Accra seeks power supply solutions: Ghana's chronic shortage of power will adversely affect its growth targets this year and for the near future. However, a spate of new undertakings, some with Chinese assistance, should ease the situation over the next three to four years. Neil Ford reports.

Ghana has enjoyed a variable reputation as an electricity producer over the past 20 years. The development of the Akosombo Dam during the 1960s provided the country with more electricity than it needed and turned Ghana into a major power exporter, to neighbouring Cote d'Ivoire among others.

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The direction of flow has reversed over the past decade, as the lack of new generating capacity has forced Accra to import electricity from Cote d'Ivoire. Power shortages have become severe over the past year but new investment should again reverse Ghana's power sector fortunes in the near future.

Low rainfall in 2006 resulted in lower water levels at the Akosombo Dam and other hydroelectric dams, which in turn triggered electricity rationing from the middle of last year. As during a similar drought in 1998-99, the rationing has continued for over a year and there are real fears that it will be reflected in lower economic growth.

A Ghanaian economist, Nii Moi Thompson, says: "It's almost certain now that low productivity due to the crisis will block the attainment of the 6.5% growth forecast for this year." Of those homes and businesses that are supplied with on-grid electricity, supplies have been turned off for at least 12 hours a day. The waters of the 1,020MW Akosombo dam are a massive 70 metres lower than normal, cutting the plant's generating capacity by 300MW. A study by Ghana's Data Bank concluded that the country could lose $1.4bn as a direct consequence of the drought.

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The Valco aluminium smelter, one of the biggest employers in the country, has had to suspend production and mining companies have been forced to resort to their own expensive small scale generators.

Small diesel and oil fired facilities provide the main back up nationwide but these are expensive to run at the best of times and doubly so with the current high oil price.

The government says that it is spending $42m a month on feedstock. Other temporary measures have been adopted but only bringing additional generating capacity on stream will provide a long term solution. The timing of the drought has been very unfortunate, given that new capacity is already in the pipeline but at least the rationing will not last for ever. The government has set a target of boosting national generating capacity to 3,000MW by 2010, a figure which would more than double existing capacity. Although the 2010 target may not be met, 3,000MW could be achieved shortly afterwards.

New town planned

At the end of September, a $292m buyer's credit facility was agreed with the Export-Import Bank of China (Exim Bank) to help finance the construction of the Bui hydro scheme. The deal will make a major contribution to the $622m required to fund the entire project. The government of Ghana is contributing $60m and another $270m loan will be provided by the Chinese government on easy terms, while the project is being developed by a Chinese firm, Sino Hydro. The 400MW Bui scheme in the Brong Ahafo region has been planned for many years. Aside from the dam, new reservoir and hydro turbines, the government hopes to develop a new town next to the dam, named Bui City, with a strong emphasis on tourist facilities. Water from the reservoir will also be made available for irrigation when the infrastructure is completed in 2012.

It is estimated that up to 3,000 jobs will be created by the scheme, although 2,000 people will be forced to leave their homes because of the flooding. Among the other smaller hydro schemes that are planned are the Ankobra, Pra, Tano and White Volta projects.

Obviously, the Bui scheme will be as vulnerable as Akosombo to low water levels but even during the worst droughts, some generating capacity should still be available. As a result, Ghana should benefit from the increase in total generating capacity.

However, in order to balance the increase in hydro generating capacity, additional thermal power plants are also being developed. The Volta River Authority (VRA) is constructing a new 220MW plant at Tema, while the existing Aboadze facility in Takoradi is being enlarged from 220MW to 330MW and will now run on gas instead of oil.

Aboadze is owned by Takoradi International Company (TICO), which in turn is 90% owned by US firm CMS Energy, with the remaining 10% stake held by the VRA.

Both thermal power plants have signed 20 year contracts with Chevron for the supply of gas from the West African Gas Pipeline (WAGP). Construction of the pipeline is nearing completion and the first supplies are expected to reach Ghana during the first half of next year. Once the Tema plant comes on stream, Ghana's immediate power supply problems should end, although it is to be hoped that substantial rainfall will end the shortages before then. About 85% of all gas transported by the pipeline with be used in power generation, while the rest will be consumed by other industrial consumers.

Gas will be piped from the Western Niger Delta to Escravos in Nigeria and then on to Cotonou in Benin, Lome in Togo, and Takoradi and Tema in Ghana. Pipeline capacity of 220m cubic feet a day can be increased to 450m cubic feet a day through the installation of additional compressor stations if Ghana requires additional feedstock for other gas fired power plants in the future.

The WAGPCo consortium comprises the operator, Chevron-Texaco West African Gas Pipeline Ltd (36.7%), Nigerian National Petroleum Corporation (NNPC) (25%), Shell Overseas Holdings Limited (18%), Volta River Authority of Ghana (16.3%), Societe Beninoise de Gaz S.A. (2%) and Societe Togolaise de Gaz S.A. (2%).

President John Kufuor said: "To look ahead to the next 30 years, to forestall the current energy shortage problems that currently confront us, and in anticipation of increased population and widespread industrialisation, it is hoped that planning ahead for increased energy supply will become part of the national culture."

Improvement in transmission needed

However, investing in new generation capacity is not the end of the story. The Ghanaian power sector also requires great improvements in transmission and distribution infrastructure if power rationing is to be avoided during future droughts.

The development of more thermal generating capacity will certainly inject more diversity into the generation mix.

The ongoing power supply problems faced by Ghana are a consequence of poor planning and insufficient investment in the past. It is all too easy to move from a time of plenty to one of shortage--but bringing new power generating capacity on stream takes many years so there is no point in waiting until a drought triggers shortages before acting. Thankfully, judging by his words, President Kufuor seems to have learnt from the failings of previous governments.