Let There Be Light: Why Ghana has been Battling with Power Outages of Late
For the past few weeks, Ghanaian homes and businesses have been battling with the menace of “dumsor”: sporadic, prolonged and unexplained power outages across the country. Last week, likely sensing mounting frustration, the government broke its silence over ‘light off’, with Ghana Gas announcing that engineering work is over and lights will be turned on.
· Over a week ago, the Atuabo processing plant operated by Ghana Gas in the Western Region was turned off and was forecast to remain out of action for 12 days according to Ben Asante, CEO of Ghana Gas, to allow for phase 1 of engineering works. However, two days ahead of schedule, the plant is back on. Phase 2 will be carried out in July/August 2019 which will likely spell more power outages.
· The engineering works when complete (both phases) will result in the pipelines from the West Africa Gas Pipeline (WAGP) being ‘tied in’ to the pipelines of Ghana Gas’s Atuabo processing plant. This should enable gas which lands in the west of the country to be diverted to the east (Tema), to power the thermal plants stationed there.
· It is estimated that Ghana will save USD300 million/year from the engineering works.[1]
Situation Report
Ghana’s installed capacity for electricity generation stood at 4,398.5mw at the end of 2017 and the majority of ‘on grid’ electricity to power its homes and businesses, is supplied by two sources: thermal and hydro (59.9% and 39%, respectively)[2]. Solar’s contribution is meagre, at just 0.2%[3]although government plans to increase the contribution of renewable energy to 10% of the entire energy mix by 2030.
Most of the gas that fuels the power plants comes from Ghana Gas’s Atuabo processing plant (73%) in the Western Region, with the remainder coming from Nigeria via the WAGP (17%)[4]. Thus, it is clear as to why a shut-down of Atuabo had such wide-reaching ramifications. Energy Minister John Peter Amewu said that, owing to maintenance works that were carried out on the Atuabo plant[5], seven regions of the country would experience twelve days of outages for around ten hours per day.
While the Deputy Energy Minister William Owuraku Aidoo apologised for the disruption, he hinted that the move will be beneficial in the long run. This is because the engineering works when complete later in the year will mean less of a reliance on Nigerian gas through the WAGP (which has notoriously been unreliable) and more of a reliance on domestic gas from the oilfields located in the Western Region. Mr Owusu Bempah, Head of Communications at Ghana Gas says that this ‘tie in’ engineering works will mean that 350 cubic feet of gas will now be available to pass through the pipeline in the west and to the thermal plants in the east, in Tema, if ever there’s a shortfall from the WAGP.[6]
But Ben Boakye, head of the Africa Centre for Energy Policy (ACEP) where Amewu was a policy analyst for close to a decade, doesn’t buy this. He claims that a return to dumsor was the result of financial mismanagement by government, in its inability to honour its contractual obligations to pay the Karpower barge, which relies on heavy fuel oil (HFO). The latter has a capacity to produce 450mw, yet only 180mw is being produced, because of government’s reneging on supplying HFO, ACEP attests. The argument that government is cash-strapped was echoed to us by an employee of one of the independent power producers, who shared with us that: “the debts owed to us by VRA & GRIDCO are no small matter, there is simply no capital in the system.” Yet the government refuted this, with Tema Oil Refinery CEO, Isaac Osei, sharing that there is ample stock of fuel for the power plants.[7]
Meanwhile, the government is intent on switching over from liquid fuel to gas for power generation as a cheaper way of keeping the lights turned on. However, even if this policy objective is achieved, Ghana could still be saddled with a power issue. Former CEO of Ghana National Petroleum Commission (GNPC) Alex Mould says that the problem lies with the “credibility of the players in the industry and creditworthiness”. This chimes with what Yao Graham, Coordinator of Third Sector Network alluded to, when he claimed that the ECG was “forced by political pressure to sign agreements with power producers.”[8]
Outlook
For homes and businesses, not being able to plan for dumsor is a close second to not having the power in the first place. The Power Distribution Service (PDS) issued a schedule and pressure will be on for the PDS to do the same for the next phase of engineering works planned for later this year; as domestic industries and homes will be forced to dig deep to cover the extra cost of alternative power supplies or lost time.
Less of a reliance on Nigeria for gas will be welcome for Ghana, given the historical knock-on effects of shut downs caused by sabotage or else to the pipelines in Nigeria. But at the same time, the removal of the ‘Nigeria-WAGP smokescreen’ will expose any Ghanaian government lapses and may put the spotlight on the IPPs themselves, their ability to deliver and indeed, the nature of the power purchase agreements which were signed in the first place.
Government’s policy of switching from fuel to gas as a cheaper alternative makes economic sense; in addition to not wasting the gas that is produced domestically. Indeed, the operationalisation of the pipeline from the west to the east of the country will make use of the gas glut in the Western Region from the Jubilee, TEN and Sankofa oilfields, which should reduce the practice of flaring.
If you are interested in learning more with us through an expert roundtable or an in-depth report, please do get in touch: lg.togobo@songhaiadvisory.com