TARIFF PROPOSAL FOR 2022

NORTHERN ELECTRICITY DISTRIBUTION COMPANY LTD (NEDCO)

April, 2022

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 Contents
1.0 INTRODUCTION .............................................................................................................................................1
1.1 Brief Description of the Current Status of the Ghanaian Electricity Supply Industry (ESI) ..................2
2.0 LEGISLATIVE PROVISIONS IN SUPPORT OF THE TARIFF APPLICATION ..................................................3
3.0 BRIEF BACKGROUND OF NEDCo AND ITS POWER SUPPLY OPERATIONS .................................................3
4.0 RATIONALE/ OBJECTIVES UNDERPINNING TARIFF SUBMISSION ............................................................4
5.0 HIGHTLIGHTS OF MAJOR ISSUES WHICH DESCRIBES STRUCTURE OF TARIFF SUBMISSION: ..............5
6.0 INITIATIVES UNDERTAKEN SINCE JULY 2019 TARIFF APPROVAL ............................................................6
6.1. Procurement and installation of 25,000No. Smart Type PPMs and Accessories ..................................7
6.1.1 Project Objective ..................................................................................................................................7
6.1.2 Scope of Work .......................................................................................................................................7
6.1.3 Project Benefits ....................................................................................................................................8
6.1.4 Project Cost ...........................................................................................................................................8
6.1.5 Completion Date: ..................................................................................................................................8
6.2 Automatic Meter Reading (AMR) and Boundary Metering .......................................................................8
6.2.1 Project Objective ..................................................................................................................................8
6.2.2 Scope of Work .......................................................................................................................................9
6.2.3 Project Benefits ....................................................................................................................................9
6.2.4 Project Cost ...........................................................................................................................................9
6.2.5 Completion Date: ..................................................................................................................................9

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 6.3 Techiman-Abofour Line Construction ...................................................................................................... 10
6.3.1 Project Objective ................................................................................................................................ 10
6.3.2 Scope of Work ..................................................................................................................................... 10
6.3.3 Project Benefits .................................................................................................................................. 10
6.3.4 Project Cost ......................................................................................................................................... 11
6.3.5 Completion Date: ................................................................................................................................ 11
6.4 Hexing System Upgrade .......................................................................................................................... 11
6.4.1 Project Objective ................................................................................................................................ 11
6.4.2 Scope of Work ..................................................................................................................................... 12
6.4.3 Project Benefits .................................................................................................................................. 12
6.4.4 Project Cost ......................................................................................................................................... 12
6.4.5 Completion Date: ................................................................................................................................ 12
6.5 Supply and Installation of 100,000 Smart Prepaid Meters ................................................................... 13
6.5.1 Project Objective ................................................................................................................................ 13
6.5.2 Scope of Work ..................................................................................................................................... 13
6.5.3 Project Benefits .................................................................................................................................. 13
6.5.4 Project Cost ......................................................................................................................................... 14
6.5.5 Completion Date: ................................................................................................................................ 14
7 PROJECTS TO BE UNDERTAKEN ..................................................................................................................... 14
7.1 Construction of Lamashegu Primary Substation .................................................................................... 14
7.1.1 Project Cost:........................................................................................................................................ 15
7.1.2 100km Conductor upgrade: ............................................................................................................... 16

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 7.1.3 Project Cost:........................................................................................................................................ 16
7.2 THE KEXIM PROJECT ................................................................................................................................ 18
7.2.1 Project Cost:........................................................................................................................................ 18
7.2.2 BENEFITS OF THE PROJECT ............................................................................................................... 18
7.3 Procurement of Distribution Materials: ................................................................................................... 19
7.3.1 Project Cost:........................................................................................................................................ 19
7.3.2 Anticipated Project Outcomes/Impact ............................................................................................. 19
7.4 Construction of NEDCo Head Office Complex: ........................................................................................ 20
7.4.1 Project Cost:........................................................................................................................................ 21
7.5 Proposed Tamale Metropolis Split Smart PPM Project ........................................................................... 22
7.5.1 Project Cost:........................................................................................................................................ 22
7.5.2 Expected Results and Benefits........................................................................................................... 22
8 HIGHTLIGHTS OF MAJOR ISSUES WHICH DESCRIBES STRUCTURE OF TARIFF SUBMISSION: ............... 23
8.1 Technical / Operating Performance Indicators/Indices ........................................................................ 27
9 Key Challenges Likely to Impact Service Delivery ........................................................................................ 29
9.1 Inadequate Revenue from Tariff ............................................................................................................. 29
9.2 Low Numbers of SLT Customers .............................................................................................................. 29
9.3 Large Operational Area with Low Customer Density ............................................................................. 30
9.4 Perennial Ministries, Departments & Agencies (MDAs) & Sensitive Customers Indebtedness ........... 30
9.5 Metering Including prepayment metering .............................................................................................. 30
9.6 Energy Audit .............................................................................................................................................. 31
9.7 Theft of power, cables and Equipment .................................................................................................... 31

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 9.8 Loss Control - Technical and Commercial ............................................................................................... 32
9.9 Availability/Reliability of Supply/Quality of Service .............................................................................. 33
9.10 Suppressed Demand .............................................................................................................................. 34
9.11 Management information system including E-payment ..................................................................... 34
9.12 Billing and Collection ............................................................................................................................. 35
9.13 Organizational reforms and restructuring ........................................................................................... 37
9.14 Customer Complaints & Dispute Resolution ........................................................................................ 37
9.15 Resolution of Court Cases ..................................................................................................................... 37
9.16 Government and Public Sector Debts ................................................................................................... 38
9.17 Bad & Doubtful Debts ............................................................................................................................ 38
9.18 Government Grants ............................................................................................................................... 39
9.19 Access to Finance and Repayment of Financing Costs ........................................................................ 40
9.20 Tariff Structure and Rates Design ........................................................................................................ 41
9.21 Introduction of Wholesale Electricity Market ...................................................................................... 42
9.22 Wholesale Market Bulk Customers Embedded in Distribution Network ............................................ 42
9.23 Embedded Generators and Interconnection ........................................................................................ 43
9.24 Power Procurement from Independent Power Producers and Renewable Energy Generators. ...... 43
9.25 Human Resource-Skilled Manpower..................................................................................................... 43
10 Strategies to Address Key Challenges ........................................................................................................ 44
11 Total Distribution Utility System Load at Peak .......................................................................................... 47
12 Regulated Market-Non-Special Load Tariff Customers ............................................................................. 48
13 Regulated Market-Energy Commission Licensed Bulk Customers Embedded in Disco Network ........... 48

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14 Base Load ..................................................................................................................................................... 49
15 Forecast of Energy to be Purchased ........................................................................................................... 49
16 Non-Conventional Energy - Renewable Energy ......................................................................................... 49
17 Distribution System Losses at Various Voltage Levels .............................................................................. 52
34.5kV-11.5Kv .................................................................................................................................................... 52
33kV-11kV.......................................................................................................................................................... 52
415V-240V ......................................................................................................................................................... 52
18 Customer Population by Classification at Characteristics ......................................................................... 52
19 Regulated Market- Non-Special Load Tariff Customers ............................................................................ 53
19.1 Residential Customers ........................................................................................................................... 53
19.2 Non-Residential Customers................................................................................................................... 53
19.3 Special Load Tariff Customers .............................................................................................................. 54
19.4 De-regulated Market-Energy Commission Licensed Bulk Customers Embedded in Disco Network 54
20 Energy Allocated to Public Lighting (GWh) ................................................................................................ 54
21 Distribution Company's System Load Data ................................................................................................ 55
22 Summary of Capital Investment Plan (Million GHS) 2021-2026 .............................................................. 55
22.1 Capital Expenditure Financing Plan ...................................................................................................... 56
23 Operation and Maintenance Costs .............................................................................................................. 57
24 Administration and General Costs .............................................................................................................. 57
25 Human Resource Costs- Employee Costs ................................................................................................... 57
26 Public Education........................................................................................................................................... 58
27 Financing and Interest Costs: ..................................................................................................................... 58

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28 Return on Equity .......................................................................................................................................... 58
29 Depreciation ................................................................................................................................................. 59
30 Projected Electricity Distribution Revenue Requirement: ........................................................................ 59
31 Proposed Tariff and Rates Structure .......................................................................................................... 60
32 Appendices ................................................................................................................................................... 63

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LIST OF TABLES
Table 1: Service Deliver and Efficiency Targets for the Tariff Period ............................................................................. 25
Table 2: Statistics on Technical/Operating Performance Indicators/Indices ................................................................... 27
Table 3: Financial Performance of NEDCo from 2017 to 2021 ......................................... Error! Bookmark not defined.
Table 4: NEDCo’s System availability and Reliability Indices ......................................................................................... 33
Table 5: Additional Availability and Reliability Indices .................................................................................................. 36
Table 6: Details of Commercial Loan Procured by NEDCo for Injection of Materials, Equipment and Services during the
Validity of the Proposed Tariff:................................................................................................................................... 40
Table 7: Distribution Utility System Load at Peak Demand ........................................................................................... 47
Table 8: Base Load Statistics ..................................................................................................................................... 49
Table 9: Energy Purchase Forecasts ........................................................................................................................... 49
Table 10: Statistics of Current and Projected Renewable Energy Purchases .................................................................. 50
Table 11: Distribution System Loses at Various Voltage Levels ..................................................................................... 52
Table 12: Customer Population by Classification .......................................................................................................... 52
Table 13: Residential Customer Classification by Voltage Distribution ........................................................................... 53
Table 14: Non-Residential Customer Population Projections ......................................................................................... 53
Table 15:Current and Projected SLT Customer Distribution by Voltage Levels ............................................................... 54
Table 16: Statistics of De-regulated Market-Energy Commission Licensed Bulk Customers Embedded in Disco Network .. 54
Table 17: Energy Allocated to Public Lighting (GWh) ................................................................................................... 54
Table 18: Disco System Load Data 2021-2026 ............................................................................................................ 55
Table 19: Summary of Capital Expenditure Financing Plan (Million GHS) 2021-2026 ...................................................... 56
Table 20: Operation and Maintenance Costs (Million GHS) 2021-2026 .......................................................................... 57
Table 21: Administration and General Costs (Million GHS) 2021-2026........................................................................... 57
Table 22: Human Resource Costs (Million GHS) 2021-2026.......................................................................................... 57
Table 23: Summary of Public Education Costs (Million GHS) 2021-2026........................................................................ 58
Table 24: Financing and Interest Costs (Million GHS) 2021-2026.................................................................................. 58
Table 25: Equity Financing Costs (GHS) 2021-2026 ..................................................................................................... 58
Table 26: Equity Financing Costs (%) 2021-2026 ........................................................................................................ 59
Table 27: Summary of Distribution Company's Revenue Requirement (Million GHS) 2021-2026 ..................................... 59
Table 28: Details of NEDCo’s Operating Costs ............................................................................................................. 61

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 1.0 INTRODUCTION
In pursuance of the Government of Ghana’s Power Sector Reform Programme
(PSRP) initiated in the late 1990s, Management of the Volta River Authority
(VRA), in 1997, registered the Northern Electricity Distribution Company
(NEDCo) as a wholly owned VRA subsidiary, with a Board of Directors, to take
over the operations of the then Northern Electricity Department of VRA, (NED).
NEDCos’ mandate, according to its Operating License and Instrument of
Incorporation is to procure electricity from Bulk Suppliers and distribute same
to customers in a commercially viable and reliable manner.

In May 2012, VRA Management operationalized NEDCo as a wholly VRA

owned subsidiary, to focus on electric power distribution in its operational area,
with the expectation that sustained distribution of safe and reliable electric
power would help to promote economic growth and job creation in the Middle
and Northern Sectors of Ghana.

In addition to the northern parts of Western, Ashanti and the Volta Regions, NEDCo operates in eight administrative regions
in Ghana namely Northern, Upper East, Upper West, Bono, Bono East, North-East, Savanna and Ahafo Regions. On behalf
of its parent company VRA, NEDCo also supplies electricity to some parts of Togo and Burkina Faso. Although this is based
on an internal arrangement with VRA, which should be earning NEDCo some revenue, this component of the agreement is
yet to be operationalized. Whereas NEDCos’ utility territory covers about 64% of the geographical Area of Ghana, its

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customer density at the end of 2021 was approximately 7 customers per sq. km, which is relatively very low and its customer
profile is also dominated by residential category including- lifeline customers, whose consumption is very low with low
revenue.
NEDCo has been experiencing both operational and financial challenges since its establishment. The electricity supply
challenges can be attributed to a number of factors, including a high level of losses in the distribution system, which is
mainly due to the obsolete nature of distribution equipment, power theft as well as non-payment of bills by Government
Ministries, Departments and Agencies and other public and private sector organizations including individual consumers.

1.1 Brief Description of the Current Status of the Ghanaian Electricity Supply Industry (ESI)
The entire Ghanaian electricity supply industry (ESI) has over the recent past few decades not lived up to expectations of
its cherished customers of the various categories, namely domestic, commercial, industrial and other bulk customers. This
situation has largely resulted from two main supply side challenges, including weak, obsolete, undersized and overloaded
distribution infrastructure. The issue of inadequate generation capacity has been resolved since the last half decade, and
the power generation mix now has over 35% excess capacity. The situation in NEDCos’ utility territory has not been
different. Cost of capital available to the main Ghanaian market for public electric utilities comprising VRA, GRIDCo, ECG
and NEDCo for timely investments in capacity upgrading, scheduled maintenance, system refurbishing and expansion are
relatively high.

Consumer practices such as inadequate adherence to energy conservation principles, concentration of power usage during
peak hours, failure and or inability to pay energy bills timely enough, coupled with high numbers of power thefts from the
demand side, have also contributed to the persistence of poor quality of electricity supply.

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The economically infertile geographical location of NEDCo, in comparison with ECG’s operational area, has aggravated the
financial situation of NEDCo resulting in its inability to deliver quality service at the level desired by Management to its
cherished customers. Additional challenges peculiar to NEDCos’ operational area include high cost of supply of every kWh
of electricity and cost per customer care due to the sparse nature of dwellings, low population density, low numbers of
economic customers/consumers as well as network vulnerability to seasonal bush fires and other adverse weather conditions
including lightning strikes.

2.0 LEGISLATIVE PROVISIONS IN SUPPORT OF THE TARIFF APPLICATION

This tariff application is in compliance with NEDCos’ statutory obligation under Sections 18 and 21 of the Public Utilities
Regulatory Commission Act, Act 538 (1997). Section 18 (1) of Act 538 provides that “A public utility shall not demand a
rate for the service it provides unless the rate chargeable for the service has been approved by the Board” of the Public
Utilities Regulatory Commission. Section 21 (1) provides that “A public utility shall, within the time determined by the Board”
of the Public Utilities Regulatory Commission, file with the Commission in the form specified by the Board, tariffs showing
the rates charged by it for the service it provides”.

3.0 BRIEF BACKGROUND OF NEDCo AND ITS POWER SUPPLY OPERATIONS

As part of the Government of Ghana’s on-going nation-wide electrification drive under SHEP and GEDAP, NEDCo has, over
the recent years undertaken power extensions to new towns and communities that were hitherto not served from the grid.
According to the 2021 annual customer classification, the Residential customers constitute 84.96% of total customer
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population, they consume about 67.76% of total energy sales and contribute to only 51.40% of total revenue. The Non-
Residential customers mostly shops, agricultural and public institutions, including the security agencies, hospitals,
educational institutions constitute 15.03% of total customer population, consumed about 24.00% of total energy sales and
contributed 38.94% of revenue. Special Load Tariff (SLT) customers who constitute only 0.01% of the customer population
consumed about 8.24% of total energy sales, and contributed 9.66% of total revenue.

In addition to the sale of electricity at Residential including lifeline rates to the bulk of our customers, the sparse nature of
settlements means that the cost of supplying each kWh of electricity comprising meter reading, bill delivery, revenue
collection, disconnection of defaulting customers and reconnection of paid-up disconnected customers, resolution of faults
is relatively higher than the average in more economically fertile utility territories, such as in the middle and southern parts
of Ghana.

In 2020 NEDCo consumed only 8% of total energy consumed by the Distribution Utilities in Ghana.

4.0 RATIONALE/ OBJECTIVES UNDERPINNING TARIFF SUBMISSION

Since the last tariff proposal approved by PURC in 2019, the total and aggregate cost of supply of a kWh of electricity to
the customers in NEDCos’ utility territory has increased significantly due to the reasons below:

• The sparse nature of habitation in many of the rural communities within NEDCos’ utility territory, which continues
to worsen with each square kilometres’ increase of our distribution network, arising out of NEDCos’ own annual

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 expansion plan and Government of Ghana’s on-going nation-wide electrification programmes such as SHEP and
GEDAP.
• Increasing US Dollar to Ghana Cedi Exchange Rate of 7.89% as at March 2022
• Increasing costs of vital materials and equipment relevant to provision of service, that is, fuel and maintenance
components of transportation, power and distribution transformers, transformer fuses, drop-out fuses, conductors,
poles, insulators, energy meters, charges of contractors for network maintenance, vegetation control, network
extension and upgrading.
• Uneconomic existing tariff
• Inflation 19.4% as at March 2022
• High proportion of Residential customers (approximately 84.96%) and about 46% lifeline customers in NEDCos’
customer demography.

5.0 HIGHTLIGHTS OF MAJOR ISSUES WHICH DESCRIBE STRUCTURE OF TARIFF

SUBMISSION:
• Ghanaian Electricity End-User Tariff consists of the following:
a. Bulk Generation Charge (BGC), which is an average of the unit cost of electricity of all the power generation
plants in the Ghanaian energy mix.
b. Transmission Service Charge (TSC)
c. Distribution Service Charge (DSC)

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The last DSC tariff of GH₵0.315307 approved by PURC was inadequate to meet the total cost of service delivery to
customers. The BGC and TSC invoiced to NEDCo in the tariff build up are always high ie about 70%, thus increasing NEDCos’
operational costs. As a result, NEDCo has been incurring financial losses as it is not able to recover its cost of service
delivery, as a result of the high BGC and TSC and unfavourable customer profile. It is worth noting that when
hydroelectricity represented a higher percentage of previous BGCs approved for NEDCo, the BGC reduced in the year 2016
and NEDCo came close to making profit. NEDCo is therefore better off with a higher percentage of hydroelectricity in its
energy mix. In the light of this, it is being proposed that PURC through EMOP (Electricity Market Oversight Panel) should
allocate more hydro power to NEDCo in the energy mix during the tariff period. A hydro component of 626GWh is being
proposed to be considered for 2022 tariff approval.

• Increasing distribution system losses in NEDCo, which was about 27.29% as at the end of 2021. This constitutes
about 9.2% technical losses and 18.09% commercial losses. NEDCo has therefore identified the need to install
meters at critical nodes of the distribution network to ensure proper energy auditing, replacement of faulty meters,
customer audit and also undertake initiatives to reduce the system losses.

• High cost of investment in NEDCos’ operations to improve upon service delivery to customers.

6.0 INITIATIVES UNDERTAKEN SINCE JULY 2019 TARIFF APPROVAL

The following projects were undertaken since the last tariff review:

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6.1. Procurement and installation of 25,000No. Smart Type PPMs and Accessories (Oct. 2019)
6.1.1 Project Objective
NEDCo initiated procurement processes to purchase prepayment meters in line with its drive to enhance revenue
collection and protection. The smart-type prepayment meters was considered in this procurement, particularly, because of
its features that makes energy theft and tampering of meters difficult. With this type of meter, the customer is given
Customer Interface Unit (CIU) to keep in his/her premises. The CIU is used to load credit and access all necessary
information from the meter and therefore the customer has no business getting closer to the meter.

The initial design was to install the meters on walls at the customer’s premises, however after further consideration it was
agreed by stakeholders that installation on poles will serve a better purpose. Pole installation was thus endorsed and
implemented.

6.1.2 Scope of Work

The scope of work is as follows

• Supply and installation of 25,000 No. single phase and 150No. three (3) phase multi-part prepayment energy
meters and associated materials
• Supply and installation of vending system with its associated accessories
• Testing and commissioning of the installed meters
• Supply of tools
• Training of NEDCo staff

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 6.1.3 Project Benefits
The benefits of the project are as follows

• Reduced commercial losses by 0.3%

• Contributed to increase in revenue collection from 73% in 2018 to 79% in 2019
• Improved customer service

6.1.4 Project Cost

The total cost of the project is estimated at GHS 38,680,069.35

6.1.5 Completion Date:

This project was completed in October, 2020

6.2 Automatic Meter Reading (AMR) and Boundary Metering

6.2.1 Project Objective
NEDCo has since 2014 been piloting the AMR system with twenty (20) customers and has expanded the system to cover
about 254 of its Special Load Tariff (SLT) customers, Tee-off feeders (Boundaries) and Incomer feeders (Check meters) at
primary Bulk Supply Points (BSP). The project is part of efforts to identify areas in the distribution system where commercial
losses are high and to take the necessary steps to minimize them.

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 6.2.2 Scope of Work
The scope of work is as follows

• Supply and installation of 432no. smart energy meters

• Supply and installation of 432no. communication modules
• Supply and installation of 104 pieces of 34.5kV combined CTs/VTs,
• Supply and installation of 55 pieces of 11.5 kV combined CTs/VTs
• Testing and Commissioning of install system
• Training of NEDCo Staff

6.2.3 Project Benefits

The benefits of the project are as follows

• Energy Audit- NEDCO is able to identify areas where losses are high
• Improved customer service

6.2.4 Project Cost

The total cost of the project is estimated at GHS12,890,016.09

6.2.5 Completion Date:

This project was completed in September 2020

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6.3 Techiman-Abofour Line Construction
6.3.1 Project Objective
A greater percentage of NEDCos’ customers along the Techiman-Abofour stretch were served from 30kV and 20kV shield
wire networks, which was not able to serve their purpose. It became necessary to transfer these customers from the shield
wire network to a conventional 34.5kV voltage network. NEDCo therefore constructed a new 34.5kV conventional line and
upgraded portions of the existing shield wire line to make the transfer possible. Some 11.5kV networks were also to be
upgraded to 34.5kV as part of the project.

6.3.2 Scope of Work

• Construction of 70km of 34.5kV steel pole line from GRIDCo/NEDCo BSP at Techiman to Abofour
• Upgrade 30kV Shield wire (SHW) network with 1No. Transformer to 34.5kV conventional network at Kuntunso
Township
• Upgrade 30kV SHW network with 12No. Transformer to 34.5kV conventional network at Afrancho/Akomadam
Township
• Upgrade 30kV SHW network with 18No. Transformer to 34.5kV conventional network at Nkenkensu Township
• Upgrade 30kV SHW network with 18No. Transformer to 34.5kV conventional network at Abofour Township
• Upgrade 11.5kV conventional network with 7No. Transformer to 34.5kV conventional network at various towns
• Upgrade 5 km of 1-phase 2 wire and 2-phase 3 wire existing LV line to 3-phase, 4 wire

6.3.3 Project Benefits

The benefits of the project include

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 • Reduce technical losses
• Improve reliability
• Increase installed capacity (over 300% increase in line capacity)

6.3.4 Project Cost

The total cost of the project is GHS12,352,748.40

6.3.5 Completion Date:

This project was completed in March 2021

6.4 Hexing System Upgrade

6.4.1 Project Objective
NEDCo currently operates a multiplicity of prepayment metering systems sourced from different manufacturers. Each of
these manufacturers has its own vending software making data transfer from one system to another practically impossible.
This means that multiple vending stations had to be created at the same venue to cater for all the meter manufacturers.
This undoubtedly increases the cost of operating prepayment metering systems from different manufacturers. To solve this
challenge, NEDCo contracted Hexing Electrical Company Limited to supply and install a Standard Transfer System (STS)
compliant system that will be a platform to harmonize all the vending and integrated billing software. In other words, the
Hexing System will provide a common vending platform for all prepayment and postpaid meters. This means that NEDCo
could procure prepayment meters from any STS compliant manufacturer without worrying about the introduction of a new
vending software to add to the already numerous vending software in NEDCo.

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 6.4.2 Scope of Work
The scope of work is as follows

• Supply, installation, testing and commissioning of an Integrated Billing and Vending System with a license limitation
for 1,000,000 meters.
• Supply, installation, testing and commissioning of a Head End System (HES) with a license limitation for 1,000,000
meters
• Supply, installation, testing and commissioning of Third-Party quota system
• Supply, installation, testing and commissioning of IT hardware and related software
• Supply, installation, testing and commission of desktop & mobile POSs, GPRS modems, and Data concentrators.
• Provision of OJT and Remote Technical support and Maintenance Service for one year.

6.4.3 Project Benefits

The benefits of the project are as follows

• Reduce receivables
• Improve revenue collection
• Improve customer service

6.4.4 Project Cost

The total cost of the project is USD 2,425,953.66

6.4.5 Completion Date:

The project was completed in December 2020.

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6.5 Supply and Installation of 100,000 Smart Prepaid Meters
6.5.1 Project Objective
NEDCo initiated procurement processes to purchase 100,000 smart prepayment meters in line with its drive to enhance
revenue collection and reduce energy losses. The smart prepaid meters procured are in two types; monobloc and split-type
prepayment meters. The split-type was also considered in this procurement, particularly, because of its features that makes
energy theft and tampering of meters difficult.

The split-type meters are being installed on poles to minimize energy theft.
6.5.2 Scope of Work
The scope of work is as follows

a. Supply and installation of 100,000no. single and three phase smart meters and associated materials
b. Supply and installation of vending system with its associated accessories
c. Testing and commissioning of the installed meters
d. Supply of tools
Training of NEDCo staff

6.5.3 Project Benefits

The benefits of the project are as follows

• Reduce commercial losses (2018:30.1%, 2019:27.5%, 2020:27% and 2021: 27.29%)

• Improve revenue collection from 2018:76%, 2019:79%, 2020: 82%.

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 • Improved customer service

6.5.4 Project Cost

The total cost of the project is estimated at USD 16,021,440.19

6.5.5 Completion Date:

The expected completion date of the project is 30th April 2021

7 PROJECTS TO BE UNDERTAKEN
To be able to surmount the challenges facing NEDCo, various projects have been planned for future implementation when
money becomes available. Among some of the projects are the following:

7.1 Construction of Lamashegu Primary Substation

Due to the expanding client base, the 11.5 kV distribution networks in the Tamale metropolis and its immediate environs
are currently loaded to maximum capacity, thereby creating no allowance for additional customer connections. Also, the
rapid expansion of the metropolis has resulted in the growth of the networks beyond their technically acceptable lengths.
This has led to power quality problems like serious voltage drops at some portions of the networks. The residents in Tamale
are dissatisfied with the quality of supply as some customers have resorted to the use of generators sometimes. Another
problem faced by these long 11.5kV lines is the introduction of high technical losses in the distribution network. It is in the
light of this that this project is being proposed to correct the anomalies.

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 7.1.1 Project Cost:
The total cost of the project is USD 9 million

Anticipated Project Outcomes/Impact

Constructing the Lamashegu substation will result in the following outcomes:

• Increased installed capacity by 40MVA: There will be adequate capacity of in the Tamale metropolis to make provision
for additional load growth.
• Increased reliability (SAIFI): There will be increased reliability as the construction of the substation will introduce an
acceptable degree of redundancy in the network. The new substation will receive its power supply from the new
GRIDCo BSP (Tamale #2) to augment the existing network that is currently receiving power from the old BSP (Tamale
#1)
• Improved voltage quality: The voltage profile in the Tamale metropolis will be improved when the length of the 11kV
distribution lines are shortened. The Feeder end voltage from 90% to > 95%
• Increased revenue: The above-mentioned benefits will result in increased revenue as energy will be available for
customers to use at all times.

The failure to construct the proposed Lamashegu substation will result in the following:

• Load shedding: The distribution infrastructure will exceed their technical loading capacity which will force NEDCo to
shed load at peak seasons.

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 • Increase Technical losses: In principle, the technical losses are expected to increase exponentially with increase in
load over time if the infrastructure remains the same. The cumulative energy loss by 2047 is estimated to be
305,280,987.40 kWh compared to 76,329,489.32 kWh after the implementation of the project over the same period.
This represents an estimated cumulative financial loss of GH₵ 269,030,325.31 by year 2047 if nothing is done.
• Poor voltage profile: Voltage supply to customers in the targeted project area will worsen without the implementation
of the project. This will lead to customer dissatisfaction. NEDCo is expected to maintain a voltage range of ±10% of
rate voltage. This however has been exceeded in the targeted network Area and needs to be corrected.
• Poor supply reliability: As equipment gets overloaded thermally, they begin to fail, resulting in total or partial loss of
power supply to customers. The frequency of failure is expected to increase if no action is taken immediately

7.2 100km Conductor upgrade:

Due to the increase load growth, the 50sqmm 11.5kV Aluminium overhead lines in NEDCo’s operational Areas are currently
loaded to maximum capacity, thereby increasing the technical loss on the 11.5kV distribution network. The aging of these
conductors has also led to power quality problems like voltage drops at some portions of the network. NEDCo’s customers
are dissatisfied with the quality of supply as they are not able to use their equipment and would have to resort to the use
of generators at some points.

7.2.1 Project Cost:

The total cost of the project is USD 1,287,000

Anticipated Project Outcomes/Impact

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The upgrade of the 100km undersized conductors will result in the following outcomes:

• Increased installed capacity (increase installed capacity by 75%): There would be adequate capacity to accommodate
additional load growth.
• Loss reduction: There would be loss reduction on the 11kV network of about 1.5%.
• Improved voltage quality (Improve feeder end voltage to >90%): The voltage profile in NEDCo would be improved
as a result of shortening of the lengths of the 11kV distribution lines.
• Increased revenue: The above-mentioned benefits will result in increased revenue as energy would be available for
customers to use.
•
The failure to upgrade the 11kV overhead lines will result in the following:

• Load shedding: The distribution infrastructure will exceed their technical loading capacity thereby forcing NEDCo to
shed load.
• Increase Technical losses: In principle, the technical losses are expected to increase exponentially with increase in
load over time if the infrastructure remains the same. The cumulative energy loss by year 2046 is estimated to be
1,705,918,845.86 kWh compared to 1,293,878,931.00 kWh after the implementation of the project over the same
period. This represents a cumulative financial loss of GH₵ 957,470,408.94 by 2046 if the project is not implemented.
• Poor voltage profile: Voltage supply to customers in the targeted project area will worsen without the implementation
of the project. This will lead to customer dissatisfaction and sanctions by regulatory agencies. NEDCo is expected to
maintain a voltage range of ±10% of rate voltage. This however is exceeded in the targeted network areas and
needs to be corrected.

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7.3 THE KEXIM PROJECT
This project is the 'Northern Ghana Rural Electricity Infrastructure and Access Project'. It is to improve the aging distribution
system in northern Ghana. The project would be funded by the Government of the Republic of Korea which would be loaned
to the Government of Ghana using the Economic Development Cooperation Fund (EDCF). Major project items include the
construction of six distribution substations, two switching stations, one Distribution Network Management System (DNMS),
and a number of capacitor banks. If this project is implemented, the following would be the expected project
outcome/impact.

7.3.1 Project Cost:

The total cost of the project is USD112.6 million

7.3.2 BENEFITS OF THE PROJECT

• Reduction of power supply cost which may arise as a result of reduction of distribution power loss. A Reduction in
technical losses by 1.05%.
• Improve feeder voltage from 87.7% t0 95%
• increased power supply capacity
• Reducing the emission of environmental substances
• Reduction of unserved energy cost by reducing the power supply interruption

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7.4 Procurement of Distribution Materials:
NEDCo as a distribution company need distribution materials to carryout maintenance as well as extension of the network.
Maintenance of the network becomes necessary due to aging of equipment as a result of usage and vagaries of the weather.
NEDCo also losses equipment as a result of accidental contacts of animals and vehicles on the distribution network. In
situation where the distribution network is weak or faulty, NEDCo will have to replace them with similar materials to make
the network functional. This therefore calls for the stocking of enough distribution materials to cater for the unforeseen
circumstances. Without adequate spare materials, outages caused by some of the above enumerated reasons could be
prolonged leading to agitation by customers and loss of revenue. It is in the light of this, that NEDCo is procuring distribution
materials to carry out maintenance as well as expansion of the distribution network. Among some of the distribution
materials earmarked for purchased are transformers, wood and steel poles, fuses, energy meters, conductors and cables
etc.

7.4.1 Project Cost:

The total cost of the project is USD 1.438 million

7.4.2 Anticipated Project Outcomes/Impact

Availability of the required spare materials will result in the following outcomes:

• Increased service availability: This leads to availability of power supply to customers and avoidance of possible
sanctions by regulators.
• Improved customer perceptions: customer perceptions about reliability of power would improve thereby influencing
their willingness to pay electricity bills.

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 • Increased installed capacity: There will be adequate capacity to make provision for additional load growth.
• Increased energy sales/revenue: The above-mentioned benefits will result in increased revenue, as it will improve
energy delivery to customers.

The failure to procure the distribution materials will result in the following:

• Poor supply reliability: As equipment gets overloaded thermally, they begin to fail, resulting in total or partial loss of
power supply to customers. The frequency of failure is expected to increase significantly if no action is taken
immediately.
• Loss of potential revenue from existing customers who usually are unwilling to pay their bills as a result of poor
quality of service
• Potential sanctions by regulators.

7.5 Construction of NEDCo Head Office Complex:

The Head office of the Northern Electricity Distribution Company is located in Tamale. The administrative structure
has six departments. These departments however operate from six distinct buildings with the farthest being about
three kilometers (Protection and Control Section, at GRIDCo office, Choggu) away from the NORRIP building. This
over the years has posed a challenge, as the routine activities of each department is not entirely independent of the
others. This in one way or another causes delay in expected deliverables in the entire business processes of the
organization. The construction of the building will bring together all the departments of NEDCo in Tamale under one
roof for easy workflow.

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 7.5.1 Project Cost:
The total cost of the project is USD 7.883million

The main objective of this project is to provide a suitable office accommodation to house all Head office staff of NEDCo
in Tamale with the intention of achieving the following:

• Cost saving by avoiding expensive rentals of office space.

• Increase productivity by having all NEDCo Staff in the same building
• Reduction of operational cost by sharing resources like printers.
• Improved VRA/ NEDCo image
• Avoid threat of ejections by Landlords.
• Improve Security to NEDCo’s equipment and tool

Failure to build the Head Office Complex to house all the departments of NEDCo will continue to impact on the overall
output and efficiency of the company. The impacts include the following;

• Delays in processing of documents: With the departments located in different buildings, movement of documents
from one department to another takes time.
• Loss of man-hours/reduced productivity
• Overcrowded offices
• Increased costs as some cost such as internet connection and security cannot be shared
• Risk of being ejected at any time by property owners.

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 • Lack of good working environment

7.6 Proposed Tamale Metropolis Split Smart PPM Project

The project consists of the procurement and installation of pole-mounted smart & split prepaid meters for LV customers in
the Tamale metropolis, where non-technical losses are predominant. In the intervention areas (Tamale Metropolis and
immediate surroundings), 33,800 customers are on post-paid or flat rate billing. Also, it is estimated that, about 51,000
customers out of the total 77,000 PPM customers in the Tamale Metropolis is engaged in energy theft in the form of
meter bypass. This project intends to replace 53,200 (69%) of the existing monobloc PPM in Tamale to stem the rampant
power theft situation in Tamale. 87,000 split meters have been earmarked for the execution of the project.

7.6.1 Project Cost:

The total cost of the project is USD 26.131million

7.6.2 Expected Results and Benefits

• Reduction of non-technical losses (NT): A sharp reduction of non-technical losses - from 28% to 12% over a 3-
year period is expected in the intervention areas due to the split and anti-tampering features of the meters. The
pole-mounted split system is assumed to eliminate the most common fraudulent practices, i.e. meter tampering or
bypassing, in the target population.

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 • Increased collection efficiency: Through the shift from post-paid and flat rate to prepaid billing, the project will
increase the collection efficiency to 100% within the target population.

7.7 NEDCO STREETLIGHTS METERING PROJECT

This Project is intended to meter all street light installations (including street light installations on major road networks in
NEDCo’s Operational Area.

The scope will involve the installation of transformers dedicated to the metering of street light installations. It will also
involve the installation of switch wires and LV switches. Additionally, some high consuming street light lamps will be replaced
with more-energy efficient types.

7.7.1 Project Cost

The estimated cost of the project is twenty-five million United States dollars (USD25million).

7.7.2 Anticipated Project Outcomes/Impact

By metering all street lights and making provision for future ones, NEDCo will be able to correctly estimate street light
consumptions and impress on government to make payments for them.

8 HIGHTLIGHTS OF MAJOR ISSUES WHICH DESCRIBES STRUCTURE OF TARIFF

SUBMISSION:

• Ghanaian Electricity End-User Tariff consists of the following:

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 d. Bulk Generation Charge (BGC), which is an average of the unit cost of electricity of all the power generation
plants in the Ghanaian energy mix.
e. Transmission Service Charge (TSC)
f. Distribution Service Charge (DSC)

The last DSC tariff of GH₵0.315307 approved by PURC was inadequate to meet the total cost of service delivery to
customers. The BGC and TSC invoiced to NEDCo in the tariff built up are always high, thus increasing NEDCos’ operational
Cost. As a result, NEDCo has been incurring financial losses as we are not able to cover our cost- of- service delivery, as a
result of the high BGC and TSC. It is worth noting that when hydroelectricity was more in the BGC, the CBGC reduced in
the year 2016 and NEDCo came close to making profit. NEDCo is therefore better off with a higher percentage of
hydroelectricity in its energy mix. In the light of this, it is being proposed that PURC through EMOP (Electricity Market
Oversight Panel) should allocate more hydro power to NEDCo in the energy mix during the tariff period. A hydro component
of 626GWh has been proposed for 2022.

• Increasing distribution system loss in NEDCo, which was about 27.29% as at the end of 2021. This constitutes
about 9.2% technical losses and 18.09% commercial losses. NEDCo has therefore identified the need to install
meters at critical nodes of the distribution network to energy auditing and to undertake initiatives to reduce the
system losses.

• High cost of investment to improve upon service delivery during the five-year period.

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Table 1: Service Delivery and Efficiency Targets for the Tariff Period

STRATEGIC
MEASURES/ KPI TARGETS
OBJECTIVE
2021 2022 2023 2024 2025
Collection Rate (%) 81.66 90 91 92 95
Increase Revenues
Receivable lag (days) 980 750 600 550 350
Increase Customer
Customer Satisfaction Index (%) 72 85 86 87 88
Satisfaction
Enhance
Customer/stakeholder Stakeholder satisfaction index 85 87 88 89 90
Engagements
Improve network
% of network automated 10 20 30 40 50
automation
Improve IT System
Average IT System availability (%) 97 98 99 99.5 99.8
Reliability and Quality
Average System Availability Index
99.27 99.45 99.51 99.55 99.6
(%)
System Average Interruption
Improve power supply 63.6 48.2 43.3 39 35.1
Duration Index (Hrs)
quality and reliability
System Availability Interruption
40.9 39.5 30.3 25.3 20.7
Frequency Index (No.)
Planned maintenance executed (%) 95 96 97 98 98
STRATEGIC
MEASURES/ KPI TARGETS
OBJECTIVE
2021 2022 2023 2024 2025
Reduce Distribution
% reduction in distribution loss 27.29 26.09 24.89 23.69 22.49
losses
Human Capital Readiness Index 75 80 85 90 100

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 % of employees trained as per
100 100 100 100 100
Improve Employee Scheme of Service
Knowledge and Skills % of employees trained in network
100 100 100 100 100
maintenance and management
Improve suitable work Number of modern Service Centre
5 7 10 8 10
environment offices constructed

IT system infrastructure coverage

60 70 80 90 95
(%)

34.5/11.5kV Primary Substations

and (No.) 34.5kV Switching Stations 0 1 0 0 8
constructed
Improve IT Infrastructure Distribution Transformer Injected
143 173 215 218 234
and access to Tools (No.)
Available transformer capacity
2,048.50 2,137 2,165 2,202 2,221
(MVA)
HV /MV Line Upgrades/extension
317.3 681.7 605.4 605.5 605.5
(Km)
Lv Line upgrades/extension (Km) 91.1 164 148.4 168 164.4
Network maintenance undertaken
95 96 97 98 98
(%)

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8.1 Technical / Operating Performance Indicators/Indices
Table 2: Statistics on Technical/Operating Performance Indicators/Indices
STATISTICS 2016 2017 2018 2019 2020 2021
34.5kV Overhead (km) 10,213 10,545.4 10,839.8 11,105.8 11,544.3 12,847.6
34.5kV Underground (km) 75.2 75.2 75.2 75.2 75.2 75.2
30kV line length (km) 386.9 386.9 391.3 391.3 466.5 467.5
20kV line length (km) 201.4 201.4 201.4 201.4 201.4 163.0
11.5kV Overhead (km) 2,225 2,320.2 2,337.9 2,410.0 3,500.8 3,589.3
11.5kV Underground (km) 51.3 51.3 51.9 53.7 60.8 64.7
Total Length of MV Line 13,153 13,580.3 13,897.3 14,237.3 15,849 17,141.8
No. of Bulk Supply Points serving NEDCo 12 12 12 16 16 16
No. of 34.5/11KV Primary Substations 10 10 11 11 11 11
No. of Secondary Substations 5,610 5,901 6,066 6,353 6983 7,465
415V line length (km) 16,861 17,403.6 17,621.5 18,401.8 27,576.1 28,481.5
Peak load (MW) -Non-Coincidental 221 240 246.7 328.5 335.6 348.3

8.2 Financial Performance Indicators/Indices

NEDCo has being making losses over the years. In 2017, GH¢278.22 million loss was recorded. This loss rose to GH¢315.4
million in 2018. Loss levels for 2019 was GH¢343.31, 2020 and 2021 were GH¢367.86 and 163.92million respectively.
NEDCo’s losses are mainly attributable to high amount paid for Bulk Generation charge and transmission service charge.

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The two constitute about 70% of NEDCo’s operational cost aside salaries and related cost which is also about 21% of
operational cost. Other factors accounting for the loss are inadequate revenue from approved tariffs especially for residential
customers and the lack of adequate economic customers (Residential and Special Load Tariff) to cross subsidize the
consumption of the residential customers within the NEDCo areas.

Table 3: Financial Performance of NEDCo from 2017 to 2021

Indicator Unit 2017 2018 2019 2020 2021
Revenue (Sales) GH¢m 598.98 529.25 574.66 688.98 883.49
Other Income GH¢m 37.51 16.37 49.61 62.84 69.46
Net Profit GH¢m - 278.22 - 315.40 - 343.31 - 367.86 - 163.92
Total Assets GH¢m 2,036.94 2,156.83 2,085.27 2,174.39 2,521.53
Current Assets GH¢m 1,023.64 1,150.83 1,344.10 1,454.43 1,701.18
Current Liabilities GH¢m 255.82 331.29 483.36 615.05 742.46
Total Liabilities GH¢m 794.85 1,116.38 1,548.87 1,966.08 2,418.06
Equity GH¢m 1,242.10 1,040.44 536.40 208.31 103.47
Ratios:
Net Profit Margin % -46.45 -59.59 -53 -46 -18
Return on Equity % -0.022 -0.0303 -0.064 -0.177 -0.158
Current Ratio No. 1.29 1.03 0.87 0.74 0.70
Gearing No. - - - - -
Return on Capital Employed % -0.022 -0.03 -0.064 -0.177 -0.158

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9 Key Challenges Likely to Impact Service Delivery
NEDCo as a utility company faces many challenges, some of which are inherent in the geographical location of NEDCo and
socio-economic circumstances of customers within the NEDCo operational area. The cost of providing electricity in NEDCo’s
operational area is very high due to factors such as the sparse nature of dwellings, low population density, low numbers of
economic customers/consumers, low ability of customers to pay, as well as network vulnerability due to seasonal bush fires
and other adverse weather conditions including lightning strikes. High cost of capital for timely investments in capacity
upgrading, scheduled maintenance, system refurbishing and expansion has hindered NEDCo’s expansion projects.

9.1 Inadequate Revenue from Tariff

Insufficient revenue from regulated tariffs especially for residential customers has resulted in a recurring gap between the
operating costs and revenue, leading to perennial operating losses. See customer category breakdown in Section 3.0 above.

9.2 Low Numbers of SLT Customers

The PURC tariff structure has an in-built cross-subsidization mechanism whereby the commercial/large users subsidize the
lifeline and other residential customers. However, inadequate industrialization in NEDCo’s operational area has largely
deprived it of the benefits of the cross-subsidization policy embedded in the PURC tariff.
NEDCo does not enjoy much benefits of the policy since there are only a few commercial/large users and SLT (0.01% of
total customer population) in its catchment area.

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9.3 Large Operational Area with Low Customer Density
NEDCo’s coverage area is 152,665 sq. km (64%) of Ghana’s land area, with customer population of 1,136,050, representing
about 7 customers per square kilometer, while the Electricity Company of Ghana (ECG) covers the remaining 36% of the
land area of Ghana with a customer population of about 3,400,000, representing about 49.0 customers per square kilometer.

9.4 Perennial Ministries, Departments & Agencies (MDAs) & Sensitive Customers Indebtedness
The debts of MDAs and other sensitive customers (hospitals, military, police, prisons, GBC, GWCL, etc.) constitute about
GH¢ 1,069,528,995.31 including subsidies and streetlighting shortfall as at December 2021. Due to the sensitive nature of
the services rendered by these institutions coupled with the special protection they enjoy under the GOG’s Clearing House
Policy, the traditional means of recovering these debts through disconnection cannot be easily applied.

9.5 Metering Including prepayment metering

NEDCo’s metering mix is made up of both postpaid and prepayment meters. The ratio of postpaid meters to prepayment
meters as at the end of 2021 was about 51:49. Most of the postpaid meters are found in the rural areas whereas the
prepayment meters are predominant in urban communities. There are some Current Transformer (CT) meters installed for
the few Special Load Tariff (SLT) customers in NEDCo Areas. NEDCo also has installed net-meters for customers who have
installed solar PV systems. There are also some flat rate customers still on NEDCo’s billing system. NEDCo is however unable
to meet its metering requirements for both customers and for public lighting infrastructure due to the scanty cash flows
and numerous projects which are all competing for the rather insufficient funds available for projects.

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9.6 Energy Audit
The distribution system loss in NEDCo was about 27.29% as at the end of 2021. This constitutes about 9.2% technical
losses and 18.09% commercial losses. NEDCo has therefore identified the need to install meters at critical nodes to
enable the auditing of the energy flow and to undertake initiatives to reduce the losses.
The intention of metering the critical nodes will allow NEDCo to identify and monitor the locations where technical and
commercial losses are occurring. These critical nodes are the bulk supply point incoming feeders, primary substation
outgoing feeders and distribution transformers that serve more than one customer.

This project when implemented together with other systems such as the Customer Information Systems (CIS) and
Geographic Information System (GIS) will help provide the foundation for an electrical model of the system to calculate
technical losses. The project also aims at installing meters with communication capability to enhance the collection of
information at all the critical nodes and also to monitor consumption of customers in real time. This will enable NEDCo
account for all the energy recorded by the meters and then compute the losses in each network segment

9.7 Theft of power, cables and Equipment

Power theft has been one of the major problems of NEDCo. Customers have devised various means of by-passing energy
meters or connecting and using power without paying. Total number of power theft cases recorded in 2021 was 4,747.

This is mostly attributable to the tendency of some to consume electricity without paying for it. Although NEDCo has
procured ten vehicles to resource its standing Loss Reduction Team to enable them do constant monitoring of the network
to identify people engaged in power theft, their impact has not yielded the desired result due to large geographical area
coverage. The issue of cable theft was also rampant in the past but has started reducing when NEDCo started replacing its

31
copper service cables with aluminum. The issue of equipment theft is not rampant in the NEDCo Areas. However, NEDCo
experiences reported cases of energy meter theft sometimes. Power theft and cable theft impacts negatively on NEDCo’s
ability to supply quality electricity to its customers.

9.8 Loss Control - Technical and Commercial

Over the past five years, NEDCo has undertaken key activities aimed at reducing both technical and non-technical
distribution losses. The following initiatives were deployed to target losses:

• Intensification of monitoring and control teams: Ten vehicles were procured for the monitoring unit in order to
intensify controls and reduce energy theft.
• Replacement of faulty meters : The billing teams in the operational areas as part of their work identify and replace
faulty meters on monthly basis to reduce commercial losses.
• Procurement and installation of prepaid meters (monobloc type): 428,399 monobloc prepaid meters with anti-
tampering features have been procured since 2011 with the aim of reducing losses and improving collection
efficiency. The procurement of 125,000, 187,000 and 395,000 meters were procured for 2019 and 2020. Additional
395,000 were planned for 2021 and are being procured in piece meal due to non-availability of funds. These PPM
meters have contributed to increase the collection efficiency but do not offer a long-term solution against energy
theft, as they can still be tampered with or bypassed with relative ease.
• Procurement and installation of 25,000 split and smart prepaid meters in Sunyani (15,000 meters) and Techiman
(10,000 meters). This pilot project aims at both, reducing energy theft and improving collection efficiency and serves
as the reference point for the roll-out of split-smart prepaid meter solution in NEDCo.

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 • Metering of streetlights: Plans are far advanced to meter all street lights starting with ceremonial streets to be able
to account accurately for streetlighting energy consumption.
• Reduce operational complexity and respond promptly to customers in need of new service
• Improve management of reward system for reporting illegal connections and meter tampering

On technical losses, the following projects are being undertaken or earmarked to be undertaken;
• Metering all substations and tying customers to the substation audit meters to aid in tracing places where losses
occur in the system,
• Undertake planned system rehabilitation to upgrade lines and transformers
• Carryout technical loss reduction projects

9.9 Availability/Reliability of Supply/Quality of Service

Power supply in the NEDCo Area is relatively stable. The indicators below show

NEDCos’ availability and reliability indices over the years.

Table 4: NEDCos’ System availability and Reliability Indices

Indicator Base 2016 2017 2018 2019 2020 2021
Year

Average Feeder Reliability (%) 98.3 98.7 98.68 99.31 99.32 99.27

Quality of supply (SAIFI) 160 116.5 77.9 48.8 69.1 40.9

Quality of supply (SAIDI) 147 132.4 115.4 60.1 59.4 63.6

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9.10 Suppressed Demand
NEDCos’ power purchase from the grid has increased from 1,124GWh in 2016 to 1,761GWh in 2021 mainly due to expansion
of the network and government-initiated programs such as the SHEP and GEDAP. NEDCos’ customers are mostly low
consuming customers who are mostly residential with a few non-residential and Special Load Tariff (SLT) customers.
However, due to long distribution lines and overloaded transformers, NEDCo is unable to supply its customer with the quality
of power required to meet their needs at some areas within the operational area.

9.11 Management information system including E-payment

NEDCo started with stand-alone billing and vending systems which were separated from each other. The two systems never
communicated with each other making it difficult for reporting, as separate reports had to be run to be able to get a required
information. To be able to cure this challenge, NEDCo set out to consolidate the billing and vending systems in order to
make it more efficient and effective in providing services to the customers and for easy access to common reports. The
integration of these systems made it possible to bring on board other systems such as digital payments and electronic
billing. The digital payment solution is currently being piloted. The payment solutions in the piloted channels are;

• USSD channel (*914#)

• Android mobile application

• IOS (Apple) mobile application

• Web application

• POS based payments using major bank cards, mobile money and Near Field Communication (NFC)

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Another key component of digitalization of NEDCos’ operations is the electronic billing. We are in the process of developing
this platform to cater for all aspects of our billing processes, that is, from meter reading through to bill delivery via multiple
channels such as physical, SMS or email. This will ultimately culminate into a self-service portal where customers can
manage their accounts from any web-enabled device. A key component of this is to build a resilient Customer Relationship
Management (CRM) that has accurate and up-to- date data of our customers. We are making use of the enterprise GIS
system deployed to gather this information.

9.12 Billing and Collection

NEDCo had five decentralized servers for billing in each of its five operational Areas until August, 2019 when the Hexing
System Upgrade Project, with a centralized billing system was introduced. Each operational area has a number of service
stations under it depending on the size. NEDCo operates a monthly billing cycle for both postpaid and prepaid customers.
Meter readers go around the premises of customers to read their post-paid meters manually each month after which they
submit the readings to the office for data inputting. In order to ensure that customers are billed accurately, consumption
proof (audit) is carried out on the data inputted into the billing system and all errors identified corrected after which the
bills are produced and distributed to customers.

NEDCo also has collection points located all over the operational Areas. We have just launched a mobile payment platform
to enable customers to pay their bills via their mobile phones.

NEDCo was able to account for about 72.71% of its energy purchase from the grid for 2021. The rest of 27.29% represents
the system losses. NEDCos’ billed energy has increased from GWh683 in 2016 to GWh1,060 in 2021 with a corresponding
monetary value of GH¢600million and GH¢ 883.49million.
Collection on the other hand was GH¢373million in 2016, GH¢417million in 2017, GH¢408million in 2018, GH¢513million in
2019, and GH¢667million and GH¢744million in 2020 and 2021 respectively. The corresponding collection rates were 61%,

35
69%, 76%, 79%, 81.72% and 81.66% respectively. (See table below table showing the relationship between billed revenue
and power purchased cost.)
It would be seen that power sales in 2016 was GH¢600m. This dipped to GH¢599m in 2017, GH¢529M in 2018, GH¢575M
in 2019 before increasing to GH¢687m in 2020 and then to GH¢692.35million in 2021. The power purchase cost also
consistently increased between 2016 to 2021 from GH¢309m to GH¢743.73m. The increases are mainly accounted for by
the surge in TSC and BGC. Also in 2021, the power purchase cost outstripped the power sales by GH¢51.38m
(GH¢743.73- GH¢692.35).

Table 5: The relationship between billed Revenue and Power Purchase Cost
KPI 2016 2017 2018 2019 2020 2021

Power Purchase (GWh) 1,124 1,224 1,312 1,413 1,575 1,761

Power Purchase (GH¢'M) 309 331 432 544 697 743.73

Billed Energy (GWh) 683 702 754 844 948 1,060

Power Sales (GH¢'M) 600 599 529 575 687 692.35

Collected Revenue (GH¢'M) 373 417 408 513 667 744

Collection rate (%) 61 69 76 79 81.72 81.66

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9.13 Organizational reforms and restructuring
In order to ensure efficiency in the business, NEDCo has been rotating its Directors and key officers. A new Department,
Corporate Strategy and Business Development was created to handle NEDCos’ strategic issues. This Department replaces
the Special Duties Directorate.

9.14 Customer Complaints & Dispute Resolution

NEDCo as a utility company has customer satisfaction as one of its core values. As a result, NEDCo is committed to the
effective and timely resolution of customer complaints and disputes. To achieve this goal, NEDCo has engaged the services
of trained professionals who handle customer complaints at each of its five operational Areas and some service centres.
Most NEDCo staff have received training in customer service. NEDCo still operates in old fashioned customer service; without
a call centre where customers make their complaints in writing, in person (face-to-face) or by telephone. The complaints
are recorded and works order issued to scheduled officers for them to attend to the complaints. When the work is done,
the work order is returned to the office to indicate the completion of work.

Where there is a dispute between NEDCo and the customer, it is handled by the Customer Service Officer at the Area
Offices of NEDCo. Where the Customer Service Officer is not able to handle the dispute, it is referred to the Area Manager.

The challenge for NEDCo is that of the large number of customer complaints from a geographically dispersed communities
and the high cost of attending to them.

9.15 Resolution of Court Cases

Typically, NEDCo initiates legal action against customers who engage in power theft or default in paying their electricity
bills. NEDCo is however guided by the fact that it has to treat its customers leniently, as a result, this option is adopted
hesitantly. Occasionally however, customers drag NEDCo to Court when they are dissatisfied with the services we render

37
to them or when there is a damage to their equipment or property due to electrical voltage surge. In most cases, NEDCo’s
Legal Team and Customer Service Team handles legal cases between the customer and NEDCo.

9.16 Government and Public Sector Debts

The government of Ghana is one of the major customers of NEDCo. NEDCo supply electricity to the government through
state institutions including Ministries, Departments and Agencies (MDAs) who are connected. Whiles prepaid meters are
being installed for customers in the private sector, those in the government sector are still on credit meters resulting in the
accumulation of huge debt. Unfortunately, however, government has not been paying the MDA debt as expected. As at
December 2021, the Government of Ghana owed NEDCo about GH¢ GH¢1,069,406,304.04 with subsidies and streetlighting
in bills. These debts have made it difficult for NEDCo to meet its debt obligations to suppliers of electricity

9.17 Bad & Doubtful Debts

NEDCo has a policy in place for the management of bad and doubtful debt. A Board memo was submitted to write off an
amount of GHC4.14million for 6,226 accounts due to inability to trace the account owners.

Surcharge & Subsidies

As a responsible publicly owned and regulated electric utility, NEDCo has always made serious efforts at complying with all
regulations that govern the supply of electricity to consumers. These include all Legislative Instruments, Rules and Laws
set out by the power sector regulators, such as the Energy Commission, PURC and MoEn. So far, these efforts have paid
off, and NEDCo has never been surcharged for any offence by any regulatory body. As part of the tariff structure, PURC
instituted the lifeline tariff for low-income consumers at tariffs below the cost of providing electricity to the end-user.
Government also extended the subsidies enjoyed by the lifeline customers to all consumers and promised to pay the
difference to the Utilities. Unfortunately, the government is yet to honour its part of the bargain. As at December 31, 2021

38
the Government of Ghana owed NEDCo an amount of about GH¢75,083,739.43 in subsidies. The amount owed NEDCo by
the government in subsidies makes it difficult for NEDCo to undertake projects to improve on its operations. Restructuring
the tariff regime to ensure that subsidies are directed to only the poor in the society would go a long way to help save the
utility companies and for that matter NEDCo from financial difficulties.

9.18 Government Grants

NEDCo, through the Government of Ghana has received a loan facility of US$ 2 million from the World Bank under the
Ghana Energy Sector Transformation Initiative Project (GESTIP). This project will assist NEDCo to improve its operational
efficiency. This project will update NEDCos’ distribution system master plan, update distribution standards and produce
documented design and construction standards that will guide future expansion and network improvements and develop
the geographic information system (GIS) for NEDCos’ Techiman Operational Area and parts of Sunyani Area.

The project will also finance the purchase of small tools and equipment for NEDCos’ business operations and provide training
to NEDCo staff across functional departments.

The Government of Ghana has secured a loan facility of US$68 million from the Korean Export-Import Bank (KEXIM) to
undertake the Northern Ghana Rural Electrification Infrastructure and Access Project (NGREIA) across NEDCos’ Operational
Areas.

The NGREIA Project comprises the construction of Six (6) 34.5/11kV primary substations, two (2) 34.5kV switching
substations and one (1) Supervisory Control and Data Acquisition (SCADA) system, Distribution Network Management
System (DNMS) made up of 42km sub-transmission lines and about 29km distribution/offloading feeders.

39
9.19 Access to Finance and Repayment of Financing Costs
PURC’s Tariff Review for 2022 is aimed at setting a multi-year tariff, expected to cover the total cost incurred by the
Ghanaian DISCos to supply electricity to the end-user; this is a kind of Long Run Marginal Cost (LRMC). In this regard, if a
DISCo identifies a genuine need for capital, equipment, material and services injections into its network or operational
procedures to improve on quality of service, and the DISCos’ own IGFs are not adequate to finance these injections, one
of the obvious options is to go for commercial loans.

Management of NEDCo has identified the need for such injections, and gaps in associated funding. Management has
therefore initiated the process of procuring a commercial loan to the tune of GHS 100,000,000, from GT Bank limited.

The table below provides details of the commercial facility:

Table 6: Details of Commercial Loan Procured by NEDCo for Injection of Materials, Equipment and Services during the
Validity of the Proposed Tariff:
Item No. Identified Gap Estimated Cost of Loan Procured Component of Interest
Materials, Equipment, Relating to the Five-
Services Year Duration of
GHS GHS Proposed Loan GHS
1. Net Cashflow Deficit 219,244,000.00 100,000,000.00 63,990,000.00
Grand-Total 219,244,000.00 100,000,000.00 63,990,000.00

40
9.20 Tariff Structure and Rates Design
While Management of NEDCo understands and appreciates the wisdom in PURC’s decision to set affordable tariff for lifeline
customers, it is worth stating that this arrangement has a measurable negative impact on the revenue of NEDCo. As
mentioned earlier, the geography and demography of NEDCos’ utility territory makes the electricity distribution business
inherently infertile economically. While settlements are sparse in nature, as much as 84.96% of NEDCos’ customer
population belong to the residential tariff category, including about 46% lifeline customers, where the PURC approved
electricity rates are amongst the lowest. Customers in the Non-residential and SLT tariff categories constitute 15.03% and
0.01% respectively.

While the residential customers consume about 67.76% of total energy sales, they contribute only 51.40% of total revenue.
The Non-Residential customers, comprising mostly businesses, agricultural and public institutions, including the security
agencies, hospitals and educational institutions constitute 15.03% of the customer population, consumed about 24.00% of
total energy sales and contributed 38.94% of revenue. SLT customers who constitute 0.01% of the customer population
consumed about 8.24% of total energy sakes, and contributed 9.66% of revenue as at December 2021.

In addition to the sale of electricity at domestic and lifeline rates to the bulk of our customers the sparse nature of
settlements means that the cost of supplying each kWh of electricity comprising meter reading, bill delivery, revenue
collection, disconnection of defaulting customers and reconnection of paid-up disconnected customers, is relatively higher
than the average in more economically fertile utility territories, such as in the middle and southern parts of Ghana.

In sum, the PURC tariff structure as described above does not adequately support the financial operations of NEDCo.

41
9.21 Introduction of Wholesale Electricity Market
The Wholesale Electricity Market (WEM) consists of the regulated and deregulated components. The customers under the
regulated market purchase electricity at tariffs set or approved by the regulator, while wholesale customers are allowed to
negotiate their own tariff and other supply arrangements, such as time-of-use tariffs etc directly generators and, or the
transmission company.

In September, 2019, The Government of Ghana declared its intention to launch the first ever WEM in Africa by the year
2022; the process is on-going. The introduction of a WEM moves electricity as a commodity away from centralized trading
under fully regulated tariffs and supply arrangements, and allows the determination of electricity prices by market forces,
thereby introducing more competition into the industry, which in turn exerts downward pressure on the cost of electricity
to end-users, especially for bulk purchasers.

Management of NEDCo has no issues with this policy, and supports the implementation as a contribution to ensure a more
efficient and vibrant electricity supply industry (ESI) in Ghana.

9.22 Wholesale Market Bulk Customers Embedded in Distribution Network

SONABEL and SAVANA Cement (SAVACEM) are the only Wholesale Market Bulk Customers embedded in NEDCos’
distribution network. Whereas on the basis of an internal agreement with VRA, NEDCo wheels power to SONABEL on behalf
of the former, of which NEDCo is a subsidiary, SAVACEM has direct arrangement with VRA, which sells power to the former
through GRIDCos’ transmission network.

This market arrangement poses no threats or challenges to NEDCos’ operations.

42
9.23 Embedded Generators and Interconnection
There are two embedded generation facilities in the NEDCo operational area, a 2.5MWp at Navrongo and 6.5MWp at Lawra
in the Upper East and Upper West region respectively. The Navrongo solar plant was commissioned on June 2013 with an
annual generation of 3,843MWh. The solar plant connects to NEDCos’ grid at a distance of 10km via a medium voltage of
34.5kV from a 2.5MVA power transformer. The Lawra solar plant is also connected to the grid via a medium voltage line of
34.5kV. The Lawra solar plant was commissioned in October 2020. The plant recorded a grid feed-in energy of about
6,088MWh from January 2021 to December, 2021, respectively. Aside these embedded generations, NEDCo has customers
spread across its operational areas with rooftop solar PVs also tied to the grid via a net-meter for billing. The capacity of
these customers combined is 1MWp as at 2021.

9.24 Power Procurement from Independent Power Producers and Renewable Energy Generators.
As a result of the absence of economic customers within the NEDCo operational area to consume high amount of electricity,
VRA is able to supply the power requirement of NEDCo. Apart from the 2.5MWp solar generator at Navrongo and 6.5MWp
solar generator at Lawra which are embedded in the network, NEDCo does not procure power from any independent power
producers or renewable energy generator.

9.25 Human Resource-Skilled Manpower

NEDCo is endowed with rich human resource with varied professional backgrounds at all levels of our operations. It is
however deficient in the required staffing to man its operational service centres due to the vast geographical land mass
that it covers arising out of NEDCos’ own annual expansion plan and Government of Ghana’s on-going nation-wide
electrification programmes such as SHEP and GEDAP. The expansion of the network calls for commensurate number of
skilled workforce to handle issues. NEDCo is unable to recruit staff to match up with the expanded network due to

43
insufficient cash flows to support the recruitment of staff. As a result of this, the existing staff are ever burdened with
workload.

10 Strategies to Address Key Challenges

AS part of the strategies to reduce NEDCos’ distribution losses and improve upon its collection rate, a number of
interventions or strategies have been employed by NEDCo to address these challenges and key among them are those
discussed below.

NEDCo is deploying Split smart prepaid metering system (din rail type) for all customers currently on post-paid or flat rate
billing. The deployment of the meters would be first targeted at the 25 most urban stations, where non-technical losses are
identified to be predominant. Pilot project started in Sunyani and Techiman where 25,000 smart and split prepaid meters
have been deployed with the associated vending systems. To implement this pilot project, NEDCo launched a competitive
tendering process in 2018 and selected a contractor, who is pre-financing the installation. The contract was signed, the
meters procured and the deployment of the meters is ongoing.

Additionally, as part of an Access Project in the Tamale market area, which the MCC is funding, the U.S. Army Corps of
Engineers, proposed the installation of pole-mounted prepaid split meters aimed at improving the electricity supply of
commercial customers in the market areas of Tamale that are accessible to vendors via short messaging services (SMS, or
text messaging) over mobile telephones. This project will provide meters for about 4,830 customers in the market and
economic enclave areas in Tamale.

There is also a project to tackle the high energy losses in the Tamale metropolis dubbed the ‘Tamale Strategy’, The project
consists of the procurement and installation of pole-mounted smart and split prepaid meters for LV customers in the Tamale

44
metropolis, where non-technical losses are predominant. In the intervention areas (Tamale Metropolis and immediate
surroundings), 33,800 customers are on post-paid or flat rate billing. Also, it is estimated that, about 51,000 customers out
of the total 77,000 PPM customers in the Tamale Metropolis are engaged in energy theft in the form of meter bypass. This
accounts for the high energy loss of about 43% in the Area. This project intends to replace 53,200 (69%) of the existing
monobloc PPM in Tamale that are prone to bypassing by customers. This brings the total Split PPM requirement of Tamale
to 87,000. The scope of the split metering project comprises the following:

• Procurement and installation of 87,000 din rail, split and smart (two-way communication) prepaid meters over two years.

• Installation of computer servers and meter vending software;

• Installation of all required hardware to facilitate a two-way communication. The communication shall be by General
Packet Radio Service (cellular) or Power Line Carrier communications.

• Creation of an additional 20 vending points in the intervention area to avoid bottlenecks in the sale of prepaid credit.
Currently NEDCo uses a network of 220 vending points (third party and own offices).

• Supply and installation of Transformer LV metering for 200 transformer points

A sharp reduction of non-technical losses is expected in the intervention areas due to the split and anti-tampering features
of the meters. The pole-mounted split system is assumed to eliminate the most common fraudulent practices, i.e. meter
tampering or bypassing, in the target population. However, the installation of the split system cannot be used against more
sophisticated frauds, such as a direct connection to overhead line. This practice however is unlikely to be common within
the LV customer population. Hence, we assume that the intervention will reduce theft by 90%. To detect the remaining

45
frauds and better monitor losses, NEDCo proposes to deploy a loss monitoring team to immediately patrol the area to
identify connection that are unauthorized.

The project will increase the collection efficiency to about 100% within the target population through the shift from post-
paid and flat rate to prepaid billing. The collection efficiency in the intervention areas currently amounts to 50% and the
average payment lag of arrears is 980 days, ie. 2.7years.

Another key initiative undertaken by NEDCo to retrieve debts is the deployment of E-Payment platforms which makes it
easy for customers on post-paid meters to pay for their bills at the comfort of their homes and those on smart prepaid
meters to also buy power with their phones. This intervention makes it convenient for customers to transact business with
NEDCo easily without the intervention of third parties.

Government is the biggest debtors of NEDCo. NEDCo provides electricity to the government through the Ministries,
Departments and Agencies (MDAs) and other sensitive customers like the hospitals, military, police, prisons, GBC, GWCL,
etc. Government however, have not been honouring its debt obligation to NEDCo as expected. Due to the sensitive nature
of the services rendered by these institutions, coupled with the special protection they enjoy under the GoG’s Clearing
House Policy, the traditional means of recovering these debts through disconnection cannot be applied. As at December
2021 Government debt to NEDCo stood at approximately GH¢1,069,528,995.31. We have been following up with the
Ministry of Finance to settle the Government debt but not much have been achieved in this regard. That notwithstanding,
we shall continue to engage the Ministry until the outstanding debts are paid.

Disconnection has been one of the tools used by NEDCo to retrieve its unpaid bills from customers. NEDCo will normally
disconnect customers who fail to pay their bills over a certain period of time. We shall continue to deploy this tool whenever
customers default in paying their electricity bills.

46
In order to improve upon the liquidity of the company, we wish to propose that PURC and other regulators approve an
interest rate for NEDCO to be applied on overdue debts. This will go a long way to compel customers to promptly pay for
the electricity bills when they become due.
We shall also respond promptly to customers in need of new service to avert the possibility of self-connection and its
associated energy loss.

Our legal unit is also up and doing in prosecuting illegal connection customers. We shall intensify the prosecution to deter
customers from power theft.

NEDCo understands that, for a distribution utility company to be able to supply quality and reliable power, it will thrive on
the shoulders of a robust distribution Network. In view of that, NEDCo has been carrying out regular rehabilitation of the
distribution network, upgrading the distribution lines, and injecting transformers in areas where the transformers have
reached their peak. Plans are also underway to automate the network to ensure efficient network management and speedy
identification and resolution of faults in order to reduce fault turnaround time. The projects identified for execution are part
of the strategies to address some of the challenges confronting NEDCo.

11 Total Distribution Utility System Load at Peak

The total distribution utility system load at peak is as indicated in the table below

Table 7: Distribution Utility System Load at Peak Demand

INDICATOR 2016 2017 2018 2019 2020 2021
Peak load (MW) -Non-Coincidental 221 240 246.7 328.5 335.6 348.3

47
The table shows the total distribution system load at peak. The data shows that the figure have been increasing steadily
from 2016 through to 2021. In NEDCo Areas the peak periods are always at night between 7pm and 10pm. NEDCo is able
to meet the power requirement during peak period.

12 Regulated Market-Non-Special Load Tariff Customers

The composition of NEDCos’ customer population makes it difficult for NEDCo to generate enough revenue for its operations.
Though Energy consumption has grown from as low as 60.03GWh in 1990 to 1,761.37 GWh in 2021 (84.96%) of NEDCos’
customers who are in the Residential category consumed 67.76% of the total billed energy of 1,060GWh out of the
1,761.37GWh, which represents total power purchased but contributed only 51.40% to the total revenue. Non-Residential
customers constituted 15.03% who consumed 24.00% of the total energy sales and have contributed 38.94% to the total
revenue. SLT customers represent approximately 0.01% of the customer population, consumed about 8.24% of energy
sold with an associated revenue of 9.66%.

13 Regulated Market-Energy Commission Licensed Bulk Customers Embedded

in Disco Network

SONABEL and SAVANA Cement (SAVACEM) are the only Wholesale Market Bulk Customers embedded in NEDCos’
distribution network. Whereas on the basis of an internal agreement with VRA, NEDCo wheels power to SONABEL on behalf
of the former, of which NEDCo is a subsidiary, SAVACEM has direct arrangement with VRA, which sells power to the former
through GRIDCos’ transmission network.

This market arrangement poses no threats or challenges to NEDCos’ operations.

48
14 Base Load
Table 8: Base Load Statistics
INDICATOR 2016 2017 2018 2019 2020 2021
Base load (MW) -Non-Coincidental 114.92 124.8 128.28 169.26 174.51 350.2

15 Forecast of Energy to be Purchased

Table 9: Energy Purchase Forecasts
ITEM 2021 2022 2023 2024 2025 2026

Power Purchase (GWh) 1,761 1,891.3 2,031.3 2,181.6 2,343.0 2,516.4

16 Non-Conventional Energy - Renewable Energy

With the enactment of the Ghana Renewable Energy Law, Act 538 of 2011, Ghanaian publicly owned and regulated
electric utilities are required to procure ten percent of their energy requirements from renewable energy sources by the
year 2021. NEDCo as a publicly owned and regulated electricity distribution company is therefore under a statutory
obligation to comply with the above legal provision.

49
 Table 10: Statistics of Current and Projected Renewable Energy Purchases

Renewable
2021 2022 2023 2024 2025 2026
Energy

Hydro<100MW 8.9GWh 503.36GWh 553.69GWh 609.06GWh 669.97GWh 736.96GWh

No purchases,
due to technology To be determined To be determined To be determined To be determined To be determined
Waste to immaturity and by the availability by the availability by the availability by the availability by the availability
Energy uncompetitive of technology at of technology at of technology at of technology at of technology at
Levelized Cost of economically economically economically economically economically
Energy (LCoE) competitive tariff competitive tariff competitive tariff competitive tariff competitive tariff

No purchases,
due to technology To be determined To be determined To be determined To be determined To be determined
immaturity and by the availability by the availability by the availability by the availability by the availability
Biomass
uncompetitive of technology at of technology at of technology at of technology at of technology at
Levelized Cost of economically economically economically economically economically
Energy (LCoE) competitive tariff competitive tariff competitive tariff competitive tariff competitive tariff

50
Renewable
2021 2022 2023 2024 2025 2026
Energy

No purchases,
due to technology To be determined To be determined To be determined To be determined To be determined
immaturity and by the availability by the availability by the availability by the availability by the availability
Wind
uncompetitive of technology at of technology at of technology at of technology at of technology at
Levelized Cost of economically economically economically economically economically
Energy (LCoE) competitive tariff competitive tariff competitive tariff competitive tariff competitive tariff

No purchases, To be determined To be determined To be determined To be determined To be determined

due to by improvement in by improvement in by improvement in by improvement in by improvement in
Solar uncompetitive competitiveness of competitiveness of competitiveness of competitiveness of competitiveness of
Levelized Cost of Levelized cost of Levelized cost of Levelized cost of Levelized cost of Levelized cost of
Energy (LCoE) Energy (LCoE) Energy (LCoE) Energy (LCoE) Energy (LCoE) Energy (LCoE)

No purchases,
due to technology To be determined To be determined To be determined To be determined To be determined
immaturity and by the availability by the availability by the availability by the availability by the availability
Wave
uncompetitive of technology at of technology at of technology at of technology at of technology at
Levelized Cost of economically economically economically economically economically
Energy (LCoE) competitive tariff competitive tariff competitive tariff competitive tariff competitive tariff

TOTAL 457.6GWh N/A N/A N/A N/A N/A

51
17 Distribution System Losses at Various Voltage Levels

Table 11: Distribution System Loses at Various Voltage Levels

Voltage Levels 2021 2022 2023 2024 2025 2026

34.5kV-11.5Kv 3.39 3.39 3.39 3.39 2.69 2.69

33kV-11kV - - - - - -

415V-240V 5.81 5.81 5.64 5.64 4.80 4.80

18 Customer Population by Classification at Characteristics

Table 12: Customer Population by Classification

Category 2021 2022 2023 2024 2025 2026

Active Customers 1,136,050 1,220,118 1,310,406 1,407,376 1,511,522 1,623,375

Inactive Customers
Total 1,136,050 1,220,118 1,310,406 1,407,376 1,511,522 1,623,375

52
19 Regulated Market- Non-Special Load Tariff Customers
19.1 Residential Customers
Table 13: Residential Customer Classification by Voltage Distribution

Category 2021 2022 2023 2024 2025 2026

Lifeline 516,547 554,742 595,792 639,881 687,233 738,088

Medium 443,143 475,909 511,126 548,949 589,572 633,200

High 5,550 5,961 6,402 6,876 7,384 7,931

Total 965,240 1,036,612 1,113,320 1,195,706 1,284,189 1,379,219

These are active customer numbers

19.2 Non-Residential Customers

Table 14: Non-Residential Customer Population Projections

Category 2021 2022 2023 2024 2025 2026

Non-
Residential 170,728 183,422 197,002 211,582 227,243 244,063
These are active customer numbers

53
19.3 Special Load Tariff Customers
Table 15: Current and Projected SLT Customer Distribution by Voltage Levels
Category 2021 2022 2023 2024 2025 2026
SLT-LV 43 44 44 45 46 46
SLT-MV 17 18 18 19 20 20
SLT-HV 22 22 22 24 24 27
Total 82 84 84 88 90 93
These are active customer numbers

19.4 De-regulated Market-Energy Commission Licensed Bulk Customers Embedded in Disco

Network
Table 16: Statistics of De-regulated Market-Energy Commission Licensed Bulk Customers Embedded in Disco Network
Category 2021 2022 2023 2024 2025 2026
Bulk (MV) 4 - - - - -
Bulk (HV)
Total 4

20 Energy Allocated to Public Lighting (GWh)

Table 17: Energy Allocated to Public Lighting (GWh)
Category 2021 2022 2023 2024 2025 2026
Streetlight
Consumption (GWh) 211 226 243 261.3 280.73 301.51

54
21 Distribution Company's System Load Data
Table 18: Disco System Load Data 2021-2026

Parameter 2021 2022 2023 2024 2025 2026

Total System Load @ Peak 348.3 353.8 371.6 402.1 424.0 440.9
Regulated Market (Non-SLT Customers) 893.23 939.05 1016 1,072.51 1,127.94 1,184.27

Regulated Market (SLT including Bulk Customers) 47.53 48.45 50.00 55.56 55.56 55.56

Regulated Market (Energy Commission Licensed

Bulk Customers Embedded in Disco Network)
Projected Base Load 174.4 184.0 193.2 209.1 220.5 229.3

22 Summary of Capital Investment Plan (Million GHS) 2021-2026

Table 19. Summary of Capital Investment Plan (Million GHS) 2021-2026
Item 2021 2022 2023 2024 2025 2026
Capital Cost 181.48 422.43 296.72 284.18 725.96 412.09
Initial Spares
Additional Capitalisation
Renovation & Modernisation (R&M)

Rehabilitation & Resettlement (R & R)

55
22.1 Capital Expenditure Financing Plan
Table 19: Summary of Capital Expenditure Financing Plan (Million GHS) 2021-2026
Item 2021 2022 2023 2024 2025 2026
Accumulated Depreciation 2,811.09 2,920.82 3,039.36 3,165.96 3,300.29 3,442.67

Retained Earnings -204.9 -97.87 -92.61 -106.92 -106.91 -90.67

Commercial Borrowings:

Domestic 60
Foreign
Additional Equity Contribution By 100 95.5 100 100 100 100
Shareholder(s)

Grants:
Domestic
Foreign
Tariff Revenue (Revenue from
Projected Capacity Charge)

56
23 Operation and Maintenance Costs
Table 20: Operation and Maintenance Costs (Million GHS) 2021-2026
Item 2021 2022 2023 2024 2025 2026
Fixed O & M Costs 79.6 85.99 91.84 97.44 103.29 113.62
Variable O & M Cost 21.16 22.86 24.41 25,90 27.46 30.2

24 Administration and General Costs

Table 21: Administration and General Costs (Million GHS) 2021-2026
Item 2021 2022 2023 2024 2025 2026
Fixed O & M Costs 44.36 47.92 51.18 54.30 57.56 61.66

Variable O & M Cost 12.87 13.90 14.85 15.75 16.70 17.89

25 Human Resource Costs- Employee Costs

Table 22: Human Resource Costs (Million GHS) 2021-2026
Item 2021 2022 2023 2024 2025 2026
Fixed O & M Costs 167.93 193.12 222.09 255.40 280.94 309.03
Variable O & M Cost 47.05 54.11 62.23 71.56 78.72 86.59

57
26 Public Education
Table 23: Summary of Public Education Costs (Million GHS) 2021-2026

Item 2021 2022 2023 2024 2025 2026

Stakeholder Communication &
0.095727 0.103414 0.110746 0.117183 0.124214 0.133071
Sensitisation (Public Education)

27 Financing and Interest Costs:

Table 24: Financing and Interest Costs (Million GHS) 2021-2026
Item 2021 2022 2023 2024 2025 2026
Interest on Foreign Loans
Interest on Local Loans 10.63 9.21 7.55 5.88 4.22
Interest on Working Capital Loan

28 Return on Equity
Table 25: Equity Financing Costs (GHS) 2021-2026
Item 2021 2022 2023 2024 2025 2026
Rate of Return -327.83 -456.13 -325.10 -384.75 -418.82 -413.92

58
29 Depreciation
Table 26: Equity Financing Costs (%) 2021-2026
Item 2021 2022 2023 2024 2025 2026
Rate of Return -0.1584% 0.0258% -0.0149% -0.0154% -0.0151% -0.0141%

30 Projected Electricity Distribution Revenue Requirement:

Table 27: Summary of Distribution Company's Revenue Requirement (Million GHS) 2021-2026
ITEM 2021 2022 2023 2024 2025 2026
A. Capital Recovery Component (CRC) 181.48 422.43 296.72 284.18 725.96 412.09
B. Fixed O & M Component (FOMC) 384.17 438.36 485.75 502.76 545.38 621.50
C. Revenue from Energy Charge 883.49 966.00 1,039.35 1,074.37 1,115.65 1,227.20
D. Reactive Power Charge
E. Revenue from Open Access- Wheeling
F. Fixed Charges
F1. Service Connection Charge 28.00 32.26 37.09 42.66 49.06 56.42
F2. Reconnection Charges 1.84 1.84 2.12 2.44 2.80 1.84
F3. Interconnection Charges 16.00 16.00 17.60 19.36 21.30 16.00
F4. Separate Metering Charges 25.00 25.00 27.50 30.25 33.38 25.00
F5. Penalties-Illegal Connection 65.00 80.00 88.00 96.80 106.48 117.13
F6. Revenue from Rural Electrification Levy 11.14 14.76 15.59 16.12 16.73 18.41

59
31 Proposed Tariff and Rates Structure
NEDCo’s cost of sales continue to increase over the years; of which power purchase and transmission service charge
dominates its total recurrent expenses, representing about 70% of its total operating expenses.

The operations of NEDCo are very sparse with long distribution network with very limited number of SLT customers (0.01%).
The quality of customers within the jurisdiction of NEDCo do not provide NEDCo the needed revenue to cover at least its
fixed and direct variable cost.

Again, procurement of Capital Expenditure items for distribution network expansion, consumer connections, meters and
information technology infrastructure are mostly denominated in forex. Variable cost per unit in 2022 is expected to be
GHp49.14 and Fixed cost per unit for the same period is also projected to be GHp18.03, totaling GHp67.17. To enable
NEDCo recover at least its cost of service and fixed cost, NEDCo proposes GHp67.1650/kwh for Distribution Service
Charge for the year 2022, representing 113.0% of the prevailing distribution service charge. Total variable cost includes
the benchmark distribution loss of 22.6% in Ghana cedi, forming part of the variable cost per kWh. The proposed rate
assumes that Transmission Service Charge and Bulk Generation Tariff remain the same. However, where BGC and TSC
goes up, we recommend that PURC factor in the rate of increase of the two direct cost elements to enable NEDCo recover
its direct fixed and variable costs.

In addition, NEDCO recorded a total customer population of 1,136,050 as at 2021. This comprises 84.96% of residential
customers, 15.03% non-residential customers and 0.01% of SLT customers. Additionally, about 46% of the total customer
population, (516,547) are lifeline customers who consume power at GHp32.6060/kwh which is far below the total of the
current approved DSC rate of GHp31.5307/kwh, TSC GHp7.9846/kwh and BGT tariff of GHp33.7957/kwh, which is
GHp73.311/kwh. This means that NEDCO is making losses of GHp 40.705/kwh for power sold to lifeline customers. We

60
therefore wish to suggest the lifeline tariff band should be scrapped or reduced from 50kwh to 30kwh/month due to
availability of more efficient energy gadgets.

Furthermore, due to the amendment of the energy sector levies ACT 899, 2015 as ACT 941, 2017, the 5% rate for public
lighting levy was reduced to 3%. This has resulted in shortfalls in revenue for the provision of public lighting especially due
to the proliferation of public lighting as a result of the creation of new regional capitals and district capitals in NEDCO
operational Areas. For NEDCO to be able to recover these shortfalls, there is the need for PURC to approve a tariff rate for
public lighting which should be applied in costing the shortfalls.
Table 28: Details of NEDCo’s Operating Costs
Description Actual Actual Actual Projection Projection Projection Projection Projection
2019 2020 2021 2022 2023 2024 2025 2026
Average exchange rate
(cedis) 5.15 5.78 6.03 7.89 8.39 8.91 9.37 9.88
Power Sales (GWh) 845.00 950.00 1,060.05 1,172.09 1,219.54 1,260.63 1,309.07 1,439.98

Salaries and related

139,592 150,555 214,842 248,335 284,314 326,961 359,657 395,623
expenses
Material expenses 43,896 23,131 60,456 65,311 69,752 74,007 78,447 56,59986,292
Repairs and
4,344 13,189 40,304 43,540 47,011 50,254 53,395
maintenance
Transportation and
20,136 22,149 13,106
Travelling 23,710 25,600 27,366 29,049 30,792
Other working costs 34,301 23,909 43,005 34,821 37,596 40,190 42,662 45,222
Regulatory Benchmark
46,170 150,957 168,713 160,238 172,211 172,499 179,127 197,040
Value GH¢'000

Total Variable Cost 288,439 383,889 540,425 575,955 636,484 691,277 742,337 811,567

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CAPACITY COST
(GH¢'000)
Average Net Fixed
1,119,514 964,324 797,103 820,800 945,917 1,040,485 979,572 918,667
Assets (ANFA)
Total Depreciation 173,219 166,559 64,021 145,613 275,609 133,504 127,914 127,241
Return on ANFA (8%) 89,561 77,146 63,768 65,664 75,673 83,239 78,366 73,493
Total Capacity Cost 262,780 243,705 127,790 211,277 351,282 216,743 206,280 200,734
Variable Unit Cost
(¢/KWh) 0.3413 0.4041 0.5098 0.4914 0.5219 0.5484 0.5671 0.5636

Fixed Unit Cost (¢/KWh)

0.3110 0.2565 0.1206 0.1803 0.2880 0.1719 0.1576 0.1394
Variable Unit Cost
($/KWh) 0.0663 0.0699 0.0845 0.0623 0.0622 0.0616 0.0605 0.0571
Fixed Unit Cost ($/KWh)
0.0604 0.0444 0.0200 0.0228 0.0343 0.0193 0.0168 0.0141
Total Cost (¢/KWh)
0.6523 0.6606 0.6304 0.6717 0.8099 0.7203 0.7246 0.7030
Total Cost ($/kWh)
0.13 0.11 0.10 0.09 0.10 0.08 0.08 0.07

Average Exchange
Rates (¢/$) 5.15 5.78 6.03 7.89 8.39 8.91 9.37 9.88

PROPOSED DSC
(GHC) 0.652330 0.660625 0.630362 0.671650 0.809949 0.720290 0.724650 0.702998
PURC
APPROVED/EXISTING 0.315307 0.315307 0.315307 0.315307 0.315307 0.315307
DSC
Proposed Percentage
113.0%
Increase

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32 Appendices
F-1D Distribution Sub-Transmission Data
F-2D Distribution Network Capacity Parameters Data
F-3D Distribution Substations Data
F-4D Distribution System Capital Outlay Data
F-5D Distribution Fixed Assets Schedule
F-6D Distribution Fixed Assets Depreciation Schedule
F-7D Distribution Project Cost Data (Foreign Costs)
F-8D Distribution Project Cost Data (Local Costs)
F-9D Capital Expenditure Funding/Financing Plan
F-10D Operation and Maintenance Cost Data
F-11D Administration and General Cost Data
F-12D Human Resource Cost Data
F-13D Customer Costs Data
F-14D Working Capital Requirement Data
F-15D Summary of Distribution Costs
F-16D Relevant Documentation In Respect of Distribution Tariff Proposal

63