Power Infrastructure Sector Reforms, Power Generation, and Private Investments: Case Study from Ghana’s Power Sector

Abstract

This paper assesses the impact of power infrastructure investments in the developing economy of Ghana following sector restructure and reform and develops a forecasting model for predicting the future trend in electricity generation and electricity tariffs. Secondary data sourced via the World Bank Public-Private Infrastructure Advisory Facility (PPIAF)/Private Participation in Infrastructure (PPI) Project Database for the period 1994 to 2013 and Energy Commission for the period 2000 to 2014 were used to analyze Ghana’s power generation statistics using descriptive, exploratory data analysis and polynomial prediction models. Results reveal that reform has stimulated independent power producer (IPP) investment, particularly in thermal generation capacities to complement hydro alternatives. It is predicted that in the medium term the electricity tariff will continue to rise while electricity generation will decline if additional investments in power infrastructure are not made. This paper provides a case study that critically appraises Ghana’s power sector reform; exposes the gap between policy implementation and policy objectives attainment; and proposes a simple yet novel polynomial prediction model that can facilitate short-to-medium term planning of generation and tariff management.