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Some power but no glory

By Kwabena Mensah & Patrick Smith in Accra
Posted on Monday, 1 February 2010 16:21

The government has ambitious plans to increase electricity

production by 1,000MW and extend transmission to 800 rural communities,

but financing remains the problem

Ghanaians could be forgiven for experiencing a sense of déjà vu when listening to successive governments explain their strategies to tackle the country’s chronic shortage of electric power. President John Evans Atta Mills’s plan to boost electricity generation from its current 1,980MW to 5,000MW by 2015 is essentially a reworking of the previous ?government’s plan.

“We are encouraging the private sector to invest in the power generation business in Ghana,” says Energy Minister Joe Oteng-Adjei. While many remain sceptical of the public-private partnerships tried out by former ?President John Kufuor’s government, former energy advisor Charles Wereko Brobbey is unambivalent: “If we want to make middle-income status in ten or even 20 years, we have to increase energy use by at least 20-fold. Much of that is going to come from the ?private sector.”?

Deputy Energy Minister Emmanuel Armah-Kofi Buah says the current power cuts are due to obsolete and overused generation, transmission and distribution systems which are connected in series, so a major deficiency in any one of them causes a national blackout. Putting that right could cost between $5bn-10bn.?

There is little prospect of Ghana’s cash-strapped state sector raising the ?required finance and few signs that the private sector will fill the gap. In the short term, the government is investing in new power plants which will generate 1,000MW of thermal and hydro-generation, and there should be an extra 400MW of hydro-power from the Akosombo-Kpong hydro ?system by 2012.

Many other projects are dependent on gas from the West African Gas Pipeline and the Jubilee field, off the coast of Ghana’s Western region. The pipeline consortium pledged to deliver enough gas to power four of the five 110MW turbines at the Aboadze ?thermal power plant, which are currently running on light crude.

Meanwhile, officials are facing scrutiny over contract pricing. An ongoing investigation by the directors of the Electricity Company of Ghana (ECG) into contracts awarded by ?President Kufuor’s government to foreign companies has found gross overpricing in equipment, installation and maintenance costs.

Companies to watch

VOLTA RIVER AUTHORITY: ?Supplies most
of Ghana’s electricity but is struggling
to meet demand ??

ODEBRECHT: ?The Brazilian mining company
has a hydro-engineering affiliate which is
developing ?the next generation of dams, with
one planned for the River Oti??

SUNON ASOGLI: i?A Ghanaian-Chinese joint
venture which is installing an off-the-shelf
gas-powered 200MW plant which could be
expanded to 1,000MW

Evaluating the contract prices against World Bank international benchmarks, some Western companies were overcharging Ghana by as much 30%, one director told The Africa Report. The ECG’s review is likely to create a political storm and lead to legal cases against the companies and officials involved.

The NDC government has committed itself to extending electrification to 800 rural communities. “We have no right to ask people to stay in the rural areas when we do not supply them with affordable and adequate power,” says Energy Minister Oteng-Adjei.

The Export-Import Bank of the United States is to provide a loan of $350m for the rural electrification project and the Chinese government has pledged $170m. The Ghanaian government is seeking an additional $320m to extend power to the three Northern regions.

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