Ghana Needs Large-scale Foreign Investment to Increase its Transmission Capacity

Ghana is participating in the Global African Investment Summit in London alongside Uganda, Rwanda, Tanzania and Togo. What is the return profile for investors in power in Ghana? Why should they invest in power here and not elsewhere on the continent?

Ghana’s electricity penetration is among the highest in the region. That has come as aresult of policies adopted by the Ghanaian government, especially rural electrification. The demand for electricity in Ghana grows about 12% every year. That is very high, and it means that at least 200 additional megawatts are required every year. Ghana is a developing country and we cannot add these 200 megawatts on our own. That calls for large-scale foreign investment.

In addition to this, Ghana is linked to other countries in the region by the West Africa Power Pool. We are linked to Ivory Coast and, by extension, Burkina Faso. On the other side, we are linked to Togo and Benin. There are technical problems that impede us from linking with Nigeria, but we will do it eventually. If you invest in Ghana, you have the potential to export power to any part of the sub-region. Ghana is the destination for power investment.

Ghana experienced severe power shortages last year. The Atuabo Gas Project is expected to finally come on-stream this year. When ready, what impact will it have on the reliability of Ghana’s power supply and its energy independence from Nigeria?

There are certain power plants in Ghana that run on gas only, so disruption in the supply has a hugely detrimental impact on the country. There are so many competitors for Nigerian gas. You have the Nigerian local market, as well as Togo and Benin.

When we have the gas available from Ghana, we would allocate it directly to our power plants, especially in the western region. Gas production will also generate savings, because of decreased fuel costs. With these savings, we can improve our systems. With gas, generators will last longer, as they will be needed less, so maintenance costs will go down. For many reasons, Ghana Gas will be very good for Ghana.

But it won’t make Ghana fully independent from Nigerian gas?

We are not going to be without the need for Nigerian gas completely. Not all theplants here in Ghana can be supplied fully by Ghana gas, especially because we will have additional generation in the years ahead. We have received commitments for an additional 2,000 megawatts from many people who want to set up new power plants in the western region. Ghana gas will not be enough for that and we are hoping there will be bigger finds. So we will still be dependent on Nigerian gas, but with Ghana gas we will ensure that some of our plants will always be on. Once we do that, we will be able to build on our hydro resources, because once you have gas supplies, you don’t drain the dams too much, so it will help us save water.

Ghana recently signed the Millennium Challenge Compact II (MCC) with the US government, by which up to to $498.2 million will be invested to create a self-sustaining energy sector in the country and be the catalyst for more than $4 billion in private energy investment. As part of the agreement, Ghana has a set of reform targets it must achieve. What is GRIDCo’s role  in helping Ghana achieve the necessary reforms to attract this $4 billion investment?

As part of this, the Electricity Company of Ghana is supposed to settle all of its debts. We are going to capitalise on that. Once we are able to get all the money we are owed by the ECG, we will use that to invest in the major projects we have lined up. Between Tema and Accra we have a number of overloaded lines. We will use this money to ensure we have a more robust system. We want to ensure that when there is new power generation, we are able to transmit it efficiently and effectively straight away. We don’t want a situation where new power plants are ready but our facilities are not. We are trying to get money from everywhere to ensure we expand the system to meet increased supply and demand.

Industry experts say Ghana needs about 12,500 megawatts of electricity to fully industrialise. Currently, the country has an installed capacity of only 2,884 MW, with the current production at around 1313 megawatts. Does the MCC go far enough in tackling Ghana’s power needs, given its goal to become an upper-middle income country in the next few years?

We definitely need 200 extra megawatts every year, as I said earlier. One aspect of our power generation is that we have a large hydro-based portion. This is not always reliable, as rainfall can change. Sometimes we expect inflows into the system that don’t come. Assuming hydro can fail, you must follow other strategies.

As part of the plan, we are looking at the type of generators in use and the correspondent fuel usage. That is very key for us. We are also interested in renewables, like solar. Two companies have interacted with us, wanting to do very large solar projects. There should be some concrete announcements on one of these projects soon. At GRIDCo, we consider solar as reliable power storage for hydro. During the day, you can use the solar, and save water from hydro. That is why we are amenable for solar to coming into the system. When solar investors approach us, we conduct a grid impact study, to see what the benefits will be for our system. We think the benefits of solar for our country are potentially very big and we welcome interest in this area.

What role do British investors play in bringing expertise, knowledge, and capital to the power sector here in Ghana, and GRIDCo in particular?

We have interacted with a number of British companies over the years in consulting and construction. In fact, some British companies are currently constructing some new substations and lines for us. We like the quality they bring to us as a country and as a company.

Why should investors bank on the reliability of GRIDCo and Mr Amuna; what makes them trust that the company tasked with transmission services is in good hands?

GRIDCo never existed until 2008. It was the transmissions department in the Volta River Authority. I am one of the most experienced transmission engineers in Ghana. I have worked as an assistant engineer, senior engineer, principal engineer, and manager.

Then I moved to director of technical services. I have worked in the grid system 80% of my working life. I used to be a commission engineer. All the sub-stations that were built from 1989 to 2005, I was the commission engineer, so I am well versed in the grid system.

Apart from that, I believe I am well-educated. I have an engineering degree, I have an MBA in finance, and an MPA from Harvard. I’m careful about saying I went to Harvard, because people then think you can solve every problem on earth!

And I think I can build good personal relationships with people. I am a very simple person at heart, and that works to my advantage.