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Empowering the country

Article - July 29, 2014
Ambitious infrastructure plans pave the way for Ghana to become the energy hub of West Africa
ONCE NATURAL GAS FROM THE JUBILEE FIELD GOES ONLINE, GHANA WILL PUT GAS TOWARDS THERMAL GENERATION AND BE ABLE TO CUT COSTS IN HALF
Nestled between the verdant tropical hills and mountains of southeastern Ghana, Lake Volta, one of the largest man-made lakes in the world, feeds millions of gallons of water into the massive Akosombo hydroelectric plants, generating the power that flows to millions of Ghanaians. This project, completed in 1965, foresaw the future needs of a growing nation, allowing Ghana to extend power to 72% of its population, the highest access rate in sub-Saharan Africa. Today, Ghana is planning an equally giant step forward, with President Mahama’s promise to more than double its total power generation while adding 2 million new customers in just a few short years from now.

72% of the population of Ghana have access to power the highest rate in Sub-Saharan Africa
“The President has stated clearly that he wants to have 5,000 MW of capacity by 2016 – that is not going to be easy. We need private investment to be able to achieve this target,” says Henry K. Ofori, CEO of Hydrocol Infrastructure. “Productivity is directly linked to infrastructure. That is a big difference between Africa and the United States – its infrastructure. There, nobody has to think about water or power, it’s taken for granted and then you focus all your energy into productivity. Now you can imagine what Africa will be like if we don’t have to think about the basic infrastructure. You will find people will have more time in developing new ideas, new technology, new methods of improving our life.”

The impact of generating this additional capacity in Ghana itself will be huge, but looking at the bigger regional picture, where more than two-thirds of the continent live without power, the significance becomes even more profound, both in terms of the business opportunities and the immense change it will bring to people’s lives.

“By our fortunate geographical location we serve as a hub for the rest of Africa, we are naturally centrally placed. The energy resources in West Africa are concentrated towards the East. We are placed in a central position, and we are able to get energy to virtually any part of the surrounding region,” says William Amuna, CEO of GRIDCo. “You can imagine that any investor that comes into Ghana, what he is doing will have a multiplying effect – it will help Ghana as a country, it will also help develop the other countries around, because it is far cheaper to generate electricity in Ghana than it is in neighboring countries. So any investment here actually has an effect, a positive effect on the rest of the region, and that should be a very good sign for any investor who is coming to invest here in Ghana.”

"Our availability rates are above 98.7% and that is really high. That is very remarkable if you compare that to other countries in the sub-region there’s no comparison at all”

WILLIAM AMUNA
CEO of Ghana Grid Company
Limited (GRIDCO)
This cost advantage comes from several factors, the most recent and dramatic of which is the oil and gas discoveries that are just now being integrated into Ghana’s power supply system. “The most crucial thing about energy in Ghana is gas – that is the fuel that will supply the thermal plants. Luckily we have natural gas from our Jubilee Fields. By the middle of the year, this gas will be online and it will be sustainable to develop our power generation,” says Mr. Ofori. “We will be producing gas, and all this gas will be aimed at our thermal generation. In other words, we will be able to also produce power at a lower cost than we are now, and that should attract investment and industrial companies that want to come and set their base here.”

Ghana’s energy sector foresees dramatic savings in production costs, with knock-on effects rippling throughout the economy. “Right now any time the Volta River Authority, the main power company in the country, wants to generate power, they spend $3 million a day, because they have to import light crude oil. When Ghana does begin to process gas, they will have to spend $1.5 million for the same amount of power – that’s a 50% saving. And this will translate to the customers’ worth – both industrial and domestic,” says Dr. George Sipa-Adjah Yankey, CEO of the Ghana National Gas Company.

The recent agreement with General Electric to build a 1,000 MW plant in Ghana reflects the government’s desire to bring in the best in international technology and know-how to achieve its goals. “Investment in the power sector is very expensive and the government cannot do it alone. So, what we are doing is getting the private people in and then that way adding on to the capacity, and I think that is very positive. We need many more private people to come in here and invest,” adds GRIDCo’s Mr. Amuna.

When the Volta River Authority switches from light crude to natural gas, it will save $1.5 million a day
“As a country we need to produce a lot of electricity. The demand for electricity in five years will be nearly doubled. This means that we need to be building power plants nearly every three months,” says Alex Mould, CEO of the Ghana National Petroleum Corporation. “This is going to create jobs, because we are going to have two plants processing the gas and pumping it through the pipeline to the power generation plants. Between three and five years we are going to have quite a lot of gas, so I say we are in the right position to benefit from the Power Africa initiative. At the same time, we are looking for more investments. The total investment that is going to come to Ghana in the next three to five years is in the order of $25 billion, just for the energy sector.”

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