Ghana positioning as energy hub of West Africa

Recent erratic power supply in Ghana has left citizens bewildered; most especially, businesses and industries that require constant and steady power supply to ensure continuous productivity.

With citizens’ complaints and frantic efforts by government to find a lasting solution to the energy situation in Ghana, President John Dramani Mahama’s declaration of a probable end to the continuous inconsistent power supply has been well received.

Most topical among his declarations was the ambitious quest for Ghana to become an energy hub in West Africa. This followed his inspection of the Atuabo Gas project which is expected to generate 550MW of power. This addition in power generation is in line with the vision of the government in positioning Ghana as a net exporter of energy.

The Ministry of Energy has revealed that Ghana’s current electricity demand stands at over 2000 megawatts (MW) and further estimates an annual capacity addition of about 200MW.

Over the years, Ghana has added about 1,000 megawatts (MW) of thermal generation capacity. As a result, Ghana’s current generation capacity of 2,125 MW is made up of about 50 percent hydro and 50 percent thermal plants. Nevertheless, inadequate and unreliable power supply remains a major constraint to future economic growth.

Current electricity demand in the country is said to be growing at about 10 percent per annum and Ghana is estimated to require additional capacity of about 200MW to match the increasing demand in the medium to long term.

Ghana’s total installed capacity is 2884.5MW but electricity supplied does not meet demand. This has resulted in the ongoing power rationing.

The Power Problem

Databank Financial Services research revealed that the power cuts in the country, compelled companies to incur unplanned operating costs of about $62 million per month or $744 million per annum due to the use of privately acquired generators.

Though the commissioning of the Bui Hydro dam, Ghana’s second largest hydro plant, by President Mahama, was believed to have set the country on its way to becoming a major producer of power in West Africa. The dam is currently producing 90MW of electricity despite its installed capacity of 400MW.

Ghana’s power sector is faced with the problem of inability of installed plants to operate at full capacity. This is due mainly to the limitations in fuel supply owing to rising fuel prices and uncertainty in rainfall and water inflows into the hydroelectric power facilities.

Atuabo Gas: Hope for Ghana?

“The important thing about this gas is that it allows us to have energy security in terms of putting in more thermal production, and it fits our programme of turning Ghana into the energy hub of West Africa. All the companies that we have signed Memorandum of Understandings with for installation of Independent Power Producers (IPP) thermal plants will feel secure to go ahead because they know that by the time they finish their thermal projects, gas will be available to power those projects”.

These were the words of President John Dramani Mahama when he visited the Atuabo gas project in the Western Region of the country.

According to him, the project, which is 99.8 percent complete, would be a game changer for the struggling Ghanaian economy, but most especially, positioning Ghana to be a net exporter of energy.

President Mahama believes that when completed, the Atuabo Gas project would drastically reduce the pressure on Ghana’s foreign exchange reserves.

He revealed that with the coming on board of the Gas plant, Ghana would save almost half a billion dollars a year in light crude purchases, and another billion dollars in foreign exchange savings for the purchase of light crude oil, and that is because the VRA [Volta River Authority] will be able to purchase the gas in Cedis.

“The multiplier effect of [gas] project will be enormous within our economy”, he added.

Ghana as energy hub in West Africa

The gas project when it comes on stream, will produce 107 million standard cubic feet of lean gas, 500 tonnes of LPG, 80 tonnes of pentane and 45 tons of condensates daily.

According to information on united world Ghana, government’s plans to build up the energy industry are still developing, but many aspects of it are already clear. The country’s electricity generating capacity of 2026 megawatts is targeted to be raised to 5000 megawatts by 2015.

The energy ministry is also studying the possibility of building up a refining and petrochemical industry, though the government is very much aware of what must be done before that process can start.

Emmanuel Armah-Kofi Buah, Minister of Energy and Petroleum explains the idea better; “We are building capacity in different sectors. We need assistance to partner with our educational institutions, improve infrastructure and improve the training of more petrochemical engineers and more people to study the oil and gas industry. We need to train more geologists and economists and legal people in the industry. We also need the capacity to strengthen our institutions.”

The information further revealed that the project to extend Ghana and West Africa’s power grid is already underway. Currently 67 percent of Ghana’s residents have access to electricity, and the network is being enlarged, with the goal of reaching 100 percent by 2020.

Power plants are being planned and built, with one at Sunon Asogli recently completed, fueled from a gas line connecting Nigeria’s oil fields to the new generating station. Transmission lines need to be built to Ghana’s eastern, western and northern neighbors, such as Burkina Faso, Mali and Nigeria, and agreements with many of the countries involved have been signed.

Inusah Abdulai Fuseini, minister for lands and natural resources also had this to say on Ghana becoming an energy hub for West Africa; “The prospects of tapping into Ghana’s resource base, in particular as regards the energy sector, are huge. We can become market players in the sector and Western Ghana will become an energy hub by producing power and selling to other landlocked countries.”

The goal, of course, is to use the country’s petroleum resources to power the planned electrical grid. The government has made great progress in extracting, selling, processing and using the oil, and is also studying closely how to minimize the environmental impact and make sure the wealth generated is put to use by improving the lives of Ghanaians.

“We have to be very focused on the things that we have to do to ensure that it will be a blessing. We do not compromise when it comes to environmental issues. We have made it very clear that there are companies that are coming to Ghana, and you have to apply the same international standards that they apply everywhere,” the energy minister further stressed.

Some have wondered why uninterrupted supply of power should be a problem when Ghana’s demand is less than installed capacity. They have also argued that Ghana is in this situation because of the inability of the power plants to operate at full capacity due to low levels of water and inadequate fuel supply.

Emmanuel Kofi Buah, has promised an increase of 1000 MW by next year when the Ghana Gas Company begins full operation.

The World Bank also believes Ghana has the right power policies but is failing to implement them and run the sector efficiently.

According to the Bank, the “solutions to the sector’s problems are well known; the challenge is to carry them out.”

“Proactive leadership of the energy sector, with a focus on efficiency and timely delivery, is crucial to Ghana’s ambitions for economic growth”, the World Bank has said.

Vincent  Baffour-Acheampong