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How Ghana can map its energy transition journey by Nafi Chinery

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The good news is that Ghana now has a golden opportunity to develop a comprehensive and context-specific plan for navigating the global energy transition. In response to COP26 and Ghanaian CSOs’ demands for a national energy transition policy, the government launched the National Energy Transition Committee (NETC) in December 2021. The committee is tasked with developing a national policy document on steps the country can take to successfully navigate the global energy transition.

All countries have a vital role and interest in avoiding catastrophic climate impacts and safeguarding a livable planet. Like the citizens of most developing countries, Ghanaians are increasingly affected by climate change, despite bearing little responsibility for the emissions that are causing it.

At the COP26 climate conference last year, governments reaffirmed their commitment to the goal of limiting global warming to 1.5°C. Achieving this will require a colossal and unprecedented shift away from fossil fuels to renewable energy sources like wind and solar — as well as the provision of clean, affordable and reliable energy for the nearly one billion people currently living without it.

The wealthiest countries that have polluted the most should hold the primary responsibility for tackling climate change, both in cutting their emissions first and fastest, and in providing climate finance and support to countries like Ghana. Ghana’s President Nana Akufo-Addo emphasised this responsibility during COP26 when he called for a fair and equitable solution that “recognises the historical imbalances between the high emitters and low emitters.”

To date, however, wealthy countries have under-promised and underdelivered. They have yet to reduce emissions to the extent necessary to avoid warming beyond 2°C, let alone 1.5°C. And, as President Akufo-Addo also mentioned, they have failed to honour their 2010 promise of $100 billion per year to support developing countries’ responses to climate change. Tragically, the consequences will be felt by all for decades to come.

Ghana’s agency in the energy transition

Despite this compound injustice and these broken promises, Ghana’s future ultimately depends on its own leadership and effective planning. Ghana is still a resource-dependent country, with more than a quarter of its export earnings coming from oil and gas alone. Over the past decade, the oil sector has contributed around $6.5 billion of direct revenue to Ghana’s budget. Without a plan to respond to the global energy transition, a significant decline in oil revenues could plunge Ghana into a deep crisis.

In the last decade, the government has allocated $2 billion to the Ghana National Petroleum Corporation (GNPC). These investments have financed equity stakes in exploration, development and general operations in oil-producing fields. NRGI’s Risky Bet report shows that, globally, oil and gas projects currently in the pipeline and worth an estimated $400 billion, run the risk of not breaking even.

At a minimum, the government should avoid making bad decisions — those that threaten the country’s economic and fiscal outlook. But Ghana’s record does not inspire confidence. In the last decade, the government has allocated $2 billion to the Ghana National Petroleum Corporation (GNPC). These investments have financed equity stakes in exploration, development and general operations in oil-producing fields. NRGI’s Risky Bet report shows that, globally, oil and gas projects currently in the pipeline and worth an estimated $400 billion, run the risk of not breaking even. Against the backdrop of the global energy transition, GNPC’s ambitions of becoming an operator are risky.

In July 2021, Ghana’s Ministry of Energy and GNPC declared their intention to sink an additional $1.65 billion of public money into shares of Aker Energy’s oil project — yet another “risky bet” given the increasing pace of the global energy transition, which would result in poor returns on such a large-scale investment. Furthermore, such a decision would divert precious capital that the government could invest in more socially beneficial programmes, such as education or cheaper and more diverse energy sources, that could power development in Ghana. Thankfully, after severe criticism from civil society organisations, the public and industry oversight bodies in Ghana, the government paused its investment plans in the Aker shares.

No doubt, Ghana’s economic and fiscal outlook is uncertain. The 2018/19 oil licensing round remains unconcluded and oil production is projected to decline. International companies are redirecting their investments, and projects have been delayed. State oil revenues peaked in 2018, at 10 per cent of total government revenue, and dropped to seven per cent in 2020, due to the coronavirus pandemic. The ongoing war between Russia and Ukraine and the related global energy crisis now present huge uncertainties for the oil sector, including the prospect of a global recession.

The good news is that Ghana now has a golden opportunity to develop a comprehensive and context-specific plan for navigating the global energy transition. In response to COP26 and Ghanaian CSOs’ demands for a national energy transition policy, the government launched the National Energy Transition Committee (NETC) in December 2021. The committee is tasked with developing a national policy document on steps the country can take to successfully navigate the global energy transition. The NETC is also tasked with conducting a nationwide consultation on Ghana’s energy transition. At the first regional forum organised by the Ministry of Energy on behalf of the NETC, Vice President Dr Mahamudu Bawumia said the NETC’s nationwide consultations are key to success: “We need to develop plans and implement options that people can relate to.” He also stressed the importance of equal opportunities for all citizens to enjoy the benefits of the energy transition and ensure social justice in the process.

The transition plans must address Ghana’s growing energy needs. Decisions about energy sources and related services should be based on analysing different solutions over the long term, mindful of the likelihood that many factors (such as the competitiveness of renewables and gas) may change quickly over the coming decade. Accordingly, the NETC should review the role of fossil gas over the course of the transition…

Essential elements for Ghana’s approach

The establishment of the NETC is an important and valuable first step. The following recommendations, if adopted, would put the committee on track to deliver a successful energy transition plan:

  • Include all voices. Ghana’s plan should be inclusive and leave no citizen behind. The plan should address how government will support local economies with relevant training, technology and finances to take advantage of the new opportunities in the transition;
  • Enlist experts. The NETC should engage sector experts working on the energy transition to help ensure that the plan is informed by data and technical analysis;
  • Promote open dialogue. Open and honest engagement between all relevant stakeholders will help build consensus and ownership around a transition pathway that is widely considered by citizens as viable and necessary. A shared understanding of the risks and opportunities of the energy transition is critical to agree on a shared strategy;
  • Plan in harmony and coordination with existing policies. The energy transition plan should harmonise existing policy objectives and remedy the systemic inefficiencies in existing policy implementation;
  • Improve governance of climate finance. The Ministry of Finance should spell out the role of international climate finance in energy transition planning and interrelate the energy transition plan with Ghana’s (conditional) nationally determined contributions under the Paris Agreement. Across the board, this requires building the state’s capacity to receive and deploy international climate finance;
  • Take a critical and dynamic approach to energy options. The transition plans must address Ghana’s growing energy needs. Decisions about energy sources and related services should be based on analysing different solutions over the long term, mindful of the likelihood that many factors (such as the competitiveness of renewables and gas) may change quickly over the coming decade. Accordingly, the NETC should review the role of fossil gas over the course of the transition — not assume from the outset that gas will be a constant;
  • Assess implications for existing institutions. Ghana’s energy transition plan should consider the role of existing institutions such as GNPC in light of the long-term, macro pathway, rather than starting with assumptions about their purpose and role. Making the right investment decisions will require transparency and robust risk assessment.

Nafi Chinery is the West Africa (Anglophone) regional manager at the Natural Resource Governance Institute (NRGI).

Strictly Personal

Umeme, grain and coffee: Why Kenya should fear Uganda’s economic gamble, By Charles Onyango-Obbo

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Uganda, the 1990s shining Africa poster boy for privatisation, is engaging in what could be East Africa’s biggest economic liberalisation reverse gear. Last year, the Uganda government formally announced it would not renew the contract of electricity distributor Umeme in 2025, when its concession expires, and that it will form a state-owned entity to take over its business.

The government’s main criticism of Umeme is its margins are too high, so it has failed to lower electricity costs, and the expensive rates have hobbled Uganda’s industrialisation ambitions. Umeme counters that it is just a distributor, and the high electricity costs are passed on from the power generators.

In two years, the debate will be resolved. Uganda will be in the midst of campaigns ahead of the January 2026 election, when President Yoweri Museveni, weighed down by the wear and tear of 40 years in office, will likely be bidding for a record-shattering ninth term, with his son, Gen Muhoozi Kainerugaba, among those trying to wrestle the crown from his head. It will be the worst possible timing because incumbents rarely make the most enlightened decisions during heated election campaigns. As the West Africans say, there will likely “be a lot of cry.”

Distribution concession

Umeme was formed in 2004 when the government of Uganda granted the distribution concession to a consortium belonging to Globeleq, a subsidiary of the Commonwealth Development Corporation of the UK, which held 56 per cent, and South Africa’s now inept utility corporation Eskom, which had 44 per cent. In 2006 Eskom exited the consortium, and Globeleq became the sole owner of Umeme.

The regional impact could be significant because, among other things, Umeme shares are cross-listed on the Nairobi Securities Exchange. If it unravels, Kenyan shareholders would be left crying in their bowls, and we could be back to the feud over regional assets that followed the break-up of the first East African Community in 1977.

Too messy to swallow

The renationalisation of Umeme will not be unique. Kenya just tried to renationalise cash-haemorrhaging national carrier Kenya Airways but found it too messy to swallow. The recently elected new government of President William Ruto has decided to throw it back on the block.

The difference in Uganda is that Umeme is just the shallow end of the pool. There are other moves to renationalise the very lucrative liberalised coffee sector by granting a near-monopoly to a Vinci Coffee Company, owned by controversial and shadowy Italian “foreign investor” Enrica Pinetti, to process and export Uganda’s coffee. That would take Uganda back to the early 1990s when the disastrous Coffee Marketing Board was disbanded.

A similar move is being made to give the Grain Council of Uganda, on paper a non-profit membership organisation, the kind of sway over the country’s grain last seen in the colonial era.

The force behind the Grain Council is the otherwise amiable president’s younger brother, retired Lt-Gen Salim Saleh (Caleb Akandwanaho), a sly operator who is the second most powerful figure in the land. A nationalist and statist, Saleh has led a quiet but effective assault against laissez-faire liberalisation, which he argues has mostly benefited foreigners and left Ugandans with only holes in their pockets. He has taken over a large chunk of the country’s agricultural budget and several “development” functions under the amorphous state-created vehicle Operation Wealth Creation (OWC) that he heads and inserted disciples in key national economic institutions.

Return to old roots

This state of affairs is a dramatic return to old roots. Uganda launched the first of a series of economic liberalisations in the 1990s that were deemed impossible in Africa at the time and anathema in the hyper-nationalist traditions that were entrenched in post-independence Africa.

It was the first country in Africa to radically liberalise its foreign exchange market and still maintains one of the least-interventionist approaches to the money market on the continent. It was also the first in East Africa to pass laws that gave the central bank extensive independence.

It was the first on the continent in the early 1990s to liberalise the fuel market and scrap fuel subsidies. Again, in East Africa, at least, it is the government that meddles least in setting the price of gas at the pump. When fuel prices skyrocketed everywhere following the Russian invasion of Ukraine last year, it alone was the East African government to flatly refuse to even consider a fuel subsidy and price cap, as all the rest of the EAC states did.

Price of food

Uganda, too, is the country where the price of food is most considered none of the government’s business. When Ugandans read stories and political fights over maize in Kenya, and the government setting the price, to some of them, it sounds like a tale about an alien planet.

The country and economy that Uganda is today are about to change. Some of the changes have to do with the politics of the Museveni succession and how the family and vested interests that have coalesced around the State House view their future security. A lot of it, though, is because of some good things: the rebirth of the EAC; the end of the wars in Uganda and the ushering in of the country’s longest spell of peace; the rebound of a post-KANU Kenya; and the Rwanda post-genocide recovery.

If there are two people in East Africa outside Uganda, who have edged Uganda to the fork in the road where it is today, they are Rwanda’s President Paul Kagame and former Kenya president Mwai Kibaki.

The author is a journalist, writer, and curator of the «Wall of Great Africans». Twitter@cobbo3

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Strictly Personal

In honour of Komla African scribes should lead renaissance, By Elsie Eyakuze

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Somehow the only news we watch on the TV at home is offered by the Tanzanian Broadcasting Corporation or any one of several Kenyan stations that the person who holds The Power chooses. As a result, I have been on an imposed “news diet” for a few years now.

It is nothing serious, just a touch of burnout with a soupçon of ennui for flavour. There are newspapers, too, but I am a decade past my paper-chasing days and I have noticed the click-bait flavour of headlines and I don’t like it.

In other words, I am growing older, crankier and particular about my news. This led me to believe that I am bored by the business that the industry might indeed be floundering — a position I do not really hold. After all, my job as a journalism-adjacent writer is to support the news and the people and institutions that bring it to us.

Maintain my optimism

I can’t afford to be cynical. I have to maintain my optimism and commitment, even through lazy editing in Tanzanian newspapers, and ulcer-inducing anxiety over Freedom of Expression when it is threatened.

But, yea, you know, it is 2023 — a year that honestly belongs in science fiction, not in real life. Like you, I get most of my news online these days, in small doses, and only when I want it. I have meandered off the path of keeping abreast into the woods of barely knowing what is going on, and it is has been wonderful for my mental health.

And that would have been that, but an energetic young journalist decided to invite me to the launch of the BBC’s Komla Dumor Awards, which took place last week in Dar es Salaam.

Apart from it being the Komla Dumor Award, there was a clear intention to spark some enthusiasm in Tanzanians to apply for the prize.

Observing old journalists encouraging young journalists while enjoying free snacks was just what the doctor ordered.

I watched young master Dingindaba Jonah Buyoya expertly handle a live recording of a show, saw a lot of familiar faces, and got reminded that journalism “is a calling, a vocation.”

Power of a calling

Nothing will kick the stuffing out of your cynicism like understanding the power of a calling, a vocation. There is a largely positive compulsion that drives people into journalism: Most of them are trying to help. They are hopeless romantics with a vision that the work that they do matters, that it can make the world a better place like a Michael Jackson song. So they take their notebooks and their electronics and venture forth to cover stories and bring them back to us in the comfort of our homes and devices.

If you spend any time thinking about it, this is a pretty radical thing to do. And we cannot live this modern life without the people who make it happen. The Komla Dumor Award is about fostering excellent African journalists, and I know exactly why young Tanzanians are hesitant to apply. I was a young Tanzanian once, I know.

They should take heart: If I managed to charm hard-nosed editors in Nairobi into letting me keep this gig, they can certainly conquer Africa, the BBC, and the world news.

We — I — need that from them more than they realise.

Elsie Eyakuze is an independent consultant and blogger for The Mikocheni Report; Email elsieeyakuze@gmail.com

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