come to us for an explanation, be it power, oil, and gas, or mining, you often find the media coming to us for explanations on those matters.
That takes us again to the public domain and that engagement with the political class. “But ultimately what we want to achieve are sound policies that ensure that the extraction of resources can be linked to the social development of the country,”
Has this government been good so far in governing the energy sector?
The government is less than a year and a half, it’s not too short but it’s not also too long to be too judgmental on their performance. There are good things and there are things that can improve.
Over the years, we have been advocating for the prudent use of our oil revenues and after several years of advocacy, we now see more focus on the pro-poor sectors; agriculture, health, and education. The challenge always has been the thin spreading of revenues across too many projects.
That hasn’t changed. So those are things that we would still want to see the government work on so that we can maximize the output from the oil sector. “The challenge always has been the thin spreading of revenues across too many projects. That hasn’t changed.”
Mineral Revenue Management Act;
In the mineral sector, we have been pushing for stronger governance on the revenues that are coming out from that sector. We want, for example, a Mineral Revenue Management Act for the mining sector. We have been pushing for four years now.
It wasn’t acted upon. NPP had it in their manifesto and we’re engaging and pushing that they would deliver on it because it’s their manifesto promise. Recently, we saw the ministry advertising for a consultant to lead the development of the law, so we are hopeful that that would be delivered. We will push that it is done quicker.
“Electricity is too expensive in Ghana.” And also the power sector, we have seen some reforms. Consistently, tariffs are coming down. For the second time since the government came into power, we have seen a reduction in tariffs. This is in the right direction because electricity is too expensive in Ghana. The only way you can promote industrial growth is to have a competitive electricity tariff.
So we have seen some reduction, they could do more by ensuring that the cost of generating power comes down and the inefficiencies in the sector are reduced. Consequently, those savings can be passed onto the ordinary person.
Politics’ negative influence on electricity tariff reduction;
I think Politics is to blame for everything that we have; the ‘Dumsor’, the high cost of electricity, it’s been largely politics. We have state institutions like the Volta River Authority [VRA] which is to generate electricity and the Electricity Company of Ghana [ECG] which is supposed to distribute electricity.
Ordinarily and in any advanced or serious country, these institutions, even though they belong to the government and the state, would be independent of the ministries and direct interference from the political class. But that is not what has been happening.
Over the years, we have seen politicians procuring generation plants and engaged directly in how distribution companies are managed. They appoint board members who do not know anything about electricity.
So, they go there and they become contractors for companies and ultimately when the cost is resolved from that kind of governance or management, the ordinary person is called upon to come and pay. And that’s how come we have escalating costs in the sector.
When you have costs going up, you have to find a way to recover or it becomes a debt. So, we had cost escalating from poor procurement. We had VRA procuring light crude oil, we were not paying for it because the distribution sector could not collect the bills that they give to consumers, and they were not able to collect revenue enough to pay the generators. The generators themselves had their challenges. With poor procurement, they procure faulty meters and transformers, which don’t work and in turn become a cost to the consumer.
Their activities kept piling costs to the point where it became almost insolvent and the government had to decide that the private sector should come in and take over. This is a good thing because the government over the years has shown that it is incapable of managing the power sector, especially the distribution sector.
They were not able to stop interfering in the operations of the company and that makes it a debt-generating organization. So we are happy that government wants to take a backseat and see how the private sector can manage the distribution sector. “… Government, over the years, has shown that it is incapable of managing the power sector, especially the distribution sector.”
Renegotiated Karpower deal;
“When the government says it wants to renegotiate, what we expect is that the bottom line or basic understanding that it was a bad deal reflects in the renegotiation that has been done.” What we are saying is that at ACEP, we knew the Karpower deal was a bad deal that needed to be renegotiated. So when the government says it wants to renegotiate, what we expect is that the bottom line or basic understanding that it was a bad deal reflects in the renegotiation that has been done.
But what we are seeing is rather spreading the ten-year cost to 20 years so that they can make some savings on recurrent payments to Karpower by sustaining their value over the period. We think that that doesn’t bring out the understanding that the contract was overpriced and that it needed to be renegotiated.
So, if we’re able to take out the politics and say that we’re not only renegotiating to make the deal look better than the NDC government, but we’re negotiating to make it better for the Ghanaians, I think we may have achieved a lot more value than we did.
That renegotiating just focused on making the contract better than the NDC which did not give out the best we needed to have had. So we’re going to engage the government, we want a closer look at the contract, providing evidence of some of the loopholes that the ministry could have exploited to arrive at a better-renegotiated contract.
The energy bond, how far with it?
“Most importantly, how do we ensure that the debt does not keep accumulating? That is to ensure that the government does not interfere with the operations of the utilities.” The band was a decision by the government to clear the debts of the energy sector.
We know the energy sector is living in debt and that is unsustainable for VRA or ECG to continue without the financial backbone to operate. If you have a strategy to retool those organizations, then you need to be able to take care of their debts. What the NDC government did was to set up the E.S.L.A. [Energy Sector Levy Act] to be able to pay for their debt over time.
But this government has decided that they would rather raise bonds to clear the debts and then use the ESLA to repay the bonds, rather than using the ESLA to clear the debts slowly over time. This is an option that we support so that these companies can wipe off their debts.
The ministry raised part of it, they are going to issue the second bond this year and we are hoping they will be able to do that. They have also set up the ESLA Plc. to be able to manage the bond issuance and its processes over the period.
So for us, that is a good way of dealing with it but most importantly, how do we ensure that the debts do not keep accumulating? And that is to ensure that the government does not interfere with the operations of the utilities.
“We know ECG is almost gone out of the hands of the government, but VRA and GRIDCo remain, so we will need a structure that ensures that these institutions can operate independently of government.”
Non-existent oil-funded projects;
“It looks as if somebody deliberately does not want the public to know how revenues are spent.” It’s not news, ACEP has been seeing these non-existent oil-funded projects and we have been talking about the way we spread revenues so thinly.
And it looks as if somebody deliberately does not want the public to know how revenues are spent. So they list projects, sometimes existing projects, projects that have received funds from other government sources as petroleum projects.
So, we are not surprised about the recent reports. Because since 2013, when we started doing petroleum project monitoring, those things have always been there. The problem has been there, except that the advocacy for them has increased over the past few weeks.
The Energy Media Group appreciates your time and willingness, Mr. Boakye, to share your expert views and insights on pertinent energy issues with us.” Thank you!
ACEP’s Executive Director Benjamin Boakye has been at the forefront of Ghana’s energy and extractives sector policy analysis, contributing significantly to government decision-making in the sector with in-depth analysis and research.