Ghana's energy privatisation "driven only by financial concerns"

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afrol News, 1 July - A new comparative study of global reforms of the electricity sector (mostly meaning privatisation), shows that neither social factors nor environmental considerations have been of major importance in decision-making. World Bank pressure and connected financial concerns have been the motives behind reform; also in Ghana. 

In a new study by the UN agency World Resources Institute (WRI) titled 'Power Politics: Equity and Environment in Electricity Reform', the authors were surprised to find that the issue of sustainable development had plaid no important role in the global reform of the electricity sector. The reforms, often targeted at reducing subsidies and increasing tariffs, "have also triggered social hardships and political opposition," the report says. 

Instead of sustainable development, they find that financial concerns and donor conditions have driven electricity reform. "Managed by closed political processes and dominated by technocrats and donor consultants, social factors play a limited role, and environmental considerations play almost no role in a re-envisioned electricity sector," the overall conclusion is.

Ghana is one of the six countries studied in the WRI report. "The World Bank has historically played a dominant role in the Ghanaian electricity sector, and has been instrumental in the reform process," the report says. "But the government of Ghana has been firm in seizing ownership of its reform program and independently directing the course of reforms."

Ghana had been "forced to consider reforming its sector" by a combination of demand shortfall — in part due to drought — and the drying up of its traditional source of financing, the World Bank. "There is little doubt that the World Bank was instrumental in urging the government to seriously consider a program of reform," the report concludes.

All sources had agreed that "without the threat of a cut-off of World Bank funds, the government would not have undertaken substantial reforms." However, in designing the program, the government had forged its own path, and one quite distinct from World Bank recommendations. 

Instead of pursuing limited reforms and relying on management contracts to improve performance, the government had "embraced far-reaching reform," integrating the giant The Volta River Authority (VRA) into the sector. The VRA generates almost all of Ghana's electricity through two large hydroelectric projects.

The report asks whether government ownership did translate to an emphasis on a public benefits agenda. "Certainly," it answers, "part of the motivation for integrating VRA into the sector was to spread the benefits of VRA's cheap hydropower more broadly through the population." 

But given the slow pace of the reform, whether the public will benefit from this approach was as yet undetermined. While the government had a long-term commitment to expand access to electricity, for much of the reform process access and reform proceeded on parallel tracks. In its support for both reforms and for electrification programs, the World Bank also pursued both as separate projects. Only in 1999 did the government make explicit attempts to relate electricity access to the reform process.

Dr. Navroz Dubash, lead author of the new study, commented that social benefits and environmental considerations could be easily discounted as rich and poor countries focus on making their power markets more competitive. "The public interest depends on whether policy-makers are sufficiently far-sighted to steer globalisation toward positive social and environmental outcomes," Dubash further concludes the entire report.

Sources: Based on WRI and afrol archives

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