Ghana - Regulatory Strengthening

Ghana Regulatory Strengthening

Independent Evaluation

ID Number DDI-MCC-GHA-IE-ENERGY-REGSTR-2019-v01

Topic	Vocabulary	URI
Energy	MCC Sector

Ghana, Ghana compact, power, energy, electricity, energy sector reform, tariffs, tariff reform, regulation

Name	Abbreviation	Role
Mathematica		Independent Evaluator

2019-07-29 Version 01

DDI-MCC-GHA-IE-ENERGY-REGSTR-2019-v01Ghana II CompactThe Ghana II Compact aims to improve the quality and reliability of power distribution systems; support regulatory reforms to promote private sector partnership and long-term financial sustainability; improve access to legal connections for micro, small, and medium-sized enterprises (MSMEs); and promote energy efficiency to manage demand growth. The compact comprised the four following projects designed to address critical challenges facing the electricity sector: (1) the ECG Financial and Operational Turnaround Project (EFOT), which was designed to improve ECG’s management and efficiency by introducing private sector participation, reducing outages and commercial and technical losses, and modernizing the electricity distribution system; (2) the Regulatory Strengthening and Capacity Building Project, designed to promote sustainability, transparency, and accountability in the power sector through strengthening regulatory institutions and processes, reviewing and restructuring tariffs, and improving the environment for private sector investment; (3) the Access Project, which targets MSMEs in markets and economic enclaves in urban and peri-urban areas with activities to increase legal connections and improve security lighting; and (4) the Energy Efficiency and Demand Side Management (EEDSM) Project, which seeks to improve building and appliance efficiency and reduce energy wastage through energy audits; standards and labels for energy efficient devices; upgrades to street lighting; and education and public information activities. The original design of the compact also covered the NEDCo Financial and Operational Turnaround Project (NFOT) which was designed to improve NEDCo’s financial performance and customer service through private sector involvement in operational and commercial capacity building, infrastructure investments, and efforts to improve cost recovery. MiDA was not able to reach an agreement to move forward with this project, so it was de-scoped. Consequently, the funds are being reallocated, and we do not cover the project in this design report. The original design of the compact also included the Power Generation Sector Improvement (Generation) Project to diversify fuel sources for power generation through support for the gas sector and liquefied natural gas development and to strengthen the enabling environment for independent power producers (IPPs). The need for MCC assistance has been greatly reduced because the GoG is already undertaking reforms with support and technical assistance from USAID. As a result, MCC is not moving forward with this project and we do not cover it in this report.(Energy)MCC’s problem diagnostic identified two main issues limiting the efficiency and effectiveness of the Ghana energy sector: (1) low reliability of electricity supply and (2) insufficient access to power. The program logic for the Ghana II Compact addresses these issues. The activities are expected to achieve targeted power sector outcomes of increased availability, reliability, and expansion of cost-effective generation for all utility customers and increase the number of businesses, institutions, and households connected to the grid. The core compact activities consist of four main projects; the ECG Financial and Operational Turnaround Project, the Regulatory Strengthening and Capacity Building Project, the Energy Efficiency and Demand Side Management Project, and the Access Project. Together, these projects aim to reduce or eliminate sector inefficiencies and reliance on government subsidies, improving service as a result. If successful, these projects would improve the availability and quality of electricity to consumers while also improving the financial health of the utility. Outcomes from these activities support the Compact's goal of reducing poverty through sustainable and equitable economic growth by improving Ghana's power sector. The Regulatory project is designed to promote sustainability, transparency, and accountability in the power sector through strengthening regulatory processes, reviewing and restructuring tariffs, and improving the environment for private sector investment. Thus, this Project is designed to ensure that the power sector is financially self-sustaining and relies less heavily on cross-subsidies among tariff categories or other direct or implicit subsidies from the Government. The primary beneficiaries of this project are electric utility customers throughout Ghana, as well as their household members, enterprise employees, and enterprise customers. However, no beneficiary analysis was conducted for this project as all benefits were rolled up into the beneficiary analyses for the EFOT and NFOT projects. The regulatory project is composed of two main activities designed to improve regulators’ capacity to monitor utility performance and to provide better information to help improve institutional and political support for tariff reform. The two activities include the Sector Performance Monitoring and Capacity Building activity and the Tariff Review and Regulation activity.The primary beneficiaries of this project are electric utility customers throughout Ghana, as well as their household members, enterprise employees, and enterprise customers.