General Electric targets first power by 2016

US energy giant General Electric says it hopes to complete the first phase of its Ghana 1,000 power project, involving some 240 to 360megawatts by 2016 -- depending on how quickly it hammers out regulatory issues and a power purchase agreement with government and the Electricity Company of Ghana.

“Our goal is that by first quarter of next year we will have the final site selection...We will need an accelerated public-private partnership process; accelerated environmental approval; accelerated regulatory approval and accelerated licencing; because if we do not get this level of cooperation, then we will never be able to meet the timeline,” Leslie Aruna Nelson, General Electric’s Country Manager, told the B&FT.

The company, which wants to build 1,000 megawats of power in Ghana within a seven-year period, is particularly concerned about the credibility of the Electricity Company of Ghana as an off-taker, which it says will be “condition precedent”.

Having a cost-reflective tariff regime, Mr. Nelson said, is critical to incentivising the private sector to take up the challenge of filling Ghana’s yawning energy demand gap.

“The most important part of a project of this nature is to have a credible off-taker. In simple language, you have to make sure the person you are producing power for can pay,” he said.

“We are going to implement this in three or four phases; the first phase will probably be either 240 megawatts or 360megawatts depending on the initial configuration. We will then add a steam turbine to increase the efficiency and output.

“We have completed feasibility, which is the most important thing. We have put together, arguably, the most dynamic consortium -- infrastructure providers from the US, the best local fuel trading partners in terms of the strongest balance sheet, and essentially the best regional operator of power plants. We have also got co-investors that have experience in developing projects on a fast-track basis, and we have got that partnership construct. We have over-subscription, quite frankly, in a number of the areas -- which allows us to choose the best,” Mr. Nelson stressed.

The over-US$1billion project, to be located in the Western Region, includes a Floating Storage and Regasification Unit to facilitate importation of Liquefied Natural Gas (LNG) for power generation.

This, according to Mr. Nelson, effectively cuts out the current challenge in Ghana of lack of fuel for power generation, and makes it possible for power to be generated at a cost cheaper than when crude oil is used.

General Electric in June 2013 signed a memorandum of understanding with the government of Ghana for the Ghana 1,000 project, which rides on the back of the Millennium Challenge Corporation’s initiative to support the power sector with a chunk from the second compact of the Millennium Challenge Account.

Of the over-US$500million account, more than US$300million is earmarked for the power sector -- through which the corporation is funding a feasibility study on the use of the Floating Storage and Regasification Unit.

“We are working closely with the Millennium Challenge Corporation to ensure that we are aligning ourselves with their goals and objectives because we don’t want to go left when they are going right,” said Mr. Nelson.

“If this works, it will be the anchor transaction of the Africa power initiative; it will really be the flagship deal to show how government – of both the US and Ghana -- as well as private sector companies can come together to solve a big social problem,” he added.

Through the project, General Electric hopes to introduce the Power Park Concept, whereby all the 1,000 megawatts will be generated from one location, instead of several generating plants at different locations.