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Opinions of Thursday, 5 February 2015

Columnist: Alhaji Mustapha Iddrisu

JM's interventions in the power sector in Ghana is historic but...

Dr. Kwame Nkrumah's industrial revolution in Ghana required an essential ingredient of growth, electricity generation. Hence, the construction of the Akosombo Dam to produce the needed electricity to spark the country's "economic independence." He inaugurated the 588 Mega Watts (MW) Akosombo power plant on 22nd January, 1966. About 60% of which was purchased by Valco for its smelter. But subsequently, the Acheampong's administration increased the capacity to 912MW by adding two more turbines. This satisfied the country's electricity requirement until Dr. Hilla Limann undertook the construction of the 160MW Kpong Hydropower facility to complement the Akosombo Dam but which was later commissioned by then PNDC Chairman, J. J. Rawlings.

As the economy of the country started picking up in the 1990s coupled with the increasing population growth and rapid urbanisation as well as the embarking on massive rural electrification, the sole dependent on the hydro-based power system was apparently proven to be insufficient. Therefore the need to diversify the electricity generation mix by successive governments became even more imperative.

The first NDC government led by J. J. Rawlings took a bold step to diversify our electricity generation sources. The then government therefore strategised towards thermal sources of electricity generation at Aboadze. The regime constructed the 550MW thermal power plant ending the one-way generation of electricity in Ghana, the highest generation of electricity in Ghana after the building of the Akosombo Dam by Dr. Kwame Nkrumah. By the close of the year 2000, Ghana had a total installed electricity capacity of about 1,622 MW.

It is imperative to point out that the NPP government's flagship investment in the energy sector was the Bui Dam Project with a capacity of 400 MW. Ghana's cocoa was used as collateral to secure the loan facility from China to finance it. But this project was finally executed by Prof. Mills of blessed memory and was recently commissioned by president John Dramani Mahama. Retrofitting works were carried out and additional turbines were also added by the Kufuor-led administration to the Akosombo Dam, boosting its generation capacity which now stands at 1,020MW. However, many energy experts questioned the rationale behind retrospective policy of investing into Bui Hydro Dam which has only a peak load capacity (emergency plant now). Erratic rainfall patterns due to climate change and increasing reservoir evaporation have threatened the viability of hydro sources of electricity.

Frantic efforts were made by the late president, Prof. John Evans Atta Mills, to reduce the electricity deficit in the country. Under his stewardship, vigorous expansion work was undertaken at the Aboadze Thermal Plant. He initiated the T3 project of 132MW in 2010 which was eventually commissioned by President Mahama in 2013. The project was financed by Canadian government loan advanced to Ghana. JM subsequently commissioned the 2MW Navrongo Solar and 400MW of Bui Hydro Power Plant. This collectively constitutes a total generation capacity of 534 megawatts.

Despite, these increases in the installed electric power capacity, Ghana's electricity demand is also increasing disproportionately at a rate of about 12% yearly. For instance, the demand is growing from the 2012 peak of 1,728.9 Megawatts as compared to 1,942.9MW in 2013. Subsequently, the peak demand in 2011 was 1,664.3MW from the demand of 1,505.9MW in 2010 representing a 10.52 percentage demand increase.Therefore; the supply side management became a big issue for subsequent governments to deal with if the current power deficit (dumsor, dumsor) was to be averted.

The country at the moment has the installed capacity of 2,845MW, but the available or dependable generation capacity is 1650MW. While the needed generation capacity (current demand) is 2050 megawatts.The country is therefore experiencing generation deficit of about 400MW to 600MW depending of the prevailing circumstances such as availability of feed (gas), level of the hydro dams and periodic maintenance schedules of the installed thermal plants. But some governments could not appreciate the impact of the increasing demand poses for the country and act accordingly.

From 1982 to 2000, a total of capacity of 710MW was installed comprising Kpong GS Hydro 160, TAPCo Thermal/CC 330 and TICo Thermal/CC 220. While from 2001 to 2008 only MRP Thermal/CC (80MW) was installed. However, from 2009 to date, a total of 1,033.5 megawatts including; TT1PP Thermal/CC (125MW), TT2PP Thermal/CC (49.5MW) and SAP Thermal/CC (200MW) all in 2010, CENIT Thermal/CC (125MW) in 2012. The year 2013 had huge addition of 534MW with the following interventions: 132MW of T3 Thermal/CC, 2MW solar in Navrongo and 400 MW of Bui Hydro. Notwithstanding these attempts by the successive governments, the country is still far from achieving power sufficiency.

For the current load shedding to be addressed, strategic interventions and investments are needed in the energy sector. The JM's government has therefore left no stone unturned in attempt to nip it in the bud. As an interim measure, the government led by the minister of energy has deployed emergency power ship systems to Ghana. These power ship systems are expected to commence commercial operations in the 1st and 2nd Quarters of 2015 aims at generating a total of 225 MW altogether.

Also, the ongoing 110MW expansion work on the TICO plant, the Kpone Thermal Power Plant's Unit 1& 2 (220MW) and 25MW from Trojan Power are all expected to complete this year. All these will bring to fruition the target of 355 MW to our installed generation capacity by the end of 2015. This will definitely reduce drastically the intensity of the load shedding as currently being experienced in the country.

As part of the government's strategic vision to eradicate the energy crisis completely in Ghana, JM-led administration has also considered diversifying the country's generation mix further as a long term measure to include coal-fired power plants. To this end, the enabling environment has been created for GENSA-Chirano Mines to establish a small 30MW coal power plant with a maximum generation capacity of up to 90MW which is due to be commissioned soon.

Probably, the most far-reaching decision taken by this government is the partnership deal struck between Volta River Authority(VRA) and Shenzhen Energy Group, the parent company of Sunon Asogli, to develop a total of 1200MW of coal-fired power plant. The Memorandum of Understanding (MoU) of which has already been signed and it is expected to complete in 2018. It is the cheapest source of energy that can spare us the needed accelerated economic growth.

Approvals of the legislature and cabinet for the constructions of 350MW and 360MW by Cenpower and Jacobsen Electro respectively have also been given. The Vice President, Kwesi Amissah Arthur, has already cut the sod on 29th January,2015 for the commencement of its construction at Kpone in Grater-Accra Region. The ceremony has paved way for CEN Power to invest a whopping sum of 900 million dollar towards the realisation of the 350MW power plant. These important interventions are expected to commence soon and due for commercial operations in 2017.

Furthermore, the construction of about 1,000MW by the General Electric (GE) is in the pipeline. The first phase of up to 360MW is proposed to complete by the last quarter of 2016. Thankfully, the CEO, Jeffrey R. Immelt, arrived in Ghana on 27th January, 2015 to finalise the agreement with the government. It is my hope that his meeting with the president would be fruitful.If this intervention by the government is finalised, the General Electric will add about 300 megawatts of electricity to the national grid by the end of 2016 and the second phase will be adding about 700MW. Bringing it to a total of 1,000MW by the end of 2018. It is refreshing that $1 billion power project is positioned in the Western Region making it the hub of thermal electricity generation in Ghana.

On 27th January, 2015, the government took another bold step with Sankofa project agreement for the development of gas with the potential to produce about 1,100MW of electricity. The Minister of Energy and Petroleum under the auspices of the President signed this agreement at the Peduase Lodge. It is projected that the project will come to fruition in 2017 and will deliver up to 170 million standard cubic feet of gas daily up to 20 year period.

It is expected that, more gas will come on stream from these newly discovered oil fields such as Tweneboa-Enyenra-Ntomme (TEN) to augment our ever increasing demand for gas. These oil fields have associated gas estimated to add 1.15 trillion cubic feet over the production period. This implies more gas for the powering of our thermal plants. The constant supply of gas would assure the Independent Power Producers (IPPs) and stimulate the needed investment in the power sector. The link between this resource to overcoming the electricity generation challenges in the country is instructive.

That is where the General Electric comes in handy. As alluded to by President John Mahama, the TEN project has the potential of producing gas that can generate about 1,100 megawatts of electricity that could be utilised by the General Electric Company. Another ambitious intervention after the Akosombo dam that generates 1,020 MW. I dare say the largest of its kind ever on the soil of Africa in the power sub-sector. It is clear by these initiatives that the president has made good of his promise to create the enabling environment for the needed investments in the energy sector.

One of the disincentives to attracting Independent Power Producers(IPPs) to generate electricity as mentioned earlier is inadequate supply of gas from Nigeria. Hence, many investors in the power sector were waiting patiently to see how the country would resolve the erratic supply of gas. Happily, the successful completion of the gas infrastructure has allayed this concern and more thermal plants may be constructed by these IPPs to bridge the generation deficit in the foreseeable future.

The Ghana Gas Infrastructure Plant is critical as it brightens the prospects of the electricity generation in Ghana. The huge investment by this government into the successful completion of the Gas Processing Plant at Atuabo deserves commendation. The announced commercial commissioning of the plant by the first quarter of 2015 is therefore a welcome piece of news. It would guarantee us constant and regular supply of gas to power the thermal plants at Aboadze. The gas from the Jubilee fields is projected to peak at 120 million standard cubic feet daily. Currently, Ghana Gas Company is ever ready to deliver the needed gas to VAR at Aboadze.

One of the serious challenges in the value chain of the power sub-sector is the ECG's inability to collect revenue and to minimise the distribution losses. The ECG's system losses is about 22% which is still above the international benchmark of 15%. To address the challenges in the distribution, generation and access to energy in the country, the government led by President John Mahama recently signed the Millennium Challenge Compact (MCC) of $498 million in the USA. The primary intent of the compact is to reform the distribution sector and ensure that the IPPs can have confidence for prompt payments from the off-takers, ECG and NEDCo. Improving customer service is the cornerstone of this major initiative by the government. The compact is therefore to assist the utility companies meet current electricity needs and upgrade infrastructure to reduce outages and improve service.The first tranche of 308.2 million would be made available to the Electricity Company of Ghana to put it on sustainable operations.

Another enviable intervention by the current government is in the area of renewable energy. Subsequent to the Gazette and publication of the Feed-in-Tariffs, the Energy Commission has issued a total of 3,907MW of Provisional Licences to thirty-seven (37) to Independent Power Producers. Out of this, a total capacity of over 2000MW will be generated from solar farms. If this laudable intervention is zealously implemented, the target of increasing the renewable energy by 10% in the generation mix will be achievable. Renewable energy is green sources of electricity generation with a minimum operating expenditure. However, the tax regime on the solar panels should be looked at again in order to bring down the initial capital expenditure.

All these bold interventions and policies initiated by the government have given the boost towards averting the impending energy crisis in the country. It is envisaged that when these projects are matured, the government's avowed generation target of 5,000MW will also be achieved as stipulated. These are the realities on the ground that will bear fruits sooner than later. With these bold interventions by the government, there will be constant supply of electricity in the near future.

As far as I am concerned as an energy analyst, no government in the recent history of Ghana had the benefit of these landmark interventions. The lasting solution to this perennial electricity crisis is nigh. It is my candid opinion that the president Mahama's interventions in the energy sector within this short period of time are unprecedented and historic.

Alhaji Mustapha Iddrisu

Energy Analyst

Takoradi, W/R