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GHANA INFRASTRUCTURE E nergy, Water & Transport. Magdalene Apenteng Director Public Investment - MOFEP. Presentation outline . Introduction Infrastructure Gaps Financing options Efficiency Gains & Potential Efficiency gains
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GHANA INFRASTRUCTURE Energy, Water & Transport Magdalene Apenteng Director Public Investment - MOFEP
Presentation outline • Introduction • Infrastructure Gaps • Financing options • Efficiency Gains & Potential Efficiency gains • Institutional arrangements – sound public investment management; • Partnerships • Conclusion
Introduction • Ghana Shared Growth and Development Agenda 2010-2013 (GSGDA): • Critical strategy to provide infrastructure investment – means to promote growth and diversify economy away from traditional exploitation of natural resources; • GSGDA – framework for support to social and economic development - transport, roads, water & sanitation, and power infrastructure.
Infrastructure Gaps - Roads • Network - 66,220 km comprising • 42,192 km of feeder roads • 12,400 km of urban roads and • 11,628 km of trunk roads. • Satisfies current minimal requirements for regional integration
Infrastructure Gaps - Roads • Setbacks – • poor connectivity, 41% of network in good condition, priority given to improving road quality against expansion; • Traffic density high especially in urban areas, • rapid deterioration; • 25% of population living in rural areas live within 2km of an all season road
Infrastructure Gaps - Roads • Way forward: • introduce improved/latest construction technology, • introduce better road maintenance and regulation, • decongest urban traffic (in Accra first), and • improve rural connectivity through inter-connectivity of roads in all three sectors – Highways, urban and feeder roads across the country.
Infrastructure Gaps - Railways • Network – currently 1300km • Originally to transport exports – manganese, bauxite, cocoa etc. and linked in a triangular form – Accra – Kumasi & Takoradi. ( Takoradi – Kumasi partially operational) • Setback - Old tracks, inadequate & outmoded rolling stocks and other essential facilities
Infrastructure Gaps - Railways • Way forward: • Rehabilitate and modernize network - Western region to fully tap its enormous economic potential. • Build a multi modal connection from Tema - Akosombopart of proposed Eastern multimodal corridor and finally extend line from Kumasi to the North
Infrastructure Gaps – Ports • Currently - seaports of Tema & Takoradi - well equipped to service both local production and international traders – volumes of activity have increased sharply in recent years; • Volta Lake transportation system - petroleum products, agricultural goods and passengers
Infrastructure Gaps – Ports • Setback - Volumes of activity have increased sharply in recent years at Tema & Takoradi • congestion and capacity constraint serious impediments to further development. • Volta Lake system – obsolete equipment; volatile ecological conditions; poor loading equipment and • Poor connectivity to road network
Infrastructure Gaps – Ports • Way forward: • Rehabilitate/retrofit and expand the Takoradiand Temaports • Develop a multimodal transportation system including provision of adequate equipment and infrastructure on the Volta Lake.
Infrastructure Gaps – Water & Sanitation • Steady progress in access to safe water (84% of the population -2008), • Slow progress in access to sanitation (14% percent of the population – 2008)
Infrastructure Gaps – Water & Sanitation • Setbacks – still several challenges - rural and urban households rely on natural sources of water • Unreliable water supply • Lack of basic and appropriate sanitation facilities.
Infrastructure Gaps – Water & Sanitation • Way forward: • Improved sector coordination • Sector wide investment plans to rehabilitate and expand distribution networks • Develop adequate sanitation facilities and • Reduce utilities’ high distribution and other operational losses. • Water Sector Strategic Development Plan 2012-25 adopted in March 2012, proposes universal coverage for water and sanitation services is to be achieved by 2025.
Infrastructure Gaps – Power • Current level is 2,200 MW • Seeks to increase installed generation capacity to above 4,000 MW by 2017, and • Universal access to electricity by 2020 (from the current 67 percent of the population).
Infrastructure Gaps – Power • Setback – • reliable power supply; - huge impediment to economic growth • congestion, and • the generation mix basically oil and hydro
Infrastructure Gaps – Power • Way forward: • Increase power generation capacity • Rehabilitate and expand Transmission network, • Diversify mode of generation from oil and hydro to more natural (wind, solar, gas) • Thus reduce costs and increase security of supply.
Financing Options • Sources of funding include increased budgetary resources, concessional and non concessional borrowing, and public private partnerships. • Budgetary resources and concessional funding – for high social return infrastructure projects; • Non concessional and private funding for high return commercial infrastructure projects.
Financing Options • Beyond GSGDA to 2017, identified infrastructure projects amount to US$13,996m (inclusive of US$2,175m for 2012-13); • Strategy – continue relying on a mix of financial resources ( public, development partners & private sectors)
Infrastructure investment plan 2012-2017 (US$million) • Generation (power) 1,980 • Transmission (power) 903 • Distribution (power) 1,000 • Roads 5,497 • Ports 674 • Rails 2,832 • Water & Sanitation 1,110 • Total 13,996
Efficiency Gains • Need to improve social and economic returns from infrastructure projects; • NIP expected to match investments with economic and social returns- (a geographic information system database tool will assist in this regards) • E.g. – Integrated Transport Plan – development of north-south corridors including 3 road corridors – western, central and eastern, one rail corridor –western, 2 multi-modal corridors (east rail-lake-road and west-rail-road
Efficiency Gains • Potential synergies and complementarities from different projects will be reviewed in the NIP; • Focus attention on road, transport and water resources and other social and economic infrastructure- e.g. opening –up of markets, connecting natural resources and production locations to national and regional markets;
Efficiency Gains • Better management of utilities through: • Good governance structures, • Regulation; • Monitoring; • Discipline in maintenance of assets to eliminate inefficiencies estimated at about US$968m annually (under pricing of US$729m)
Potential Efficiency Gains • Closer alignment of fees and tariffs to costs; • Improve targeting efficiency of subsidies- (progressive tariff structures, rural electrification); • Better financial management and improved balance sheets will increase ability to become financially viable companies
Potential Efficiency Gains • Use private financing through PPPs and thus reduce impact of investment financing on Government balance sheet and debt ; • Efforts to reduce distribution losses and under-collection of revenue through improved networks maintenance and legal enforcement. • Improvement of the regulatory capacity (especially with the advent of PPPs).
Institutional arrangements for Sound Public Investment • Rational – Deliver Ghana’s strategic investment plans – through: • improved revenue mobilization, • sound planning, • formulation, • allocation and supervision (operation and maintenance) of projects;
Institutional arrangements for Sound Public Investment • Commitment by government: • Includes the creation of the Contract database – led to the reduction of arrears in 2011; • Strengthen quality control of project preparation, appraisal, selection and implementation
Institutional arrangements for Sound Public Investment • Provide central guidance and independent reviewof projects; • Develop a full project database and asset registry, and • Institute Project management and monitoring
Institutional arrangements for Sound Public Investment • Streamline the monitoring, production of completion reports and ex-post evaluations of projects. • Ongoing development of a 3-year rolling Public Investment Plan (PIP), • Adoption by Cabinet of the Public Private Partnership policy
Institutional arrangements for Sound Public Investment • Creation of the Public Investment Division within MOFEP to oversee activities for public investment; • Complementary and coordinating activities with NDPC in monitoring of public investment activities; • However several constraints for both offices such as staffing, office space, logistics and financing support need to be resolved urgently.
Partnerships • Strategic partnerships with private sector - to ensure more rapid, efficient and satisfactory implementation of infrastructure plans; • To mobilize and complement financing and expertise that markets in Ghana or abroad will not provide • Non-concessional financing will be mostly used to finance commercially viable projects.
Conclusion • Ghana’s investment needs are very diverse, critical and urgently needed. • Current efforts including • adequate and reliable financing, • good governance structures, • an effective regulatory regime together • with effective and reliable partnerships are most needed for the expected impact on the economic and social development of the country.