ALBERT KAN-DAPAAH Energy Minister of Ghana

Ghana’s energy consumption profile has been changing, and those who are tasked with seeing that the country is able to draw on all the power it needs to drive growth and development have their work cut out for them.
Following a brief slump, demand for electricity is once again increasing by 10% per year, and in the petroleum sector, the major overhaul of a system that secretly subsidized the price of gasoline and other fuels is causing severe strains but has succeeded in averting a crippling cash crisis. The Energy Minister, the Hon. Albert Kan-Dapaah, is confident the situation is now in hand.

“With petroleum derivatives, we found we had a major problem. For several years, the previous government had been ordering what amounted to under the table subsidies to the tune of $900,000 a day,” says the minister. He explains how banks had little choice but to “lend” refineries enough to make up the shortfall, knowing they had little chance of ever seeing their money again.
“At the rate it was going, it would soon have exceeded the total primary capital of the entire banking sector put together, so that was very frightening.” That anomaly has now ended, but the price of gasoline had to go up by 64%, a major blow to workers being asked to show wage restraint. Says Mr. Kan-Dapaah: “We have a formula in place that will automatically readjust the price of gasoline if there are major variations in the traded price of crude oil or in the exchange rate. And if oil prices fall, then gasoline and fuel prices will, too.”

In the case of electricity, the government is so far managing to stay a nose ahead on the demand curve. Some electricity is purchased from the Ivory Coast, and a new thermal plant has come on line to supplement the hydropower facilities at Akosombo and Kpong on the Volta River that supply 64% of Ghana’s total electricity requirements.

GILBERT O. DOYKI CEO of the Volta River Authority

The thermal facility was already on the drawing board when a severe drought in 1998 led to persistent brownouts all across the country, even in Accra, the capital, similar conditions can be expected every seven to ten years. Nobody knows the upshot better than Gilbert O. Doyki, CEO of the Volta River Authority, which generates all of Ghana’s electricity. “We can’t very well tell our industries, ‘sorry, no rain this year, so no power for you.’ That is why we were determined to have a thermal complement in our grid.”
At present, the thermal plant at Takoradi is fueled by light Nigerian crude–the neighboring nation allocates 30,000 barrels per day of its production to Ghana–but some of this gets refined into gasoline. The plant, which has a capacity of 550 MW, was deliberately built in such as way so that only relatively minor readjustments would be necessary for it to be fueled by natural gas, which Nigeria also has in vast quantities and mostly flares away.

Changing Takoradi over to gas would slash the production price per kilowatt by roughly a third. Plans are to get the changeover completed by 2004, in time for the inauguration of the West African Gas Pipeline, an initiative that is meant to route Nigeria’s super-abundant natural gas to five of its neighbors. “The Takoradi plant is going to be the anchor for this pipeline,” says Mr. Dokyi.
Meanwhile, Akosombo remains the system’s backbone being by far the most cost-efficient as well as the biggest, pumping 6,400 GWh into a grid with an overall demand of 8,500 GWh. However, it is also the oldest, dating back to the mid-1960s. “In those days, technology was not the best and we didn’t care too much about efficiency,” says Mr. Dokyi. But after a major retrofit on the first unit’s turbines, output has gone from 130-140 to 170 MW, saving no small amount of foreign exchange that would otherwise have had to be used to buy oil for Takoradi.

The Akosombo dam remains the backbone of the Volta River Authority’s hydroelectric system, pumping some 6,400 GWh into the grid.

“There is reform in the wind in the power sector,” says Mr. Dokyi. “That will include privatization of the distribution sector and see some of the departments of the VRA breaking away to do business and show profits on their own. These will probably start off as VRA subsidiaries, and eventually they may have private participation. The Takoradi plant is also supposed to be privatized, but nobody is talking about privatizing Akosombo or Kpong. These will be our energy backbone at least for another five to ten years.”
Over at the Energy Ministry, Mr. Kan-Dapaah gives every assurance the government will do its part to ease the entry of private capital into the power industry. “What we have done and are trying to consolidate is an enabling environment. For a start, we have set up regulatory bodies like the State Energy Commission so the investor will know exactly what the on-the-ground legal, fiscal and environmental conditions are.”