Policy and law
What is the government policy and legislative framework for the electricity sector?
Ghana’s electricity industry is unbundled into three main sub-sectors, namely electricity generation, transmission and distribution. The policies of government for the electricity sector are mainly in relation to these three sub-sectors.
The National Energy Policy 2010 (the Policy) is the underlying policy guiding governmental actions and strategies in the power sector. Generally, the goal of the government was to become a major exporter of power in the West African sub-region by 2015. This was intended to be achieved through capacity addition, modernisation of transmission and distribution infrastructure. The policy also focuses on institutional and regulatory reforms intended to create competitive electricity markets.
The objective of the government under the National Energy Policy was to increase installed generation capacity from about 2,000MW to 5,000MW by 2015 and to achieve universal access by 2020.
As at 2014, Ghana had achieved only 2,830MW of installed generation capacity. According to the National Energy Statistics 2016 from the Energy Commission, Ghana increased its installed generation capacity from 2,830MW in 2014 to 3656MW at the end of 2015. According to the 2017 and 2018 National Budgets, a total of 880MW of power capacity was added to the country’s installed generation capacity in 2016 to bring the installed capacity to 4,132MW. In 2017, a total of 445 MW of power capacity was further added to increase the country’s installed generation capacity from 4,132 MW to 4,577MW. In 2018, the government plans to increase the installed generation capacity by about 484MW (with 340MW coming from the CenPower Power Project and 144MW from Phase 1 of the Early Power Project) to meet the growing demand of electricity.
The policy objective for the transmission market is to provide adequate, safe and reliable electricity transmission network. This may be achieved by supporting the mobilisation of commercial and domestic capital resources to supplement external funding for transmission infrastructure development. Also, the policy is to enforce technical regulations and operational standards, and to provide support for the maintenance of existing transmission infrastructure.
The policy objective for the distribution market is to seek adequate investment to improve the electricity distribution network and thereby reduce high system losses and improve the poor quality of electricity supply. This is intended to be achieved by assisting distribution utilities financially to improve their operations.
To secure future fuel supplies, the policy objective is to increase and diversify the fuel mix in power generation. The policy requires government to, inter alia, support infrastructure for new fuel supply sources, develop coal power, and support regional integration of energy resources. The government also intends to achieve universal access to electricity by extending the reach of electricity infrastructure to all communities by 2020.
With regard to electricity pricing, the government’s objective is to ensure that electricity pricing is efficient and competitive while providing rates that are affordable.
Power sector reforms were initiated in 1995 to ensure an efficient and effective power sector and also to allow increased private-sector investment and participation. The policy objectives include to promote competition in the generation of electricity through the development of a wholesale electricity market, create the environment for retail competition in the electricity market, facilitate the entry of independent power producers (IPPs), and ensure improved performance of electricity utility companies. In 2017, the Cabinet of Ghana approved the full operationalisation of the Wholesale Electricity Market (WEM) and its associated mechanisms as well as the establishment of the Electricity Market Oversight Panel (EMOP). The WEM controls the supply and trading of wholesale electricity between retailers and generators. The EMOP is an 11-member panel tasked with monitoring the general performance of the Electricity Company of Ghana (ECG) and ensuring the smooth operation of the WEM.
The strategic policy focus for the sector is to attract investment to improve and expand the capacity of the existing infrastructure to deliver reliable power supply services in the short to long term and to be net exporter of electricity in the West African sub-region.
In 2014, the government set up the Ministry of Power as part of a restructuring of the power sector to ensure more stability and security of power. Prior to this, the Ministry of Energy had the oversight responsibility for the power sector. The Minister responsible for power is mandated to drive the sector and achieve the national objective of achieving sustainable generation, supply and efficiency of power to match the growth the economy is experiencing. The Ministry of Power has oversight responsibility for all the regulatory activities and generally provides policy and investment direction in the power sector. In 2016, with the change of government, the new government replaced the Ministry of Power with the Ministry of Energy to develop and ensure reliable, high-quality energy services at the minimum cost to all sectors of the economy through the formulation, implementation, monitoring and evaluation of energy sector policies.
Ghana has two main regulatory agencies for the power sector, namely the Energy Commission and Public Utilities and Regulatory Commission.
The Energy Commission Act 1997 (Act 541) (the Energy Commission Act) established the Energy Commission. The commission’s main object is to regulate and manage the utilisation of energy resources in Ghana and to coordinate all policies in relation to them. The commission is responsible for granting licences to public utilities for the transmission, wholesale supply, distribution and sale of electricity and natural gas in Ghana.
There are a number of subsidiary legislations and guidelines enacted under the authority of the Energy Commission Act for the proper management and regulation of the power sector of Ghana.
The Public Utilities and Regulatory Commission Act 1997 (Act 538) (the PURC Act) established the Public Utilities Regulatory Commission (the PURC). The PURC’s responsibility is to approve rates charged by public utilities, ensure competition among public utilities, monitor standards of performance of public utility service provision and ensure the protection of consumer rights.
There are several other Acts of Parliament, legislative instruments and sector codes enacted for specific purposes within the electricity industry. The Volta River Development Act 1961 (Act 46) (the VRA Act) established the oldest power entity in Ghana - the Volta River Authority (VRA). The VRA is wholly owned by the government of Ghana. The VRA, through its subsidiary, the Northern Electricity Development Company (NEDCo), is responsible for electricity distribution in the northern regions of Ghana. The Electricity Company of Ghana, another wholly state-owned utility, is responsible for the distribution of power in the southern regions. The VRA Act tasked the VRA with the responsibility to generate electricity by means of the water power of the Volta River and by any other means. The VRA also supplies electrical power to distribution companies, bulk customers and the townships of Akosombo and Kpong.
As part of power sector reforms in 2005, the VRA’s mandate was restricted to electricity generation and the electricity transmission functions of the VRA were transferred to the Ghana Grid Company (GridCo). GridCo is responsible for operation of the National Interconnected Transmission System (NITS), bulk power purchase of electricity from generators of electricity and sale to NEDCo and ECG. It is important to highlight, that it is expected that NEDCo’s distribution functions in the northern regions will be transferred to ECG in order to create a national distribution utility. Independent Power Producers who intend to transmit electrical power over the NITS are required to enter into a connection agreement with GridCo.
In 2007, Parliament enacted the Bui Power Authority Act 2007 (Act 740) (the Bui Power Act) which established the Bui Power Authority to oversee the development of the Bui hydroelectric power project on the Black Volta River and any other potential hydroelectric power sites on the Black Volta River.
The Renewable Energy Act 2011 (Act 832) (the Renewable Energy Act) is the most recent energy related legislation geared towards the encouragement of Ghana’s drive to boost the renewable energy sector.
The object of the Renewable Energy Act is to provide for the development, management and utilisation of renewable energy sources for the production of heat and power in an efficient and environmentally sustainable manner.
The Energy Commission developed the National Electricity Grid Code (the Grid Code) in 2009, which is intended to set out the requirements, procedures, practices and standards that govern the development, operation, maintenance and use of the NITS in Ghana.
The overarching objective of the code is to ensure that NITS provides fair, transparent, non-discriminatory, safe, reliable, secure and cost-efficient delivery of electrical energy.
The Grid Code describes the responsibilities and obligations associated with all the functions involved in the supply, transmission and delivery of bulk electric power and energy over the NITS including the functions of the electricity transmission utility (ETU), a NITS asset owner, a wholesale supplier, a distribution company and a bulk customer.
To ensure that electric power is produced, transmitted and distributed in an environmentally sustainable manner, the Environmental Protection Agency Act 1994 (Act 490) (the EPA Act) was enacted in 1994. The EPA Act established the Environmental Protection Agency (EPA) as the principal environmental watchdog in Ghana.
All electricity utilities must receive environmental permit from the EPA before they undertake any project. The EPA ensures compliance with the laid down environmental impact assessment procedures in the execution of electricity projects.
The existing legal regime envisages a spot as well as a bilateral market for power trading. The present position is largely bilateral as there are not yet enough players for a fully functioning liquid spot power trading market. The GRIDCo, as market operator, is currently working at establishing systems and procedures to support enhanced market operations.
2Organisation of the market
What is the organisational structure for the generation, transmission, distribution and sale of power?
Generally, electricity goes through a three-step process before arriving at the end user for consumption. First, power is produced from generators that are usually located far from the load centres. Second, the power is transported over the transmission grid, which is composed of transmission lines, transformers, and other components, to the bulk load distribution substations. Third, from bulk load distribution substations, power is delivered to the individual customer sites using distribution lines.
The generation market is made up of two main players, namely the government (through the VRA and Bui Hydroelectric Company) and the IPPs. The VRA operates a total installed electricity generation capacity of 2,434MW. This is made up of two hydroelectric plants on the Volta River, with installed capacities of 1,020MW and 160MW at Akosombo and Kpong. The VRA also operates a 330MW Combined Cycle Thermal Plant at Aboadze, near Takoradi.
VRA, through its joint venture company, Takoradi International Company (TICO), jointly owned with TAQA, from Abu Dhabi in the United Arab Emirates, operates the 330MW combined cycle thermal plant at Takoradi. An additional development 132MW (T3) Magellan plant was commissioned at Aboadze in 2012.
The VRA also operates three major plants in Tema. The 110MW Tema Thermal 1 Power Plant, the 80MW Mines Reserve Plant, and the 220MW Thermal Plant located at Kpone, near Tema. The VRA is also planning additional development of 100-150MW of wind power at locations in the southern part of Ghana and up to 12MW of solar power generation in the northern part of Ghana. The VRA has begun the installation of a 2MW solar plant.
There are a number of IPPs operating in the generation space in Ghana, with a total installed generation capacity of 1,210MW. Some of these IPPs are Sunon-Asogli, Cenit Power Plant, Karpower Barge, Ameri Energy Power, Early Power, Amandi, among others. In the renewable energy sector, Africa Plantations for Sustainable Development is currently developing a eucalyptus plantation to power a proposed 60MW power plant for the national grid. Other companies providing renewable energy in Ghana include, Soater Solar Ghana Limited, Orion Energy Ghana Limited, Signik Energy Limited, among others.
After generation, electricity is transmitted. In 2006, GRIDCo was created out of VRA and was tasked with the wholesale power transmission. Currently, GRIDCo is the only company responsible for transmission of electricity in Ghana. There are no private players in the transmission sub-sector. GRIDCo operates the NITS and all power producing companies that intend to supply electricity over the national grid to the various load centres are required to enter into a connection agreement with GRIDCo in order to connect to the NITS.
Ghana has an extensive transmission system that covers all the regions of the country. The transmission system is an interconnected network that supports the bulk transfer of electricity over long distances from generation facilities to distribution centres called bulk power distribution substations. While generation’s role is to make sure that electricity is available when customers demand it, transmission’s role is to make sure electricity is available where customers need it.
This high-voltage transmission network connects generation sites in Akosombo, Aboadze, Takoradi, Kpong and Tema to the various load centres around the country. The network features over 4,000km of high-voltage electric transmission lines that connect to more than 40 substations.
The primary backbone of Ghana’s transmission system is a network of 161kV, 69kV and 225kV lines and substations. This primary network is supplemented with a sub-transmission system of 34.5kV lines and a single 69kV line in the lower Volta region - the 34.5kV network is sometimes classified as distribution. The ongoing implementation of 330kV projects will see 330kV replacing 161kV as the primary transmission voltage. Under the Transmission System Rehabilitation Project which began in 2017, GRIDCo continued to improve operational reliability, security and control of transmission via various transmission system improvement projects. GRIDCo completed the Tumu-Han-Wa 161kV line and commenced the Kpandu-Kadjebi 161kV line project and the Aboadze-Prestea 330kV in 2017. In 2018, the government aims to complete the Aboadze-Prestea 330kV and Prestea-Kumasi 330kV transmission lines (each 70 per cent complete) and continue working on the Kumasi-Bolgatanga 330kV transmission line (about 50 per cent complete).
Ghana’s high-voltage transmission system interconnects with Togo and Benin via a double circuit 161kV transmission line connecting the Akosombo Generating Plant in Ghana to Lome in Togo, and with the Ivory Coast via a single circuit 225kV 220km transmission line between Prestea substation in the Western Region of Ghana and Abobo substation. A small network of low-voltage lines connects Ghana to the border towns of Po and Leo in Burkina Faso and Dapaong in Togo.
These cross-border interconnections allow Ghana to trade power with its neighbouring countries. Regional efforts have been under way to integrate the transmission networks of Economic Community of West African States (ECOWAS) member states to facilitate power trading among the regional entities. In this regard, the West African Power Pool (WAPP) has begun efforts to build regional transmission lines to interconnect major load centres.
The distribution system is a network of low-voltage distribution lines that deliver electricity directly to customers. The distribution system is generally considered to begin at the bulk power distribution substation where GRIDCo delivers power to the wholesale power buyers and end at the retail consumer’s meter. Beyond the meter lies the customer’s electric system, which consists of wires, equipment and appliances.
Electricity distribution and sale services are currently conducted by three companies: ECG; NEDCo, a wholly owned subsidiary of VRA; and Enclave Power Company Limited.
Substations on the transmission system receive power at higher voltages and lower them to lesser volts to feed the distribution systems. The distribution system consists of the poles and wires commonly seen in neighbourhoods. At key locations, voltage is again lowered by transformers to meet customer needs.
ECG operates in the southern part of Ghana comprising the Ashanti, Western, Eastern, Central, Western and Volta regions. The ECG network consists of about 77,000km of service lines, connecting 24 bulk supply points (BSPs).
ECG has more transformer capacity than the present peak demand but growth in demand in certain areas has resulted in under-capacity in those areas.
ECG serves about two million customers including residential, commercial and some large industries. These include nine bulk customers within the ECG network infrastructure. These bulk customers, even though they are embedded in the ECG system have a choice to opt to buy power from VRA or any other wholesale supplier except that they are required to pay for the use of the ECG system to reach their facilities.
NEDCo’s operations cover largely the northern part of Ghana comprising the Brong-Ahafo, Northern, Upper East and Upper West regions. NEDCo’s distribution network consists of 5,488km of medium-voltage lines and 7,832km of low-voltage (415V) lines connecting 24 BSPs. The NEDCo system has transformer installed capacity of 200MVA compared with its average peak load of 130MVA.
NEDCo operates at 34.5kV, 11kV and 400V voltage levels. NEDCo serves over 350,000 customers including residential, commercial and some large industries.
NEDCo has no bulk customers under its jurisdiction primarily because of the absence of large industrial customers in their areas of operation. The northern part of the country is comparatively underdeveloped.
Enclave Power Company Ltd is the only privately owned electricity distribution company, licensed by the Energy Commission in 2009 to distribute and sell electricity within the Free Zones Enclave at Tema Industrial Area. Enclave Power Company’s network consists of nearly 3km of service lines connecting one BSP at the New Tema substation.
Enclave Power Company Ltd currently serves 17 industrial and large commercial customers operating within the Tema Free Zones Enclave. The consumption of the customers within the Enclave Power Concession was estimated at about 17.8GWh with maximum demand well in excess of 32.0MVA in 2008.
The power market is evolving and there is a lot of interest being shown in the sector by IPPs. GRIDCo as the market operator is working towards putting systems and procedures in place to support market operations.
The new market structure enables and encourages the free entry of IPPs into the generation market, creating a competitive generation market which, when combined with open access to transmission, also facilitates a bulk power trading market. The structure also emphasises decentralisation at the distribution level, with plans for eventually adding more distributors, each operating in a defined geographic service area. To further enhance a competitive market, the current government in 2017 approved the restructuring of the VRA to include a wholly owned entity to manage the hydroelectric facilities separately and invited private sector participation in the ownership and management of state-funded thermal power plants.
All bulk customers are permitted to purchase electricity directly from any wholesale suppliers of their choice at prices negotiated directly between the parties. In other words, the bulk customer has the prerogative to decide which wholesale supplier it is willing to contract with.
Regulation of electricity utilities – power generation
Authorisation to construct and operate generation facilities
What authorisations are required to construct and operate generation facilities?
By virtue of the Energy Commission Act, participation in any segment of the power sector, either for generation, transmission, wholesale supply, distribution or sale of electricity, requires a licence.
The Energy Commission is required to make a decision of any application within a maximum period of 16 days. Applications will be granted as a matter of course unless there is compelling reason not to do so. Such reasons must be founded on technical data, national security concerns, public safety or any other reasonable justification.
Generators wishing to be connected to the transmission system must enter into an electrical connection agreement or transmission services agreement with GRIDCo.
Under the Renewable Energy Act, every person who intends to engage in a commercial activity in the renewable energy sector requires a licence. The commercial activities in the renewable energy industry are production, transportation, storage, distribution, sale and marketing, importation, exportation and re-exportation and installation and maintenance.
Grid connection policies
What are the policies with respect to connection of generation to the transmission grid?
The policy for the transmission market is to provide adequate, safe and reliable electricity transmission network. To achieve this, the Board of the Energy Commission in 2008, put in place the Electricity Transmission (Technical, Operational and Standards of Performance) Rules 2008 (the Transmission Rules). The purpose is to establish the requirements, procedures, practices and standards that govern the operation and use of the NITS.
Under the Transmission Rules, GRIDCo is required to operate the NITS to offer fair, transparent, open access and non-discriminatory services to grid participants.
In order to connect to the NITS, the operator of a generation facility is required, among others, to design, install and maintain its plant and equipment to meet the requirements of the connection requirements of GRIDCo. Further, the operator must operate its plant and equipment in accordance with dispatch instructions of GRIDCo and to meet system performance and reliability requirements in a manner that is consistent with the reliable operation of the transmission system.
Alternative energy sources
Does government policy or legislation encourage power generation based on alternative energy sources such as renewable energies or combined heat and power?
Available renewable energy sources
In Ghana, the government has policy and legislation frameworks to encourage power generation based on alternative energy sources. It is government policy to increase access to modern forms of energy. The 2018 National Budget noted that the Ministry’s goal in 2018 is to increase the penetration of renewable energy in the energy generation mix and to promote distributed solar power for government and public buildings.
Ghana has a sub-sector for renewable energy. According to the Renewable Energy Act, renewable energy means includes energy obtained from non-depleting sources including wind, solar, hydro, biomass, bio-fuel, landfill gas, sewage gas, geothermal energy and ocean energy. Ghana is well endowed with renewable energy resources, particularly biomass, solar, wind energy resources, and to a limited extent mini-hydro.
The goal of the renewable energy sub-sector is to increase the proportion of renewable energy, particularly solar, wind, mini hydro and waste-to-energy in the national energy supply mix and to contribute to the mitigation of climate change.
The development and use of renewable energy and waste-to-energy resources have the potential to ensure Ghana’s energy security and mitigate the negative climate change impacts of energy production and use as well as solve sanitation problems.
Biomass is Ghana’s dominant energy resource in terms of endowment and consumption. Biomass resources cover about 20.8 million hectares of the 23.8 million hectare land mass of Ghana, and is the source of supply of about 60 per cent of the total energy used in the country. The vast arable and degraded land mass of Ghana has the potential for the cultivation of crops and plants that can be converted into a wide range of solid and liquid biofuels.
The production, transportation, sale and pricing of woodfuels are all undertaken by the private sector except for taxes and levies, which are regulated by local government authorities. The woodfuels business will continue to be operated and managed by the private sector.
The development of alternative transportation fuels such as gasohol and other biofuels can provide substitute fuels for the transportation sector and help diversify and secure future energy supplies of Ghana.
The major challenge in biomass energy supply is how to reverse the decline in the wood-fuel resource base of the country and further sustain its production and use by improving the efficiency of production and use.
The biomass policy focuses on improved production and efficient use of biomass in the short term while increasing regeneration and fuel substitution in the medium to longer term, as well as shifting from the use of biomass to alternative sources of energy.
By virtue of its geographic location, Ghana is well endowed with solar resources that could be exploited for electricity generation and low heat requirements in homes and industries. Solar energy utilisation has, however, been limited owing to its comparatively higher cost.
The government is committed to improving the cost-effectiveness of solar and wind technologies by addressing the technological difficulties, institutional barriers, as well as market constraints that hamper the deployment of solar and wind technologies.
A major challenge in the development of solar and wind is the high cost of these energy sources owing to the current state of their technology.
Waste-to-energy projects have become a very important mechanism for the management of the growing sanitation problem facing urban communities as well as a means of contributing to energy supply and security. Significant amounts of wastes are generated in Ghana. These include municipal waste (both solid and liquid), industrial waste and agricultural waste.
There are many energy technologies which can convert these waste materials into electricity, heat and fuel. The conversion technologies include combustion, gasification, pyrolysis, anaerobic digestion, fermentation and esterification.
Some waste-to-energy technologies that have been developed in Ghana are anaerobic fermentation of municipal waste and industrial liquid wastes to produce biogas for heating and electricity generation, combustion of solid wastes to produce electricity in combined heat and power (CHP) systems.
Government policies and legislative framework
The Renewable Energy Act is the most recent energy related legislation geared towards the encouragement of Ghana’s drive to boost the renewable energy sector in Ghana.
The key policy focus is to engage Ghanaian engineers and scientists to cooperate with other experts to bring down the cost of renewable energy technologies in order to make them competitive as well as creation of fiscal and pricing incentives to enhance the development and use of renewable energy. Renewable energy technologies that are competitive will be promoted.
The government intends to diversify the national energy mix by implementing programmes to support development and use of renewable energy sources. Under the Renewable Energy Act, there are financial incentives (including a lucrative feed-in tariff) for renewable energy projects.
More specifically, the PURC has the power to mandate feed-in tariffs for renewables which includes a requirement that, for each energy purchase, an offtaker will have to obtain a certain percentage from renewable sources to benefit. The commission is tasked with recommending exemptions from taxes, duties and levies with respect to machinery, equipment and other input into renewable projects.
The feed-in tariff set by the PURC remains in force for a 10-year period and subsequently subject to review, every two years thereafter.
Free zone developers and enterprises granted licences under the Free Zones Act are exempted from the payment of income tax on profits for the first 10 years. The income tax rate after 10 years does not exceed a maximum of 8 per cent of the profit.
The benefits enjoyed by operators in the free zones include guarantee against expropriation, unconditional transfers of profits, dividends, charges and fees, remittances and other payments through an authorised dealer bank in free convertible currency.
What impact will government policy on climate change have on the types of resources that are used to meet electricity demand and on the cost and amount of power that is consumed?
Environmental concerns are a prominent part of every industry today and the electric power industry is no exception. Climate change emerged on the political agenda in the mid-1980s with the increasing scientific evidence of human interference in the global climate system and with the growing public concern about the environment.
Electricity supply is currently vulnerable to climate change. About 67 per cent of electricity generation in the country is from hydropower and 33 per cent is from thermal generation using diesel (Energy Statistics 2006), with a small contribution (less than 1 per cent) from small-scale solar systems. By 2020 the energy supply is expected to be more diversified, according to the National Energy Plan for 2006-2020, with a larger contribution from natural gas and renewables, and potentially from nuclear power.
The production and use of energy impact on the environment and global climate in varying degrees. The exploitation of biomass for energy purposes results in deforestation, while the use of fossil-based fuels contributes to climate change.
Ghana’s participation in the Stockholm Conference in 1972 signified the beginning of the country’s desire and willingness to make concerted and conscious efforts at the management of its environment.
At the Earth Summit in Rio de Janeiro 20 years later, Ghana and the world moved closer to the objective of living in harmony with our environment by signing the Rio Conventions.
Before a person undertakes any activity or operation in relation to electricity, that person must obtain the necessary environmental approvals and permits valid for a period of 18 months. The EPA will not grant an environmental permit unless the applicant submits an environmental impact assessment (EIA).
In addition to the granting of a licence by the Energy Commission, before any project can take place, the EPA must give a permit for the project after a detailed environmental impact assessment has been carried out as regards the potential effects of the project on the environment.
Ghana generates most of its power from hydroelectric facilities, which do not cause emissions of harmful elements into the atmosphere. But their large reservoirs have some impact on the environment by flooding large areas, dislocating people, changing the ecology and causing silt formation.
Transmission lines may require intrusion on natural areas. They may be visible from scenic areas or intrude on residential neighbourhoods. They may destroy or disrupt wildlife habitats. Therefore prospective operators in the electricity market seeking to obtain licence must provide environmental disclosure to the Energy Commission. Prior to construction, the applicant must acquire siting clearance (siting permit).
The applicant for licence must provide an EIA report certified by the EPA and an environmental permit or permanent environmental certificate issued by the EPA.
The government’s policy on climate change is that there will be a shift towards generation from renewable energy sources. Thermal generation using crude oil will shift towards the use of natural gas. Consumption of power will decline owing to energy conservation methods and cost of electricity might increase owing to the high cost of generation from using renewable energy technologies.
The medium-term policy objectives for the achievement of the energy sector goals include steps to minimise environmental impacts of energy supply and consumption through increased renewable energy and efficient energy delivery.
The government’s strategic goal is to ensure that energy is produced, supplied and used in an environmentally sustainable manner. The strategies will focus on the conduct of strategic environmental assessment and EIA studies and social impact assessment studies of all energy projects, with associated adaptation and mitigation plans for environment and climate change.
The government’s policy on climate change in relation to the energy sector includes the following resolutions:
- to adopt an inter-sectorial approach to energy planning and development that integrates energy development with energy conservation, environmental protection and sustainable utilisation of renewable energy resources;
- to reduce the pressure on forests for wood-fuels and encourage the use of renewable energy resources in order to reduce the use of fossil energy;
- to ensure that rigorous feasibility studies are undertaken for hydro-electricity facilities and other significant generating facilities all of which must be subjected to environmental impact assessment; and
- to maximise the use of the nation’s hydrocarbon resources in the production and distribution of energy.
Does the regulatory framework support electricity storage including research and development of storage solutions?
Ghana’s Renewable Energy Act provides a regulatory framework which supports electricity storage, research and development. The regulatory framework mandates anyone who seeks to engage in any storage or other commercial activity in the renewable energy industry to obtain a licence to be granted by the Energy Commission. The licence may require the installation of a suitable facility for the storage of the renewable energy, which suitability shall be determined by the Energy Commission.
The establishment of the Renewable Energy Fund and Energy Fund is to promote research and development of storage solutions. The objects of these funds is basically to provide financial resources for the promotion, development, sustainable management and utilisation of electricity and renewable energy sources.
The funds are primarily applied to the provision of financial incentives, feed-in tariffs, capital subsidies, equity participation, etc, for projects related to the development and utilisation of energy resources including storage solutions.
Does government policy encourage or discourage development of new nuclear power plants? How?
In 1964, Ghana decided to undertake the Ghana Nuclear Reactor Project. The project was intended to introduce nuclear science and technology into the country and to exploit the peaceful applications of nuclear energy for national development.
At present, the government’s policy is to diversify the energy mix by exploring options to develop nuclear energy. The goal is to develop nuclear power as an option for electricity generation in the long term.
Ghana has participated and is still participating in coordinated research projects with the International Atomic Energy Agency (IAEA) which helps to increase the nuclear knowledge base of the country. Ghana Atomic Energy Commission (GAEC) is in close contact with other International Nuclear Agencies such as Global Nuclear Energy Partnership.
Nuclear Power Planning Committee (NPPC) involving stakeholder institutions was established in 2008 for the formulation of the nuclear power policy and development of the basic elements of nuclear infrastructure. Based on the NPPC’s recommendations, the government took a cabinet decision in 2008 to introduce nuclear energy into Ghana’s energy mix.
Human resource capacity building currently in place is in two forms (ie, degree and non-degree awarding programmes).
In the degree awarding category, the GAEC has established a Graduate School of Nuclear and Allied Sciences in collaboration with the University of Ghana with assistance from the IAEA to award masters and PhD degrees in nuclear science.
The non-degree training programmes involve the use of the 30kW research reactor in teaching and training of scientists and technicians in the field of reactor operation, physics, safety, engineering, maintenance etc.
IAEA has also formulated technical cooperation projects such as GHA0008; planning for sustainable energy development, GHA0009; human resource development and nuclear technology support, GHA0011, etc to up the country’s nuclear knowledge base.
Ghana participates in IAEA training courses and workshops on national, regional and international levels.
Legal and regulatory framework
The Atomic Energy Commission Act 2000 (Act 588) provides the legislative framework for nuclear power in Ghana. The Act deals with national energy policy including economic and commercial considerations, with a clear designation of responsible institutions or bodies, including their relationships with nuclear power.
The Atomic Energy Commission is the independent regulatory authority responsible for the safety, security and safeguards of nuclear power. This includes a system of licensing, inspection and enforcement covering all subject areas of nuclear law.
At the international level, there are some basic international legal instruments that Ghana has to ratify and implement to show commitment to peaceful use and application of nuclear technology.
Regulation of electricity utilities – transmission
Authorisations to construct and operate transmission networks
What authorisations are required to construct and operate transmission networks?
Construction and operation of transmission networks require the acquisition of an electricity transmission licence.
According to the Transmission Rules, the transmission system comprises electricity plant and equipment within the borders of Ghana that function or are operated at any voltage higher than 36kV as well as any associated feeder or supply equipment that are for shared or for common use.
The ETU is the exclusive and independent operator of all transmission assets irrespective of ownership and plays the central role in respect of activities related to the NITS. The ETU transports electricity from the producers to bulk consumers. GRIDCo is the sole owner and operator of the NITS.
All prospective participants in the deregulated segment of Ghana’s electricity supply industry must obtain a transmission licence from the Energy Commission. They must also negotiate and conclude interconnection service agreement with the ETU.
The ETU and all grid participants must comply with all relevant laws, the requirements of the Grid Code, permits, prudent utility practice and applicable international standards. Generators wishing to be connected to the transmission system must enter into an electrical connection agreement or transmission services agreement with GRIDCo.
To ensure transparency and non-discriminatory access to the relevant information, the ETU must make available to the public at its offices the procedures for obtaining and terminating transmission interconnection services agreements with any licensee.
A transmission licence authorises the licensee: to monitor and control the operation of the national interconnected network to provide open access transmission and interconnection services; and to provide open access transmission and interconnection services to operators domestically and internationally.
There are three stages in acquiring an electricity transmission licence. At stage one the prospective operator must acquire a provisional licence.
At stage two, the prospective licensee must obtain a siting clearance (siting permit) and construction permit (authorisation to construct). A construction permit authorises the operator to physically construct its machinery and plants on the approved site. Stage three involves the acquisition of an operational licence (authorisation to operate). This authorises the operator to operate.
Eligibility to obtain transmission services
Who is eligible to obtain transmission services and what requirements must be met to obtain access?
Every bulk power customer (distribution utilities, companies, etc) is eligible to obtain transmission services at a fee if it satisfies all established technical and operational requirements.
A grid participant must be a legal entity having a valid connection agreement with the ETU for the purposes of:
- constructing, owning and providing NITS infrastructure or ancillary services;
- injecting, wheeling, or offtaking power for its own use or for retail; or
- exchanging power either with the electricity networks of neighbouring countries or within the WAPP.
By virtue of section 11 of the Energy Commission Act, participation in any segment of the power sector, either for transmission, wholesale supply, distribution or sale of electricity, requires a transmission licence.
A transmission licence is subject to the conditions determined by the Energy Commission. The commission is required to make a decision of any application within a maximum period of 16 days. Applications will be granted as a matter of course unless there is compelling reason not to do so. Such reasons must be founded on technical data, national security concerns, public safety or any other reasonable justification.
A distribution company or bulk customer who wishes to receive power from the NITS must design, construct and operate its network connected to the NITS in accordance with prescribed standards and in accordance with the instructions of the ETU.
GRIDCo is responsible for the good governance and management of the NITS in accordance with the Grid Code and guided at all times by generally accepted best practices for an independent system operator.
All wholesale suppliers, distribution companies and permitted bulk customers have the opportunity to connect to the NITS and have fair and equitable access to the services provided by the ETU.
No facilities can be connected without a minimum arrangement for communications, metering and protective relaying being in place.
Any operator that wants to obtain transmission services must negotiate and execute a Connection Agreement with the ETU before the completion of the installation, erection or construction of the connection to the NITS. The Connection Agreement sets out the terms and conditions for connection to the NITS and provision of service.
The ETU is empowered to spell out its own transmission conditions and charges in the transmission agreement subject to approval by the PURC.
The Energy Commission in consultation with the PURC prescribes standards of performance for the supply, distribution and sale of electricity to consumers by licensed public utilities. The standards of performance include matters relating to voltage stability, maximum number of scheduled and unscheduled outages, number and duration of load shedding periods and metering.
Every grid participant that intends to establish and connect to the NITS any new or modified equipment or network that it owns, operates or controls must liaise with the ETU and the NITS asset owner, and obtain the required approval from the Energy Commission.
To avoid discrimination in the transmission of electricity, the ETU must develop and publish in detail all the requirements, qualifications and administrative procedures to be fulfilled or followed by those seeking to be provided services by the ETU.
A grid participant must construct, operate and maintain all equipment that are part of its facility in accordance with the requirements of the Grid Code, prudent utility practice and applicable national and international laws, protocols and standards.
Government transmission policy
Are there any government measures to encourage or otherwise require the expansion of the transmission grid?
Ghana’s transmission policy objective is to provide adequate, safe and reliable electricity transmission network. To achieve this, the National Energy Policy requires the government to support private sector co-financing with government for grid extension to designated franchised zones, increase funding from government and other multilateral and bilateral sources for the National Electrification Scheme and to support new service connections for electricity in the rural areas. The Rural Electrification Programme has seen 289 out of a targeted 2,185 communities connected to the national grid and the 2018 national budget reported the national electricity access rate increased from 83.24 per cent in 2016 to 83.62 per cent in 2017. The goal is to connect a total of 1,796 communities in 2018. There are many government incentives to encourage expansion of the transmission grid. For instance, there are tax exemptions and reliefs, easy clearing at the ports and the like meant to encourage expansion of the transmission grid.
Ghana’s exchange controls were relaxed substantially in 2006, so that now, the only necessary prerequisite for the repatriation of funds is to repatriate funds through an authorised dealer bank. These banks report foreign exchange transactions to the Bank of Ghana, but no exchange controls are imposed.
In 2013, Ghana passed the Ghana Investment Promotion Centre Act 2013 (Act 865) (the GIPC Act). Among others, the GIPC Act is to encourage and promote investments in Ghana and to provide an attractive framework and a transparent, predictable and facilitating environment for investments into various sectors (including the energy sector) in Ghana. Foreign investors are now required to register with the Ghana Investment Promotion Centre (the GIPC) before commencing business operations in Ghana. Upon registration, a foreign investor is entitled to receive investment support from the GIPC and benefit from the investment incentives under the GIPC Act.
The GIPC Act provides an express guarantee for the repatriation of dividends, foreign debt service costs and distributions of equity following the winding-up of the business. Repatriations from Ghana can be made in freely convertible currency without any restriction insofar as the repatriation is done through a licensed bank.
Further, the GIPC Act, provides guarantee against expropriation or nationalisation by the government. A foreign investor cannot be compelled by law to cede his or her investment to another person. Every nationalisation or expropriation must be done under a law that provides for payment of fair and adequate compensation and a right to access the High Court of Ghana for determination of investor’s interest or right and the amount of compensation to which the investor is entitled.
The government has also shown commitment to provide support for the expansion of its transmission facilities by providing guarantees and comfort letters, subject to parliamentary approval, to foreign investors who enter into power purchase agreements and other forms of support agreements with public utilities in Ghana. The government is also minded to provide special tax reliefs, subject to parliamentary approval, to foreign investors who invest resources in expanding the transmission grid.
Rates and terms for transmission services
Who determines the rates and terms for the provision of transmission services and what legal standard does that entity apply?
Rates and other economic terms and conditions for transmission services are determined by the PURC. The technical terms for the provision of transmission services are determined by the Energy Commission. The Grid Code that contains technical standards and requirements for transmission services.
The only licensed utility that provides transmission services is GRIDCo. All grid participants are required to enter inter into transmission agreement with GRIDCo before they can operate. All rates set by GRIDCo are subject to approval by the PURC.
The PURC provides the guidelines for fixing rate to be charged by public utilities for their services. In doing this, the PURC takes into account such factors as the interests of the consumer, the interests of an investor, the cost of production of the service, and the assurance of the financial integrity of the public utility.
A public utility cannot directly or indirectly demand or receive a higher rate than the rate approved by the PURC. A public utility may, with the written permission of the commission, demand and receive from a consumer a special rate agreed to by the public utility and the consumer.
The PURC may also fix a uniform rate throughout the country, a region or district for a service provided by a public utility. In doing this, the commission may take into account the population distribution in the country, the need to make the best use of a natural resource of the country, and the economic development of the whole country.
All revision of rates or new rates chargeable in respect of new services must be filed with the PURC at least 60 days before they become effective.
Before approving a rate, the PURC is required to give the public utility and consumers affected by the rate a reasonable opportunity of being heard. Rates approved by the PURC must be gazetted. Recently, in 2018, the PURC reviewed and approved utility tariff reductions for various electricity customer categories effective 15th March 2018. However, in spite of this reduction in electricity tariffs, Ghana still remains comparatively high on the price index for electricity tariffs in West Africa.
Entities responsible for grid reliability
Which entities are responsible for the reliability of the transmission grid and what are their powers and responsibilities?
The regulators (the PURC and the Energy Commission) are responsible for the reliability of the transmission grid. The PURC ensures reliability by approving tariffs. The Energy Commission, on the other hand, ensures that licensing requirements, procedures, practices and standards are enforced in the NITS.
The Energy Commission monitors the operations of the transmission utility to ensure that transmission services are reliable. The PURC also monitors performance, quality of service, efficiency and to ensure compliance with technical standards.
To maintain stable and secure operation of the NITS to provide the expected standard of service for the benefit of all grid participants, certain minimum technical, design and operational criteria are to be met by all grid participants seeking connection to the NITS.
GRIDCo is responsible for wholesale power supply reliability from generation and transmission to delivery at the bulk power distribution centres.
To assure reliability of the transmission grid, transmission licences are granted subject to conditions. The Energy Commission monitors and enforces compliance with all licence conditions. A contravention of the licence conditions gives rise to penalties.
As part of the compliance monitoring procedure, the licensee is required to submit to the Energy Commission a detailed corporate performance statistics half-yearly and an annual report at the end of each financial year. The performance statistics includes the benchmarks stipulated in all the relevant legislation and Codes as well as the benchmarks stipulated in the respective licences.
Authorised officers of the Energy Commission have the right of free access to the premises or operational area of the licensee for the purpose of inspecting and ensuring compliance with the licence conditions.
Prior to suspension or cancellation of a licence, the defaulting licensee must be given an opportunity to respond to the commission’s written complaint and the proposed action of remedy.
The commission may cancel a licence that has been granted but has not been utilised within one year from the date of issue after giving 30 days’ notice to that effect. The ETU monitors and reports to the Energy Commission the performance of the NITS in terms of quality and reliability (ie, adequacy and security) of supply.
Regulation of electricity utilities – distribution
Authorisation to construct and operate distribution networks
What authorisations are required to construct and operate distribution networks?
To construct and operate distribution networks, an operator requires an electricity distribution licence issued by the Energy Commission. The VRA is exempted from the requirement for a licence to produce and supply wholesale electricity from the hydropower installations on the Volta River basin. An electricity distribution licence is site-specific.
In Ghana, a distribution licence includes a sale licence. This is because the electricity distributors also sell electricity to consumers. A distribution and sale licence authorises the licensee to operate a distribution network, and to distribute, sell or retail electricity.
There are three stages for the acquisition of authorisation to construct and operate distribution networks. Stage one involves the acquisition of a provisional electricity distribution licence. An applicant must submit the required documents to the Energy Commission.
Stage two involves the acquisition of a siting clearance and construction work permit. An applicant must submit the required documents to the Energy Commission. Stage three is the final stage and involves the acquisition of authorisation to operate.
A distribution licence is granted on the conditions determined by the Energy Commission and includes a condition that the rates or charges for services are subject to the approval of the PURC.
Access to the distribution grid
Who is eligible to obtain access to the distribution network and what requirements must be met to obtain access?
All power consumers, especially the bulk customers or special load customers have access to the distribution grid. The distribution utility must ensure that all requirements are met before granting access.
A participant seeking to engage in embedded electricity generation or distributed generation services must negotiate and conclude a distribution network access agreement with the relevant licensed distribution entity. This must be done while seeking a licence from the Energy Commission.
The conditions for connection agreements must comply with the Grid Code. The Energy Commission facilitates these negotiations as and when required.
Licensed distribution service providers must connect embedded electricity installations to their distribution network.
Government distribution network policy
Are there any governmental measures to encourage or otherwise require the expansion of the distribution network?
Under Ghana’s National Energy Policy, the policy direction of the government in respect of the distribution infrastructure is to seek adequate investment to improve the electricity distribution network and thereby reduce high system losses and improve poor quality of electricity supply. Accordingly, the policy requires government to assist distribution utilities in regaining their financial health, encourage distribution of utilities to seek commercial loan financing to modernise their infrastructure, encourage the injection of investment capital from private sources and from the domestic market in the medium to long term. There are many government incentives focused on encouraging expansion of the distribution network. For instance, there are tax exemptions and reliefs, financial incentives, feed-in tariffs, capital subsidies, equity participation, easy clearing at the ports and the like meant to encourage expansion of the distribution network especially in respect of renewable energy.
First, the Energy Commission and the PURC (the Regulators) have the authority to establish and enforce standards of performance for public utilities engaged in the distribution and sale of electricity.
Second, the government, on its part is committed to improving and expanding the distribution network in order to achieve its universal accessibility object by 2020. In that light, the government is minded to grant guarantees, comfort letters and tax benefits, subject to parliamentary approval, to foreign investors in the power sector over a period of time.
Third, foreign investors also benefit from the incentives under the GIPC Act, including guarantees from expropriation, repatriation of dividends, capital and debt costs in free convertible currency through a licensed bank.
Rates and terms for distribution services
Who determines the rates or terms for the provision of distribution services and what legal standard does that entity apply?
Rates and other economic terms and conditions for distribution services are determined by the PURC. The technical terms for the provision of distribution services are done by the Energy Commission.
The Energy Commission in consultation with the PURC prescribes standards of performance for the supply, distribution and sale of electricity to consumers by licensed public utilities. The standards of performance include matters relating to voltage stability, maximum number of scheduled and unscheduled outages, number and duration of load shedding periods and metering.
An electricity supplier must ensure that the voltage at the point of supply to a customer’s premises or electrical installation is within the prescribed voltage levels. The voltage levels are 230V, 400V, 11kV, 33kV or 34.5kV.
Regulation of electricity utilities – sales of power
Approval to sell power
What authorisations are required for the sale of power to customers and which authorities grant such approvals?
In Ghana, an electricity sale licence is required for the sale of power to customers. Distribution companies hold both electricity distribution licence and electricity sale licence. This is because the electricity distributors also sell electricity to consumers.
A distribution and sale licence authorises the licensee to operate a distribution network, and to distribute, sell or retail electricity.
There are two stages involved to acquire an electricity sale licence. These are the acquisition of provisional licence and acquisition of operational licence (authorisation to operate).
Sale of power to consumers in Ghana is done by three distribution companies, namely ECG, NEDCo and Enclave Power. The authorities which grant approvals are the Energy Commission and the PURC.
There are two types of markets, namely, the regulated market and deregulated market.
Regulated market: this includes the distributors and sellers that are directly supervised by the PURC. Their tariffs are set by the PURC.
Deregulated market: this is made up of bulk consumers or customers with average demand of 3MVA or annual consumption of 6GWh. They must obtain a permit as bulk customers from the Energy Commission before they can negotiate with suppliers or generators of electricity.
Power sales tariffs
Is there any tariff or other regulation regarding power sales?
In Ghana, distribution of power and sale of power are done by the same entities. The PURC determines distribution or sale service charges. Because distribution and sale are done by same entities, the tariff for sale of power is embedded in tariff for distribution of power. Power sales tariffs are the same as the DSC as approved by the PURC.
Wholesale suppliers are entities that generate power and feed into the grid. They also sell power to bulk customers. The tariffs to be charged by the licensee for its services are determined by the PURC.
Rates for wholesale of power
Who determines the rates for sales of wholesale power and what standard does that entity apply?
The rates or charges for wholesale supply of electricity are determined by the PURC. The Energy Commission grants wholesale supply licence to public utilities to operate facilities and installations for the wholesale supply of electricity. The wholesale supply licence permits the public utility to produce electricity for supply to distribution companies and bulk customers.
A wholesale supply licence will not be granted unless the Energy Commission is satisfied that the grant will promote the safe, reliable and economic operation of the interconnected transmission systems in the country.
Public service obligations
To what extent are electricity utilities that sell power subject to public service obligations?
There are standards of performance to be observed by the utilities. Except where a licence or authorisation given to a public utility is revoked, suspended, cancelled or expires, a public utility cannot refuse to provide its service generally without the prior written permission of the Energy Commission.
Licensed public utilities are required to maintain their equipment and property used in the provision of the service in a condition that enables them to effectively provide their services. They must make the reasonable effort necessary to provide to the public a service that is safe, adequate, efficient, reasonable and non-discriminatory.
Public utilities must submit monthly bills to their consumers. There are strict rules governing the termination of services by public utilities.
Licensed public utilities are required to make the repairs, changes, extensions and improvements in or to the service that are necessary or proper for the efficient delivery of the service to the consumer. Licensed public utilities are subject to penalties for failure to discharge their service obligations including payment of compensation to consumers who suffer on account of that failure.
Which authorities determine regulatory policy with respect to the electricity sector?
The Energy Commission and the PURC are the regulatory bodies established to ensure the proper functioning of all players in the energy sector and to create the requisite conducive environment for the protection of private investment in the sector.
The Energy Commission is mandated, among other things, to licence and regulate the technical operations of service providers in the electricity supply industry. The commission performs these regulatory functions through elaborations and enforcement of licensing conditions, technical rules of practice and standards of performance rules.
On the other hand, the PURC is responsible for the economic regulation of the electricity sector. Its main function is to set tariffs and monitor compliance with performance standards of the service providers in the power supply chain.
The PURC is responsible for approving electricity tariffs, monitoring quality of service and consumer protection.
Scope of authority
What is the scope of each regulator’s authority?
The Energy Commission has responsibilities for the licensing of operators and setting technical standards for the power sector. The Energy Commission also advises the Minister for Energy on energy sector policy and planning issues.
The statutory functions of the Energy Commission include to recommend and advise the Minister for Energy on national energy policies; to prepare, review and update periodically indicative national plans to ensure that reasonable demands for energy are met and to grant licences to public utilities.
The Energy Commission is required to establish and enforce uniform rules of practice and standards of performance for public utilities engaged in the transmission, wholesale supply, distribution and sale of electricity and natural gas.
The Energy Commission also has a role to play in developing and promoting renewable energy sources in Ghana. The commission is independent.
The PURC’s regulatory mandates are:
- to provide guidelines on rates chargeable for electricity services;
- to examine and approve the rates;
- to protect the interests of consumers and providers of utility services;
- to monitor the standard of performance of the utilities; and
- to promote fair competition.
Under the Energy Commission Act, the PURC is also required to approve charges for the supply, transportation and distribution of electricity.
The PURC approves rates and charges chargeable in respect of renewable energy sources.
Establishment of regulators
How is each regulator established and to what extent is it considered to be independent of the regulated business and of governmental officials?
The Energy Commission was established by the Energy Commission Act. The source of funds for the commission is the Energy Fund. The commission manages and administers the fund. Parliament is statutorily required to annually provide the commission with such monies as may be necessary for the efficient performance of the functions of the commission.
The President appoints the commissioner of the Energy Commission. Appointment of the Executive Secretary, other staff and employees of the commission is done by the President acting in accordance with the advice of the commission given in consultation with the Public Services Commission.
The PURC is established by the PURC Act. The President appoints the commissioner and members of the PURC. The commission is not subject to the direction or control of any person or authority in the performance of its functions. The President also determines their allowance.
The PURC Act specifies four sources of funding for the PURC namely, government subventions, loans granted to the commission, monies accruing to the commission in the course of the performance of its functions, and grants it may obtain.
Challenge and appeal of decisions
To what extent can decisions of the regulator be challenged or appealed, and to whom? What are the grounds and procedures for appeal?
A complaint that relates to the provision of utility service or rates chargeable for service provided by a public utility is required to be referred to the PURC for investigation and settlement. The PURC may apply to the High Court for the enforcement of its decision or direction.
Persons who are dissatisfied with a decision of the Energy Commission in relation to a licence application may have the decision reviewed by the commission.
An application for the review of a decision is required to:
- be made in writing;
- set out the decision to which the application relates;
- set out in detail the grounds on which the applicant seeks a review of the decision in question;
- be accompanied by any information or evidence that the applicant considers should be taken into account by the commission; and
- be lodged with the commission within 14 days after the decision is given.
Once the application for the review of a decision has been received, the commission:
- may stay the execution of the decision to which the application relates;
- will take a decision on the review within 30 days;
- may confirm, amend or substitute the decision; and
- will give the applicant written notice of the commission’s decision, and the reasons for the decision on the review.
An applicant who is dissatisfied with a decision of a review by the Energy Commission has a right to appeal to the Minister for Energy, and subsequently to the courts. The appeal must be made within 14 days after receipt of the written notice of the decision appealed against.
Acquisition and merger control – competition
Which bodies have the authority to approve or block mergers or other changes in control over businesses in the sector or acquisition of utility assets?
The Energy Commission has the power to approve or block mergers or other changes in control over businesses in the sector. The commission requires that all operators are licensed. Licences granted by the commission are not transferable except with the prior written approval of the Energy Commission. Whenever a merger occurs, a new licence has to be applied for.
However, no licence is required where the entities were named, and the fact of the merger was mentioned, in the regulations of the licensed operator or in the application for the licence.
To avoid double licensing in the event of a merger, the merging entities are required to prepare a single corporate module or structure that reflects the merger.
Review of transfers of control
What criteria and procedures apply with respect to the review of mergers, acquisitions and other transfers of control? How long does it typically take to obtain a decision approving or blocking the transaction?
An operator must apply to the Commission for permit where:
- there is any change in its directors or corporate structure;
- there is transfer of a part of the utility; or
- there is modification of the plant or capacity.
A licensed operator that intends to undergo a merger must state that in its application for a licence specifying the new corporate identity. The non-licensed company merging with a licensed operator must demonstrate to the commission that it has all the technical and financial capacities to operate as an independent power operator.
Prevention and prosecution of anti-competitive practices
Which authorities have the power to prevent or prosecute anti-competitive or manipulative practices in the electricity sector?
Ghana’s energy sector is dominated by state-owned enterprises. Transmission and distribution of electricity are under state monopoly, with minor private participation in distribution. The current legal regime does not make any express provisions for the regulation of anticompetitive practices in the electricity market. However, the PURC is mandated to promote fair competition among public utilities. The PURC is responsible for competition regulation and quality.
Anticompetitive practices occur only in the wholesale market. The independent system operator has the authority to prevent these practices in the electricity sector. The Energy Commission has the power to withdraw the licences of operators or refer operators to the Attorney-General for prosecution.
The Energy Commission is empowered to promote and ensure uniform rules of practice for the transmission, wholesale supply, distribution and sale of electricity.
Determination of anti-competitive conduct
What substantive standards are applied to determine whether conduct is anti-competitive or manipulative?
The market rules that exists in the wholesale market are the standards that are applied in determining anticompetitive or manipulative conduct. Currently, GRIDCo has a draft version of the market rules.
In determining anticompetitive or manipulative conduct, the Energy Commission and the PURC apply their own benchmarks. They also apply the various legislative instruments and licensing conditions as well as international best practices.
Preclusion and remedy of anti-competitive practices
What authority does the regulator (or regulators) have to preclude or remedy anti-competitive or manipulative practices?
The PURC has the statutory power to handle competition in the electricity market. The system operator handles the wholesale market.
Acquisitions by foreign companies
Are there any special requirements or limitations on acquisitions of interests in the electricity sector by foreign companies?
There are no limitations or special requirements on acquisitions of interests in the electricity sector by foreign companies. The operator must be registered in Ghana. An operator must include in its corporate structure all the foreign companies it intends to partner or deal with (eg, for supply of equipment).
Authorisation to construct and operate interconnectors
What authorisations are required to construct and operate interconnectors?
Authorisation is required to operate interconnectors in line with the NITS for transmission of electricity throughout the country. An operator requires a licence granted by the Energy Commission authorising the licensee to operate the interconnector.
This imposes conditions for the safe, reliable economic dispatch and operation of the NITS for the transmission of electricity without discrimination to a wholesale supplier of electricity. Similarly, conditions are imposed in that tariffs to be charged by the licensee for its services are subject to the approval of the PURC.
Even upon the grant of a licence for distribution and sale of electricity, it must be shown that the licensee has the capability to interconnect distribution facilities or installations with transmission systems in the designated area.
Interconnector access and cross-border electricity supply
What rules apply to access to interconnectors and to cross-border electricity supply, especially interconnection issues?
Ghana’s imports and exports of electricity are driven primarily by two factors: the need to meet growing peak demand and the variability of the Volta River flow rates. The primary electricity trading partners are Ivory Coast and Togo, with which electricity is traded via the existing transmission interconnections. For example, Ghana has an exchange agreement with the Ivory Coast for up to 200-250MW of power import or export as the need arises on either side.
In December 2003, Ghana signed the ECOWAS Energy Protocol, which calls for the elimination of cross-border barriers to trade in energy, and encourages investment in the energy sector. This agreement, along with the WAPP agreement, is expected to lead to a more active regional import and export power market.
A grid participant wishing to interconnect the NITS to the electricity networks of neighbouring countries in the WAPP must do so in accordance with the provisions of the Grid Code, the ECOWAS Energy Protocol and the WAPP Operation Manual.
These agreements have potentially significant benefits for Ghana. Demand for electricity is growing rapidly throughout the region, which simultaneously creates a larger market for Ghana to trade power within the larger ECOWAS region.
The ECOWAS Regional Electricity Regulatory Authority (ERERA) is the regulator of regional cross-border trade of electricity in West Africa.
There are rules that are under development by ERERA. The Energy Commission licences operators that intend to export power. WAPP is an ongoing project.
Transactions between affiliates
What restrictions exist on transactions between electricity utilities and their affiliates?
The law permits a public utility to arrange for the joint use of its equipment and facilities by another public utility. This may be done for a reasonable compensation where the arrangement is convenient or necessary and the use will not result in damage to the owner or other users of the equipment.
The PURC has the power to direct that two or more public utilities enter into an arrangement for joint use of equipment and facilities for the provision of a service. The PURC may exercise this power only when it is satisfied that the arrangement:
- is necessary to provide safe, adequate and economic service to consumers;
- will not result in irreparable damage to the owners or users of the equipment or facilities; and
- is just and reasonable having regard to the circumstances of the case.
The Energy Commission must be informed of all operations of affiliates for the commission to determine whether the licence of the operator covers the affiliates. The operator must submit any existing agreement or material contract between it and its affiliate or any other company to the Energy Commission.
Enforcement and sanctions
Who enforces the restrictions on utilities dealing with affiliates and what are the sanctions for non-compliance?
In the event of a dispute relating to transactions between affiliates, the parties may lodge complaints with the PURC for settlement. In enforcing the restrictions relating to dealing with affiliates, the PURC may, on a complaint from a public utility or consumer affected by the arrangement, modify or revoke an earlier directive.
The Energy Commission may arbitrate and settle a dispute arising between licensees where the parties cannot reach an agreement.
Update and trends
Update and trends
Are there any emerging trends or hot topics in electricity regulation in your jurisdiction?
In August 2014, the government of Ghana entered into the Millennium Challenge Compact with the United States of America (acting through the Millennium Challenge Corporation that provided a grant of up to US$498,200 for, among other things, a five-year economic development programme to fund investments in Ghana’s power sector (the Compact). The Compact entered into force in September 2016 and the first tranche of US$308.2 million was made available to the Ghana government. In September 2018, the government of Ghana satisfied the conditions to access the second tranche of Compact funds in the amount of US$190 million.
In line with the terms of accessing Tranche II funding under the Compact, the management of ECG was opened up for private sector participation. The proposal for new private management of the ECG was won by a consortium of private investors (with 51 per cent Ghanaian shareholding in the ownership of the Concession) led by the Manila Electric Company of the Philippines (Meralco). The concession agreement between the government of Ghana and Meralco was placed before the parliament of Ghana and approved in July 2018.
Under the concession agreement, Meralco will have the right to operate and expand the power distribution network in Ghana, which is expected to significantly improve the technical and commercial performance of ECG. The expectation is that the implementation of the concession agreement will reduce total distribution system loss, which will translate into substantial reduction in electricity tariffs as the revenue of the utility increases, and the power supply will become more reliable over the next five years.