Black-outs cost economy US$974m annually

The cost of energy disruptions in the country has been computed to cost the economy about US$974 million every year, the country’s energy producers have said.

This is about six percent of the country’s Gross Domestic Product (GDP).

The Director of Engineering of the Ghana Grid Company Limited (GRIDCo), Norbert Anku said the cost of power outages to the economy is more than two-fold what the company needs to generate and produce energy to prevent outages.

“Compared to the level of investment in electricity generation and transmission infrastructure needed to prevent outages, US$320 million, for example, is more than six years of GRIDCOs revenues under the existing tariff structure,” he said.

Anku said it the recent power outages are a manifestation of the problems which have forced the power producers to seek an increment in the existing tariff for power supplied.

Currently, the utility companies have laid a proposal before the Public Utilities and Regulatory Commission for a 150 percent increase in tariffs charged to consumers - a proposal consumers, especially the Association of Ghana Industries, have kicked against, claiming the increment will kill domestic manufacturing industries.

“As a society we pay the full cost of reliable power - whether we choose to pay a low tariff and endure the deleterious effect reliability failures have on the economy, or we choose to pay fair power prices to assure high availability and reliability,” he said.

The World Bank has estimated that thecost of power outages to countries in sub-Saharan Africa each year is about US$320 million.

However, Mr. Anku said the cost to the Ghanaian economy is much higher because the country’s level of electrification is higher than many countries in the region, and so the country is much more reliant on electricity

He explained that the company uses an estimate of the value placed by an average consumer on an unsupplied unit of electric power, which he said is a critical component of evaluating the cost of power outages as it measures consumers’ willingness to pay to avoid such outages.

He explained that the financial impact on a consumer of power when their power is curtailed differs depending on whether or not the power outages were planned, and depending on the type of consumer.

“First, outage data was collected and the cost per outage estimated for each sector, reflecting the inherently different unit value of electricity to each sector. According to data provided by the Electricity Company of Ghana (ECG), its average customer was without electricity for about 10 hours each month in 2007. Using this as a comparison for the bulk power system, this translates into 120 gigawatts per hour of lost load in 2009.”

source:B&FT