 Diversifing
Energy Sources
Ghana has made some progress in the energy sector, but the eagerness of the government to fast track the development process was constrained last year by a severe energy shortage forcing the country to ration power consumption. At the time of the drought, Ghana was totally dependent on getting power from hydro-generation sources from the Akosombo dam on the river Volta and the hydro-electric plant at Kpong.
The main producer of power is the Volta River Authority (VRA) , with six 127 MW turbine at Akosombo and a 160 MW turbine at Kpong on the downstream on the Volta Lake. The VRA is owned by the government of Ghana, but a Power Sector Reform Program initiated by the government is seeking to encourage independent power producers to pitch in Ghana and supply power.
Mr. Gilbert Ohene Dokyi , Chief Executive of VRA, acknowledges that "we are going to have competitors. Everybody perceives us as a monopoly but that has been broken. We are making available transmission lines to call those who want to do business. All independent operators will have access to the national grid".
With lessons learnt from the over dependence on the hydro-generating sources, the government, within a short space of time, increased the reliance on other sources of energy. Two thermal plants have been commissioned to meet the escalating demand for energy. The first one, with a capacity of 300 MW, built by the Ghana National Petroleum Corporation (GNPC) in the Western Region and the second one built by the VRA and an American company, CMS Energy Company, at Tema.
Mr. Tsatsu Tsikata , Chief Executive of GNPC, said its power project will be completed in phases. "The first phase which is expected to be completed by the second quarter of next year, will increase the capacity of the plant from 125MW to 400MW within two years".
The VRA is also looking beyond today. Mr. Dokyi says, "We are building more power stations to ensure that by the year 2020, there will be adequate power generation to supply the required amount and have some surplus."
The energy shortage in the country also affected neighboring countries like Burkina Faso, Togo and Benin. These countries buy electricity generated by the VRA for domestic consumption. The effect of the energy crisis on the economies of these countries have wizened them up. Ghana, Togo, Benin and Nigeria have entered into an agreement with some public and private companies led by Chevron to build a West African Gas Pipeline (WAGP), that will supply gas from Nigeria’s oil fields to the countries in West Africa.
Mr. Tsikata whose company also signed the agreement to participate in the WAGP said "the West African pipeline is going to be a major infrastructural breakthrough and being able to get investors to do additional investment is important for the energy sector. Energy is now going to provide the kind of developmental growth that we are trying to achieve". With WAGP, West Africa can make significant strides towards its economic growth and self-sufficiency goals, precisely the kind of progress outlined in Ghana’s Vision 2020 program.
Physically, the project is a proposed 1,000-kilometer pipeline system that will connect gas supplies in Nigeria’s Western Delta to new plants and industries in order to support the growing regional energy demand along with new industrial development WAGP Project Manager, Mr. Chris P. Miller of Chevron Overseas Petroleum, says the project will link trillions of cubic feet of natural gas produced in Nigeria, which otherwise would have been flared. It will also generate as many as 80,000 jobs and generate some 1.4 billion dollars in additional investment.
The project is very important to Ghana in particular, the pipeline construction which will start early next year will provide close to 80 per cent of the initial gas to Ghana.
Ghana’s efforts to be self-sustainable in energy could be attained by the end of the project. Indeed, President Clinton during his visit to Ghana promised 67 million dollars loan for the purchase of two barge mounted power plants for generation of a 130 megawatts of electricity.
The monopoly of the Ghana Electricity Company as the main distributor of power generated in the country is coming to an end with the entry of private investors. It is expected that within the next few years the country’s power sector will see a complete change. American companies like Marathon Power and KMR Power have already expressed interest in investing in the sector.
Until the gas pipeline project is completed, Ghana will continue to spend huge chunk of its foreign exchange earnings to import crude oil for her domestic needs. The ever rising cost of the crude oil on the world market has been posing problems to the Ghanaian economy. The Government frequently has to adjust fuel prices upwards in order to meet the cost of imported crude oil and that has been a source of conflict between consumers and the authorities.
| Through the GNPC, the government had invested millions of dollars in oil exploration and production of oil hoping that an end would be brought to the country’s over dependence on the importation of crude oil. The search has not been successful even though technical information available indicate that Ghana is capable of producing oil in commercial quantities from its off shore area.
Mr. Tsikata who has been criticized by some for investing millions of dollars since the 80’s without striking oil is optimistic. "A lot of new technical information has been acquired from the investments that GNPC and other companies are making in drilling wells. The next two years is going to see all together, the most intensive degree of exploration activity in this country. "The prospects are good for oil to be produced in Ghana", he said.
But for the moment, GNPC is concentrating on its other function of marketing crude oil it imports. The corporation which was the only importer of crude oil on behalf of the government now has to compete with other international tenders for the purchase of crude oil for Ghana’s only oil refinery; the Tema Oil Refinery (TOR) . TOR is the only company mandated in Ghana to distribute fuel to oil companies operating in the country. Currently producing two cubic tons of petroleum products for local consumption, the company seems to have succeeded in serving the country well.
Mr. Lovelace Prempeh , Deputy Managing Director of TOR, says, "our vision now is to target the West African Market". Currently producing two million cubic tons of petroleum products for local consumption, TOR, the main beneficiary of imported crude oil from GNPC has expressed interest in penetrating the West African market with its products. " Ghana is definitely the Gateway to Africa and the refinery is going to play a pivotal role in this. We see ourselves as the provider of fuel and petroleum needs of the sub-region. We plan to export some products to Burkina Faso, Mali and Togo. The opportunities are vast. I can see the refinery growing beyond its present limits " said Mr. Lovelace Prempeh, Deputy Managing Director of TOR.
Local customers of TOR at the moment are the oil marketing companies like Shell, Mobil, Elf, Total, GOIL and Tema Lube Oil who depend on base oil from the refinery to blend into petroleum products for export.
Despite its success, the government is scheduled to divest its interests in TOR within the next year in pursuance of its privatization policy.
The Tema Lube Oil Company established in 1990, is owned by five oil marketing companies and the Social Security and National Insurance Trust (SSNIT), who has 24 per cent shares. With a turnover of about 14 million dollars per annum, Tema Lube Oil currently has monopoly over the blending of oil in the country. Mr. Samuel Anguah , General Manager, said that the projection of the company is to grow at about ten per cent annually for the next five years. " We expect that after five years about 30 per cent of our output will be exported through the oil companies or ourselves".
The Tema Lube Oil Company is a very successful private company in Ghana because it achieved the outstanding feat of paying off within three years, a 15 year Italian government loan contracted through the government of Ghana in 1996.
Alongside TOR, the government has also slated the Ghana Oil Company (GOIL) , distributors and marketers of petroleum products, for privatization.
GOIL is the market leader in Liquefied Petroleum Gas (LPG) and premix fuel; a specialized product among fuels developed largely by GOIL to meet the demands of the fishing community in Ghana. The fisher’s outboard motors require a special type of fuel to run. It is a combination of gasoline and engine oil. The company with 104 stations scattered across the country is developing a strategy to enter into partnership with entrepreneurs in order to develop the stations. "These entrepreneurs could be locals or people living abroad. They do not need to have one hundred per cent capital. If we assess their location and it is a good one we team up with them to develop it and do the business", said Mr. Yaw Agyemang-Duah , the Acting Managing Director.
"We want to be in the forefront of the petroleum marketing business in Ghana, and in the long run, perhaps get into other energy products and services; supplies of aviation fuel to the airlines and bitumen. We want to invite all who want to do fuel and lubricants business here, to talk to us", he emphasized. |
GHANA
