ACCRA — It is now clear that the crippling load management is giving way to sustainable supply of electricity in Ghana. However, to sustain the gains that have been chalked in the power sector over the last few months, our gas supply sources must be made to match up with the country’s demand to guarantee optimal thermal generations. As it is widely reported, the demand for lean gas will hit a record high of 265 million standard cubic feet daily (mmscfd) in 2020 and subsequently reach 584 mmscfd by the last quarter of 2030 from the current demand of about 19 mmscfd.
Gas infrastructure has been crucial to thermal power generation, and has a potential of saving the country of huge foreign exchange reserves. Gas industry has been described as a game changer for obvious reasons. Light crude oil is quite expensive and cost the country dearly to import. However, Ghana has a huge potential of proven gas reserves that can be harnessed for her economic benefits. Unfortunately, the gas sector requires huge capital investments to explore and produce that is beyond the financial means of the country.
This calls for attraction of foreign direct investments in exploration and production sectors to harness the country’s gas potential as soon as practicable. EPRI is however aware of some of the government’s strategic interventions and partnerships that have been struck by the Petroleum Ministry with some oil and gas production companies. A number of deals with these companies are aimed at unearthing the gas potential of new discovery fields for the benefit of the country.
Apart from the one billion dollars investment in the Ghana National Gas Project, which is producing about 120mmscfd of lean gas for thermal generation and almost half of the country’s LPG for domestic consumption, Tweneboa, Enyera, Ntomme (TEN) discoveries are estimated to deliver its first gas in the third quarter of 2017. This has the potential of producing about 80 million standard cubic feet (mmscf) of gas per day.
Another critical intervention that has yielded $7 billion investment is the Sankofa Project being spearheaded by ENI. This singular intervention receives financial supports from the World Bank and International Finance Corporation (IFC) which has been world-wide acclaimed. This collaboration between ENI and Vitol Energy is aimed at developing the Sankofa and Gye Nyame fields to provide adequate gas for optimal operations of the thermal plants for the next 20 years.
Arguably, this is considered as the biggest gas sector investment in the sub-region. The Sankofa project is expected to produce 200 mmscfd of gas by 2018. The gas from Sankofa project has an estimated value of 1.15 trillion cubic feet over its production life. With this volume of natural gas, it can be used to produce about 1,100megawatts (MW) of electricity. This can boost the country’s generation capacity far beyond the anticipated target of 5,000MW by the government.
However, one significant threat that can undermine these efforts is an unabated plummeting fuel prices globally. The downward trends of fuel prices have become disincentive to many investors in both exploration and production sectors. Many energy companies have pulled back investments in new oil and gas projects due to the near collapse of fuel prices. For example, Qatar Petroleum and Royal Dutch Shell Plc have cancelled their plans to build a $6.5 billion petrochemical plant in the Emirate until further notice.
It is therefore refreshing that the Prime Minister of Italy, Matteo Renzi, has given the assurance that the Offshore Cape Three Points (OCTP) Sankofa Gas Project will continue as planned despite the falling crude oil prices. This is commendable risk assumption giving that further investments in the industry have been curtailed by some super majors. Oil and gas industry is full of risk taking, especially at this time when fuel prices are not attractive. The biting effects of these trends are greatly felt by independent oil and gas companies all over the world.
The minority in Ghana’s parliament has raised issues regarding the contract sum, risk management, gas pricing and return on investment, which turns out to be shallow and lack merit. In every working democracy, it is the considered responsibility of the minority to hold the government accountable and in check. However, many of the issues raised by the minority were not convincing and lacked substance.
Most of their concerns ignored the current happenings in the industry. It comes across as the usual partisan call to gain mileage without due consideration of global prevailing circumstances. Anyway, the ministry of Petroleum’s response is quite revealing and convincing. And therefore suffice it for now.
It is envisaged that if all these gas potential fields are harnessed properly, Ghana will be producing over 500mmscfd of gas by 2019. This includes but not limited to 120 mmscfd from Jubilee Oil Fields. The Sankofa project alone will bring on board about 200million and TEN oil fields will come on stream with an estimated production of 80 mmscfd. The total gas volumes of these sources are projected to generate about 3,000 megawatts of electricity. This is a piece of good news considering the fact that a growing number of energy pundits have already predicted gas supply deficit in the near future.
Another success story that will augment the existing gas potential is the introduction of Liquefied Natural Gas (LNG) in the country. EPRI has recognized the frantic efforts made by the Ministry of Petroleum in conjunction with Ministry of Power to establish a Floating Storage and Regasification Plant close to Tema Thermal Corridor with the capacity of about 120 mmscfd. This intervention if well implemented could provide enough gas to power every thermal plant situated in that enclave.
It is commendable to point out that cabinet has also given approval for the interconnection of Ghana Gas pipeline with West African Gas Pipeline to ensure optimum gas supply. This interconnectivity is to enable reverse flow of gas between the two gas pipelines to serve the connected countries in case the volume of gas supply increases. As it stands now, the West African Gas Pipeline supply lean gas for only Tema Power area, while the Ghana Gas Pipeline provide lean gas to Aboadze thermal power alone.
This means that a highly pressured lean gas in the WAGP can only serve thermal plants in Tema and vice versa. This is exactly what the cabinet decision sought to address by March this year. It implies that a highly pressured lean gas in the pipelines in one case should be enough to serve the two thermal enclaves when the project is completed somewhere in March.
It is projected that Ghana will soon phase out the use of light crude oil in the generation of electricity. President John Dramani Mahama declared, at the recent UN Climate Change Conference of the Parties (COP) held in Paris France, that the use of crude oil to generate electricity in Ghana will cease by 2020. This will be made possible due to proven reserves of gas already stated. Many countries have considered the use of gas as a transitional power source as part of short term strategic plan towards preservation of the environment.
Minister of Petroleum, Hon. Emmanuel Armah Kofi Buah recently announced that “80 percent of our source of power will come from thermal generation with gas as the critical feed stock.” However, in the view of EPRI, this should remain a transitional measure and other power sources such as renewables and “clean coal” power plants should be explored and deployed proportionately to ensure security of supply.
Even though poor rainfall patterns have made hydropower source almost redundant, it can still play a significant role in the generation mix. Policy makers should not discount it completely in the generation mix albeit it’s dwindling capacity. Putting our eggs into one basket could be dangerous to our energy security in the long term.
With these strategic interventions and investments put into action by the government and other stakeholders, EPRI is therefore convinced that the current stable supply of electricity can be sustained. But to make this dream come into fruition, the Gas Master Plan should urgently receive cabinet approval to guide the country’s gas policy, enforce transparent regulatory framework, ensure funding sources, and implement gas pricing policy and infrastructure requirements as well as guarantee institutional mandates for the agencies under the gas sub-sector.
It might seem gloomy now in the power sector, but the future prospects are brighter with the right policies, strategies and interventions, coupled with determined, collaborated efforts that should be implemented by inter-ministerial and sectorial deliberate actions aimed at overcoming any impediments. The only tool that will defeat the realization of this dream will be complacency on the part of the government and key stakeholders.
Maybe things are getting better. Maybe one day DUMSOR will come to an end. Maybe Alhaji Mustapha is right. Whatever it is, we need men; men with the conviction and the self belief that they, like the ancestors before them, can solve our pertinent problems. Or, what is the point?
This is a very detailed review and I hope that this step is definitely in the right direction. I hope the government and in partnership with the private sector keep up the commitment to bring a lasting solution to this electricity crisis after all. But it seems some much needed progress is being made. Thanks for sharing.
John Mahama told Ghanaians that he has ended dumsor by adding 800 megawatts of power to our generation with the shortest period of time. This is enough to even get Valco and all our industries operating at full capacity. Now listen to the Power Minister….Make no mistake. Mahama is a tragic mistake. That is why they cant publish his address. End This Hurt.
VOTE Mahama and his NDC OUT……..
The Country was handed over to Mahama with no dumsor , but he plug us into dumsor and enter into dubious contracts paying over $510 million instead of $220 million making the country to lose close to $300 million and now he wants us to clap for him for the so-called I have fixed dumsor. He is a joke #Mahama Must Go
Energy Analyst, John Peter Amewu, has predicted that the country could plunge back into the power crisis now referred to as ‘Dumsor’, if government does not take long-term measures to fully address the problems in the power sector.
According to him, about 85% of the problem has to do with financing which the government has not resolved despite bringing on board a number of power generation plants.
“The president has managed to reduce the frequent level of Dumsor that we have to some extent. The situation is normalizing but it has not completely normalized, as he has promised the country. Basically, because I think they have targeted the wrong point for the solution. The problem has not actually been resolved. The generation aspect that the president has been talking about largely has been addressed, but the problem is not generation,” he argued.
On the electricity power issue, the problem is not really solved, we only have a change in the name.
First it’s DUMSOR , now it’s UNAFFORDABLE.
So who is telling Ghanaians the truth? My president says dumsor has been fixed and his deputy power minister,John Jinapo says we shouldn’t jubillate because Dumsor isnt over yet!!!
PRESSING THE RESET BUTTON, PART 1
Ghana has undoubtedly retrogressed under the management/mismanagement of the current President His Incompetence John Dramani Mahama, who first ascended the high office of President upon the unexplained and mysterious death of his boss President Evans Attah Mills in the year 2012.
Under his watch, Ghana had to endure an unprecedented 4 long years of Dumsor. It was been argued that Mahsma’s only legacy as far as the energy sector is concerned was his adding a new word to the English verbiage; Dumsor. The cost of Dumsor to our peoples economic and social lives is unimaginable; several thousands of jobs were lost as several businesses folded up or downsized. SMEs were the worst hit since the cost of petroleum products to power generators that were acquired by these SMEs was also going through the roof. This was happening at a time that Ghana was producing oil in commercial quantities and at a time when international crude prices had reach a record low. Doctors were forced to continue with even surgical procedures using torchlights and mobile phone lights because the lights had gone off when their patients were on the operating table. Funerals had to be fast tracked because bodies were going bad in mortuaries. Criminals were not only emboldened, they were actually facilitated to freely operate under the cover of darkness, kind courtesy Dumsor. I do not wish to bring back gory memories of our horrific Dumsor experience. I will therefore pull the brakes on Dumsor and discuss yet another monumental failure of John Mahama; Currency depreciation.
Regrettably the Ghanaian economy is very much import dependent. I recall the efforts of the erstwhile NPP administration to turn things around and begin a process of value addition and export promotion. The “AGOA” process was curtailed with the assumption of office of the NDC. The African wear that was becoming popular internationally, the cassava, Palm nut, etc that were going to be exported were all brought to a an abrupt halt by this government. So almost all products and services are priced with the dollar being the denominator currency. The rate of depreciation therefore is very crucial to us as Ghanaians.
On August 2 2014, both Bloomberg and the Financial Times reported that the Ghanaian Cedis was the worst performing currency in the world. Another unprecedented and monumental failure of John Mahama. This failure meant that the prices of goods and services were also going to quadruple and go out of the roof. The major reason why the costs of utility, petroleum products, spare parts, in fact almost everything is so unbearably high is the incompetent manner in which the economy is being managed.
Just the other day, a friend was suggesting that the name Zachues be conferred on the president. Lazy in his approach and unable to think outside the box, the president has resorted to taxing everything he sets his eyes on. Condoms, cutlass, Wellington boots, have not been spared. Heavy taxation has greatly reduced the peoples disposable income and targeted not only the profit but also the start up capital of business. Mahama must find money which ever way; tax the people or borrow money. This NDC government has borrowed money more than all other Ghanaian governments put together. At the beginning of their tenure, total debt of this country was 9.5 billion Cedis, today our debt stock is around 100 billion Cedis. For a population of 25 million people, it means everyone owes 1 million dollars or 4 million Cedis. Yes, you owe 1 million dollars, I owe 1 million dollars, your wife or girlfriend owes 1 million dollars, your husband or boyfriend owes 1 million dollars. We could have been living like Arabian shieks. But what has happened to all these monies? Shared amongst family and friends in the name of sole sourcing of over bloated contracts. Corruption, corruption, corruption. Recall the bus branding saga? In November 2015, the Ghana news agency reported that government built and commissioned a six unit classroom block in Kpone Katamanso at GHC 510,000. That same month, that same GNA reported that MTN built a similar, in fact a better equipped six unit classroom block in Upper West Akyem for GHC 170,000. You see what I am talking about?
Our country has been sent back several years, we have retrogressed. The NPP met a highly indebted and poor country in 2001, they left it a middle income country in 2008. The NDC met a middle income country in 2009, today, Ghana is according to official communication from the Workd Bank, a highly indebted and distressed country (HIDC).
So what is the plan? What can be done? The answer is obvious; press the reset button. That is what happens when machines malfunction. For us as a country our reset button is the ballot paper, we must change this inept, incompetent and corrupt John Mahama government.
In part two of this article I will talk to you about the alternative. I will once again introduce you to a man whose heart desire is to see a prosperous and Happy Ghana, a land of opportunities, jobs for the able and willing, a sound support system for those you need it, a buoyant health and educational sector and transformed agricultural sector that adds value to its raw products; Nana Addo Dankwa Akufo Addo.