Power supplies are the key to prosperity
OVER-DEPENDENCE ON HYDRO-ELECTRICITY HAS GIVEN WAY TO A MORE BALANCED APPROACH AS THE VOLTA RIVER AUTHORITY TAPS THERMAL AND OTHER SOURCES FOR A MORE STABLE AND RELIABLE SUPPLY

Ghana is pursuing an aggressive program to bolster its electricity supplies, encouraging foreign investment in private power generation projects and strengthening transmission and distribution networks. The availability of a reliable power source is a key ingredient in attracting foreign direct investment.
The strategy includes raising electricity prices to more commercial levels. The government wants all state utilities, including the power and water sectors, to operate on a full cost-recovery basis within the next year. The ability to charge realistic market prices is a major step forward in attracting fresh investment capital into the electricity sector.

In the past the power sector has been a tricky area for the authorities. A reliance on hydro generation led to a number of chronic power shortfalls as water levels dropped during drought periods, most recently in 1998. It prompted Accra to diversify into other areas, particularly thermal generation. It also sources some electricity from neighboring Ivory Coast.

DR. CHARLES WEREKO-BROBBY Chief Executive of Volta River Authority

The Volta River Authority (VRA) is the main organization responsible for providing Ghana with its electricity needs. In the past, this predominantly meant hydro generation from the Akosombo Dam, holding the world’s largest artificial body of water. Recently, it has also meant buying in electricity, either from abroad or from private power producers, and then distributing it across the country.

Dr. Charles Wereko-Brobby, VRA’s Chief Executive, says that roughly two-thirds of the country’s power supply is now thermal based, with the rest coming from hydro sources. The result is a more balanced and stable outlook for consumers.
“VRA’s focus right now is to make sure that we produce reliable, stable and adequate power,” he says. “The signal we have to send to investors is that the power is going to be there reliably, adequately and competitively priced. Whatever scenario comes up, their investments will not be jeopardized by erratic power supplies.”

Long term, there are plans to tap alternative energy sources, such as renewable and even nuclear power, but now the prospects for thermal generation are particularly bright. The discovery of natural gas offshore bodes well for the future. The development of the West African Gas Pipeline—an international gas pipeline linking Ghana with Nigeria, Togo, and Benin—is also set to transform the local power market. Analysts predict that the pipeline could slash the cost of natural gas and reduce the cost of thermal power in the Ghanaian market by up to a third.

VRA INVITES private developers to invest in new generating plants

Dr. Wereko-Brobby says it will make the production of electricity highly competitive and assist in the government’s drive to attract more foreign investors. It will also create an attractive environment for independent power producers. Ghana has already attracted investment from the likes of U.S. firm CMS Energy, which built the Takoradi thermal power station near Aboadze with a capacity of 650MW. The West African Gas Pipeline is expected to deliver the first gas to Takoradi by 2005.

Recently, the response from the investor community to the Bui hydro power project, about 100 miles upstream of Lake Volta, was also encouraging. More power is still needed, however.
In addition to generation, VRA—set up in 1961 initially to supply power in bulk to the Volta Aluminum Company—distributes electricity, mainly in the north of the country. It works alongside the Electricity Corporation of Ghana, which is responsible for distribution around the Ashanti, Western, Central, Eastern, Greater Accra, and Volta regions.

Although it currently imports power from the Ivory Coast, which is marginally cheaper than domestic supplies from Takoradi, Ghana has reserve capacity to cope with future shortfalls. It is also exporting some power to Burkina Faso and Togo, though this is not a priority, according to Dr. Wereko-Brobby.

“Our objective is not really to sell power,” he says. “Obviously the ability to supply power to our neighboring countries gives us additional revenue, but the emphasis is very much towards meeting Ghana’s social needs first.”
There are no plans for VRA itself to make any additional investment in power generating capacity, however. The new approach is to invite private developers to build and operate generating plants, with VRA purchasing the power and distributing it accordingly. It is a radical departure from the past, but makes for a more efficient and reliable environment.

Dr. Wereko-Brobby says Ghana is taking steps to meet any future supply problems. This means bolstering domestic electricity supply. VRA recently raised $30 million in financing from local banks to repay arrears to the Ivory Coast’s Compagnie Ivoirienne d’Electricité. The deal means that work can now commence on additional transmission lines, which will enable the Takoradi plant to operate at full capacity and possibly eliminate imports altogether.

“The capacity that we have in Takoradi, when it is fully deployed, is capable of meeting Ghana’s power needs,” he says. “So if we can get all our capacity up and running, we do not need to depend on the Ivory Coast.”