Business News of 2014-05-05

Sunon Asogli to operate zero discharge 700MW coal plant

The management of Sunon Asogli Power Company at Kpone has explained that it will employ environmentally friendly production methods in the design and operation of its coal-powered plant to produce 700 megawatts of power for Ghana.

The Chairman of the private power company, Mr Li Xiaohai, told the Daily Graphic that having successfully delivered a 200-megawatt plant at Kpone, near Tema, the next phase must involve the installation of bigger machines which were efficient and cost effective, hence the decision to use a coal plant.

He said the plant would be designed using the more environmentally friendly European emission standards, which had zero discharge.

“In power generation, bigger machines deliver power more efficiently and this will be the way forward for the company,” he said.

Sunon Asogli, owned by the Shenzhan Energy Group Ltd, with the China Africa Development Fund owning 40 per cent stake, has already made presentations to the government on the viability of the project and hopes to start immediately after feasibility studies are completed.

The company estimates the project, which would be in two phases of installing 350 megawatts each, to cost $1.5 billion and should be delivered within 36 months, once construction starts.

The company has also chosen to site the coal plant in Takoradi, where it would also build a coal intake terminal at the port.

Background

Shenzhan Energy Group, which comes from the China’s Shenzhan region, is experienced in gas, coal and renewable power generation.

It was incorporated around 1989, at the time that the Shenzhan region was undergoing massive development and economic transformation and needed more power generation to spur industrialisation and growth.

Over the last 30 years, the Shenzhan region has grown from a population of 50,000 people, mostly fisher folk, to an industrial area with 40 million people.

Mr Li said although the coal would be imported from South Africa to power the plant, pre-feasibility studies had shown that it would be cheaper than gas and that supply reliability of the input (coal) was highly guaranteed.

Coal plant

Although Ghana has found gas in commercial quantities in its oil fields, experts say the deposits are not enough to generate enough electricity to meet Ghana’s growing demand.

More than 50 per cent of world generation of power run on coal. China imports coal to generate about 60 per cent of its power needs.

Managers of Sunon Asogli see coal plants as a credible alternative for reducing the country’s generation deficit.

The crisis

The construction of the Sunon Asogli gas powered plant began in April 2008 and completed in December 2009. As per arrangements with the government, natural gas was expected in 2007, but it was never ready until August 2010. The plant started commercial operations at the end of that month.

Barely a year after operations, however, crisis hit the plant when gas supply ceased due to damage to the pipelines transmitting gas from Nigeria. This caused the plant to shut down for almost a year. Earlier this year, the West African Gas Pipeline once again cut the pressure in the system.

In spite of the challenges, Mr Li said the company had kept faith with the economy and continued to fire the 200-megawatt plant, which is running near full capacity.

“Putting in such high investment only for it to lie idle certainly pushes our risk high. But even in such hard times, we continue to operate, especially in our belief that power was key to economic development. This is why we have always wanted to do more in Ghana,” chairman of the Sunon Asogli said.

He, however, rejected suggestions that the company would take on the government to recover losses it incurred as a result of its temporary shut down when gas from Nigeria did not come.

The chairman of Sunon Asogli company said if anything at all, its action would be directed at the West African Gas Pipeline which had a contractual agreement with the country and not the government of Ghana which did not have anything physically or notionally to do with the cut in gas supply to its plant.