Ghana Energy and Poverty

8/12/2019 Ghana Energy and Poverty

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EU ENERGY INITIATIVE

Facilitation Workshop and Policy Dialogu

!uagadougou" #urkina Faso

$%&$' !cto(r $))*"

Papr Prsntd (y Go+rn,nt o- Ghana

Ghana. Enrgy and Po+rty Rduction /tratgy

Dli+rd (y

0l,nt G1 A(a+ana

Dirctor" Rn2a(l Enrgy 3 RE/PR!

Mr. Chairman, the Honourable Ministry of Mines and Energy of the Republic of Niger,Your Excellencies,Fello !articipants"adies and #entlemen$

Introduction

%n &frica, e face to crucial and related problems in pro'iding access to energy to the poorerparts of our populations.

Firstly( the idespread inefficient production and use of traditional energy sources such as fuel

ood and agricultural residues. This poses economic, environmental and health treats.

)econdly, the high une'en distribution and use of modern energy sources such as electricity,petroleum, li*uefied !etroleum #as +"!# etc. This raises the important issues of economics,equity and quality of life.

%n almost all &frican countries, rural energy supplies, especially rural electrification is 'ery highon the national agendas because electricity plays a 'ery 'ital role in the economic de'elopmentof e'ery country. %t impro'es elfare and enhances the *uality of almost e'ery sphere of life.Hoe'er, despite efforts made o'er the last to to three decades less than -/ of our peopleli'ing in the rural areas ha'e access to grid0based electricity. 1his has ob'iously put a lot of

strain on the national treasuries of our countries ith little chance of e'er achie'ing uni'ersalco'erage ithout doing e'en greater damage to these same economies that e had hoped toimpro'e.

%n #hana, for almost to decades, the *uest to pro'ide the rural population +usually the poorersegment of the population ith access to modern energy ser'ices, particularly electricity, hasbeen on the energy policy agenda of successi'e go'ernments. %n 2345 the #o'ernment of #hanaembar6ed on an Economic Reco'ery !rogramme +ER!. 7ne aspect of the programme as to

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encourage economic de'elopment, particularly ith regard to agricultural and mineral resources.%n addition, part of the ne direction as aimed at stemming the flo of people from theproducti'e agricultural sector to the less producti'e large urban areas. 1o be able to stop therural0urban drift, the #o'ernment of #hana +#7# recogni8ed that rural standard of li'ingneeded to be impro'ed and then identified the pro'ision of access to modern energy, especially

electricity, as one of the means by hich socio0economic impro'ements in li'elihood of ruraldellers could be achie'ed. Conse*uently, the go'ernment formulated a policy on ruralelectrification and made a commitment to extend the reach of electricity to all parts of thecountry ithin a thirty +5 year time period.

Th Ghana National Elctri-ication /ch,

%n 2343, the #7# instituted a National Electrification )cheme +NE) as the principal 'ehicle forachie'ing uni'ersal access to electricity in #hana. 1he ob9ecti'e of the NE) is to extend thereach of reliable electricity supply to all communities ith population abo'e - by the year:: through extending the national electric grid.

& complementary acti'ity to the NE) is the )elf0Help Electrification !ro9ect +)HE!. ;nder the)HE!, communities that are ithin :6m from an existing 55


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poerful tool for de'elopment and ealth creation that it can and should be alloed to gro upon its on financial feet@

%n #erald FoleyAs o'er'ie on rural electrification in +Borld an6 Round 1able Discussion

233> one of the issues that come out clearly is that$Developing countries should never undertake rural electrification prematurely. It should be

considered as a priority option only when the urban areas are substantially electrified and

providing a good revenue base, and when the rural areas are ready for it.

1his may sound good as a logical se*uence. ut e are in a dilemma here. Be all 6no thatrural electrification is an essential ingredient of rural de'elopment. De'elopment reducespo'erty. Ho then do e bring de'elopment to our rural people if our priority is to ser'e theurban people and ser'e them 'ery ell first@

%n the electricity industry, e should not forget that it is the supply that brings the demand not

the other ay round. &n entrepreneur may establish a factory in a rural area if there is alreadyelectricity in that area, but ill not do same if there as no electricity there. Merely hoping thatthe poer utility ill extend its grid is not sufficient encouragement for any entrepreneur.

1herefore 2hat ar 2 not doing right4 Bhat leadership roles should #o'ernments and?or thepri'ate sector be playing that are not being played@ Be should try to get these ansers beforee go bac6 home.

Rural Elctri-ication. Non&Grid !ptions

#rid0based electricity has been the only mainstay of rural electrification efforts in mostcountries. Hoe'er, the increasingly high cost of ser'ing isolated and remote communities has

generated re0thin6ing of the strategy.

1he time has come for us to incorporate into our rural electrification planning process, least0costoptions. 1he choice of technology should be based on consumer needs, economic 'iability,technical and institutional capabilities and consumer illingness and ability to pay.

From the end0users perspecti'e, electricity from a reliable distribution netor6 is preferable, nomatter the cost to the utility, as long as the energy tariff is affordable to them. Hoe'er, from acountryAs perspecti'e, sound national economic policy dictates least cost paths to ruralelectrification. 1his is here % tend to agree ith #erald Foley.

Altrnati+ /ourcs

1his therefore calls for alternati'e sources of electricity or other least cost options to be explored.1he reneables fit 'ery ell into this category. 1here is no denying the fact that the energy offuture is the reneables. 1he earth recei'es as much energy from sunlight in tenty +: days asthere is stored in the planets entire reser'es of coal, oil and natural gas2.

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%n the category of the reneables, photo'oltaic +!= systems are the easiest to use ith pro'entechnical reliability. )olar != systems are an effecti'e complement to grid0based poer, hichis often to costly for sparsely populated and scattered settlements and remote areas.

%n such rural and remote conditions, fuel independent modular )olar Home )ystems offer the

most economic means of pro'iding lighting and poer for most ordinary domestic applicationsand small businesses.

1here are a lot of areas in our countries here solar +!= systems for rural electrification offerthe least0cost option and #o'ernments should therefore seriously consider and encourage solar+!= systems in lieu of expensi'e grid extensions. !olitical reluctance to specify areas unli6elyto be ser'ed ithin fi'e to ten +-02 years creates unrealistic expectations among consumers.1hese expectations create a ait0and0see attitude and therefore dampen efforts to mar6et solar!= systems.

& lot is happening ith reneable energy implementation mainly as pro9ects, most of hich are

rather small ith large o'erheads. Continued inno'ati'e experimentation is needed to carefullymatch reneable energy resources, technologies and system design ith consumer incomes,population density, distance from the existing grid etc. the many possible technologies are$ solar,ind, hydro, biomass, and 'arious combinations and hybrids.

Ho do e speed up progress on reneables. 7b'iously 'ies on this issue ill 'aryconsiderably. )ustainable groth in the reneables ill depend on the de'elopment of localtechnical, financial, management s6ills and institutional capacities to support the local industry.1his ta6es time, there should therefore be sustained and long0term commitment to it.

Bell established reneable energy ser'ices companies +E)C7s ould lin6 technologies to ruralrecipients pro'iding e*uipment, installing and maintaining it, and collecting money for theser'ices pro'ided.

Hoe'er, !ri'ate0sector business models may be best for reaching the upper income ruralmar6et, but diffusion don the pyramid is the 6ey issue for e*uity and social de'elopmentGbecome important reasonsG 1he main concern should therefore be to find effecti'e ays ofbuilding together both pri'ate and public approaches and then respecti'e actors$ consumers andconsumer groups such as cooperati'es, entrepreneurs, the public sector for financing and thepoer utilities.

0urrnt Accss Initiati+s

7n coming into office in :2, the present #hana #o'ernment opted to 9oin the Borld an6As

Highly %ndebted !oor Country +H%!C debt relief initiati'e. Conse*uently, the go'ernment hasdran up a #hana !o'erty Reduction )trategy +#!R) document. 1he #!R), hich representsgo'ernmentAs medium0term de'elopment strategy, contains comprehensi'e policies to supportgroth and po'erty reduction o'er a three0year period. 1he go'ernment recogni8es in the #!R)document that the pro'ision of ade*uate and reliable energy supplies is critical for the reali8ationof its de'elopment ob9ecti'es of reducing po'erty and attaining general economic groth. %nNo'ember, :2, the Ministry of Energy formulated an energy policy frameor6 entitledEnergy for !o'erty &lle'iation and Economic #roth$ !olicy Frameor6, !rogrammes and


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!ro9ectsG. %n this document the go'ernment spells out its 'ision for the energy sector, hich is tode'elop an energy economyG that ould ensure reliable supply of high *uality energy ser'icesfor all #hanaian homes, businesses, industries and transport hile ma6ing significantcontribution to the export earnings of country.

1he :2 energy policy frameor6 has as one of it 6ey ob9ecti'es the commitment to increaseaccss to high 5uality nrgy sr+ics. 1o help achie'e this ob9ecti'e, the Ministry of Energyill continue to support rural electrification using both grid extension and other decentrali8edoptions notably solar != and mini0hydro. 1he decision to use off0grid applications to electrifycertain rural communities is ne to the NE), hich hitherto as grid biased, and it is premisedon the fact that it ill 'irtually be impossible to electrify certain islands on the =olta "a6e andremote areas by extending the national grid. Remote rural communities that are not expected tobe connected to the grid ithin the next - to 2 years ha'e therefore been earmar6ed for solar !=electrification under a pri'ate0public partnership. ;nder this programme, o'er solar !=systems ha'e so far been installed nationide.

)olar != poer is being used$ to pro'ide electricity for homes,

lights for rural schools and to poer computers and tele'ision sets,

to pump potable ater.

in rural health centres and clinics for lighting, 'accine refrigeration and pro'ision of

potable ater.

Bhile the introduction of reneable energy, especially !=, to the NE) is a elcome relief toproponents of reneable energy, presently go'ernment electrification policy tends todiscriminate against the latter. For instance, it has been established that in certain remotecommunities, pro'iding != systems ill be the most cost0effecti'e ay of electrification.

Hoe'er, hile go'ernment bears almost 3-/ of the cost of grid extension, solar !=electrification pro9ects are being piloted on fee0for0ser'ice basis ith emphasis on cost reco'ery.Borse of all, the monthly tariff paid by users of != systems tends to be relati'ely higher thanhat is paid by lifeline consumers using up - 6Bh of grid electricity. 1his ob'iously representsan ine*uality that needs to be addressed through policy. 7ther reneable energy technologies+RE1s being considered to pro'ide access to both mechanical and electrical poer are in theareas of ind and mini0hydro.

Accss to Enrgy and Walth 0ration

& producti'e uses of electricity programme is being formulated to assist entrepreneurs in

electrified rural areas to establish businesses, to generate income, increase economic producti'ityand reduce po'erty in the rural areas. 1he programme ill also in'ol'e capacity building in thenely electrified areas through training, access to credit to support the establishment of small0medium scale rural enterprises.

%n line ith this ob9ecti'e, the Ministry of Energy has acti'ely supported initiati'es such as the&frican Rural Energy Enterprise De'elopment +&REED and the Multi Functional !latformprogrammes.

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6oushold Enrgy

1he o'erall family energy consumption in rural communities has a clear thermal componenthich is met by biomass. 1his accounts for almost 3-/ of total rural household energy

consumption. 1he rural household energy is ood fuel based hile the urban households rely oncharcoal hich re*uires three times as much ood to produce the same amount energy output. %tcan be seen that, urbanisation is dri'ing deforestation really hard.

For the rural poor, the first tier after ood fuel is the mo'e to charcoal. y the time they are inthe second tier they are into modern fuels, starting ith 6erosene. 1he next *uantum 9ump ta6esthem into "!#. For the rural poor, electricity is ne'er an option for coo6ing.

1he best ay to impro'e energy access for the rural poor is to ma6e the modern fuels such as6erosene and "! #as and batteries easily a'ailable by encouraging entrepreneurs ith financingor assistance in hardare. Considering the le'els of po'erty that exist in some parts of &frica,using mainly mar6ets instruments ill not achie'e the desired outcomes.

&n integrated approach to the problem of energy access for the rural poor ill enable completesolutions, in economic and en'ironmental terms to be achie'ed and this ill e'entually lead topo'erty reduction and better conditions of life for the rural poor.

#io,ass

iomass +mainly fuel0ood and charcoal is the main energy form used in #hana, accounting fornearly >/ of total energy consumed nationally, rising up to 3-/ in rural areas. 7'er the yearsthe biomass resources +tree co'er, etc ha'e been o'erexploited resulting in scarcity of thisin'aluable energy resource. Conse*uently, more person0hours are spent gathering these resourcesma6ing them increasingly expensi'e and in some cases unaffordable for the poor. #o'ernment

has adopted to main approaches to address this problem. Firstly, research continues to beconducted into the production, con'ersion and use of ood0fuels. 1his has led to the introductionof a number of impro'ed coo6 sto'es and charcoal 6ilns onto the mar6et. 1he second approach isthe introduction of programmes to substitute ood0fuels ith modern energy forms such as "!#and reneable energy. Re0aforestation is going on in #hana but aim is not to pro'ide biomassenergy.

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8PG

;nder its "i*uefied !etroleum #as !romotion !ro9ect the go'ernment aims to expand the supplyand reach of "!# as a substitute for ood0fuel in homes, schools and small businesses. &lthough

the programme chal6ed some success in the terms of increase in tonnage of "!# consumednationide J from a little o'er -, M1 per annum in 2343 to o'er -, M1 in : J itfocused on urban areas and therefore made little impact on the rural areas. ;nder the ne "!#pro9ect therefore, past efforts are being re'ieed to ensure a more successful programme.

Participating in #ilatral and 9ultilatral Partnrships

#hana as selected as one of the first six countries for launch of the Borld "! #as &ssociation+B"!#& 0 ;ND! partnership called theLP as !ural "nergy #hallenge. . 1he purpose of theor6shop that immediately folloed the launch in &ugust :5, as to create a forum for the'arious sta6eholders to discuss the nature of the #hanaian "! #as industry, to identify the ma9or

barriers and to lay out the steps re*uired in order to establish a 'iable rural mar6et.

1hree main issues ere identified, namely$

the inade*uacy of the existing Regulatory Frameor6 and )afety standards

the lac6 of Rural &ccess to "!# in #hana and

the non0existence of an comprehensi'e "!# Cylinder Management )ystem

1his year ;ND! appro'ed ;)K5, to fund a pro9ect entitled "!# )ubstitution for Bood0fuel in oarding )chools, Homes and )mall Enterprises in Northern #hanaG. &s the pro9ectAstitle suggests, the pro9ect see6s to encourage the target beneficiaries to mo'e from the use ofood0fuels to "!#.

#o'ernment ill continue to or6 closely ith B"!#&?;ND! and sta6eholders to ensure thatrapid progress is made in the establishment of a 'iable "!# industry..

9ainstra,ing Pro+ision o- Enrgy into th GPR/

%t needs to be emphasised that #hanaAs !R) has already identified energy as a prere*uisite forsocio0economic de'elopment. %n order to lin6 energy to broader po'erty and sustainablede'elopment acti'ities, ith a particular focus on achie'ing the Millennium De'elopment #oalsand enabling economic groth and social de'elopment, an Energy for !o'erty Reduction&ction !lanG is in the process of being de'eloped under the #lobal =illage Energy !artnership

+#=E!.:

1he Energy for !o'erty Reduction &ction !lan is for each identified priority sector,the &ction !lan hen completed ill gather the folloing information$

!riority pro9ects?programs as defined by the #!R) for the next 2 years ith a focus on the

next fi'e years

:1he #=E! as launched in &ugust :: at the Borld )ummit on )ustainable De'elopment in Lohannesburg asa1ype %%G partnership. 1he #=E! see6s to reduce po'erty and enhance economic and social de'elopment throughthe accelerated pro'ision of modern energy ser'ices to those un0ser'ed or underser'ed.

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&n outline of the energy inter'entions re*uired for the identified pro9ects?programs

1he pro9ects and programs for hich funding has been secured and from hom

1he funding gaps for specific pro9ects?programs

1he &ction !lan ould pro'ide sta6eholders ith a picture of selected sectors ith respect to

their !o'erty Reduction )trategy !rograms +!R)!s, ho is doing hat and hat the outstandingneeds are. &rmed ith this information #=E! and other initiati'es of its il6 ill be in a positionto either fund or facilitate funding for 'arious components of the &ction !lan. 1his plan shouldtherefore ser'e as a useful guide and ensure effecti'e participation of all partners andsta6eholders in the implementation of Energy for !o'erty Reduction !rograms in #hana. )inceinformation presented by this pro9ect ill only represent a snapshot of the sectors at a point intime, the deli'erables ill include a strategy for sustaining this effort.

%n addition to the &ction !lan, another 6ey output from the pro9ect ill be the preparation of 2ready0to0be0implemented pro9ect documents.

0onclusions

#enerally, it can be said that #hana has put in place the necessary policies and programmes tofacilitate the pro'ision of modern energy to unser'ed and underser'ed communities. Bhat is leftno is ho to translate these policies and programmes into acti'ities to ensure that modernenergy becomes not only accessible to the rural population but also that hen a'ailable, it ill beput to producti'e uses. %t is the hope of go'ernment that by partnering and collaborating ith theE;E% and other partners, better energy deli'ery mechanisms ill be found to help implement thego'ernment access programmes.

1han6 you.

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Ghana Energy and Poverty

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