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VRA To Build 300MW Power Facility   
 
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21-Nov-2011  
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The Volta River Authority (VRA) plans to build a 300-500 megawatt power-generation facility in the next four years, estimated at a cost of US$300-500 million, to meet the country’s increasing power demand.

“Currently, we’re seeking advice and approval from our board on how to finance the project. The discussion is ongoing, so let’s wait for the completion first,” Chief Executive Officer of VRA, Kweku Andoh Awotwi, told Business and Financial Times in an exclusive interview.

When asked whether government would finance the project, he said: “Government itself has taken a view that there must be other investments in the market -- and government is not going to continue supporting VRA; at least, that is how we understand it.

“Otherwise, it would not bother to deregulate the market. So that means we have to look for these funds in the market -- it does not have to be listing on the Ghana Stock Exchange, one can raise money from other sources.”

He added: “We’ve put the equity idea on the back-burner for now – not because it’s not a good idea, but we think there are other ways to raise funds.”

Ghana’s power sector is undergoing a period of change, with a spurt of new projects that will raise total installed generation capacity in the country by 65 percent to a total 3,600 megawatts by 2013.

According to the Ghana Power Report 2011, the increase in supply is timely, with power-generation reserve capacity in the country falling to critical levels in recent years.

The report said demand for electricity has fast outpaced new investments in power-generation capacity over the past decade, reaching a peak-power demand of 9,131 GWh in 2010.

From 2000 to 2009 residential demand has risen by 61 percent, driven by rapid urbanisation and high economic growth. Fifty-two percent of the population now live in cities (up from 42 percent in 2000), and their incomes have increased as a result of economic growth averaging 5 percent annually.

At the same time, industrial demand has grown by 64 percent on the back of the gold-mining sector’s strength.

Ghana is the second-largest gold producer in Africa, and with gold prices at an all-time high the energy-intensive sector now accounts for 12.5 percent of total electricity consumption.
VRA unhappy with West African Gas Pipeline:

Awotwi told B&FT that one of the biggest challenges facing the Authority is getting sufficient gas from the West African Gas Pipeline (WAGP). “For now, the supply to us has been erratic,” he said.

“We’re a key player in WAGP because we have some shareholding, so we must ensure it succeeds. We’ve communicated to the WAGP board our concerns, and also our energy minister is representing us – we hope to see improvement in supply.

“When it is was first conceived, the West African Gas Pipeline Company (WAGPco) thought there wouldn’t be enough demand in Ghana to meet the supply, but now there are not supplying to meet the demand – it shows you how the country itself has grown,” he explained.

“It’s critical that the Nigerian political situation must be stable so that there will not be disruptions from that point of view.

“It is also clear that the Nigerian gas sector must also be in place to encourage the supply of gas, because if there is not enough gas in Nigeria, Ghana is not going to get,” he said.

Militants in the Nigerian Delta have on several occasions attacked the WAGP's main supply artery (the Escravos-Lagos Pipeline) and disrupted gas-flows. In addition, increased Nigerian domestic demand has limited WAGP supply to Ghana to an amount that will barely generate 36 percent of its thermal power-plant fuel requirements in 2013.

To supplement possible shortfalls from WAGP, the government of Ghana has made plans to build gas infrastructure to tap gas from the newly-discovered Jubilee offshore oil field -- but this will only be ready in 2012 at the earliest.

Despite this, fast growth is expected in the years ahead for the Ghanaian electricity sector. Commercial production of oil is expected to boost growth in the country significantly with electricity consumption forecast to rise by 26 percent between 2011 and 2015 to a total of 13,169 GWh. At current tariff rates, total industry revenues are forecast to grow to US$2.05billion by 2015.
 
 
Source: B&FT
 
 

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