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Ghana’s power sector to earn $419m in 2014 – Frost & Sullivan

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The Akosombo Dam

Ghana’s electricity sector earned revenues of $287 million in 2007 and it is estimated to reach $419 million by 2014, Frost & Sullivan has said.

According to the organization which describes itself as the Growth Partnership Company, the deregulation of the power sector in Ghana offers lucrative opportunities for interested investors.

It said in a press release Monday July 13, 2009 that the robust demand for power in Ghana is leading to power shortages and placing enormous pressure on existing power generation facilities.

The company added that in response to the shortages the Ghana government has opened up the industry to the private sector to support investments in new generation facilities.

The release quoting electricity industry analyst of Frost & Sullivan, Jeannot Boussougouth said, “the booming mining and smelting industry in Ghana is driving the demand for more power. By 2014, the country will require an additional electricity generation capacity of 2000MW to meet growing power requirements.”

It noted that the government of Ghana has embarked on a number of significant initiatives to build a reliable power sector to sustain the country’s growing economy. The power sector has been unbundled to create an environment conducive for private sector investment.

“The private sector is being encouraged to diversify into thermal power and enter into power purchase agreements directly with bulk power end users such as mining companies. This deregulation of the energy market will result in cost-reflective tariffs and higher returns on investment for private investors,” Boussougouth said.

The release stated that over four independent power producers (IPPs) are already at different stages of power plant construction in Ghana. Approximately 1600MW of additional generation capacity is already under construction and is expected online in the short-to-medium term future.

It however added that the prevailing low tariffs are an important restraint to the growth of the power sector since it discourages major investment from IPPs. Moreover, the government’s existing hydropower plants are now old and characterised by frequent breakdowns and low availability, resulting in severe power shortages.

According to Boussougouth, “the current tariff regime is heavily influenced by hydropower and is not attractive to IPPs that are generating power from expensive imported oil.”

He therefore advised IPP’s interested in investing in the power sector in Ghana to look for “sources of cheaper fuel to cushion themselves from the prevailing low tariff.”

Ghana’s main electricity power source, the Akosombo Dam has a total Plant capacity of 1020 megawatts.

The country has constructed a 330 megawatts thermal plant in Takoradi to supplement its power supply needs.

A 560 megawatts Sunon Asogli Power is under construction. The first phase of 200 megawatts has been completed.

There is an ongoing project to build another 400 MW hydropower plant at the Bui dam in the Brong Ahafo region.

By Emmanuel K. Dogbevi

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