How Ghana's Economic Turnaround Is Threatened

Falling Water Level Stunts Hydro Power; More Energy Needed

AKOSOMBO, Ghana -- Just as its economy is picking up steam, Ghana is finding its growth stunted by a force beyond its control: climate change.

Rainfall in the West African country has declined so sharply in recent years that the water level behind the 41-year-old Akosombo Dam, long the country's main power source, is now at a record low, forcing the government to ration power and companies to invest in costly diesel generators. Economists estimate the water-and-power shortage could slash as much as two percentage points off Ghana's economic growth this year.


"Definitely there are climatic changes affecting our part of the world," says the Rev. Ishmael Gansah, deputy chief executive of the Volta River Authority, a governmental body that runs the dam and its reservoir, Volta Lake. "Predictions are that our part of the world will get drier."


Many scientists suspect that global warming is responsible for decreased rainfall in areas as far-flung as Australia, Algeria, Mali and the American Southwest. The World Bank estimates that global warming is a major reason rainfall in the Niger River Basin to the east of here has fallen by 15% since the early 1970s, and officials at the international development agency suspect the effect has been similar here in the Volta River Basin, which includes parts of Ghana, Benin, Burkina Faso, Ivory Coast, Mali and Togo.


Ghana's experience illustrates how changing weather patterns can have a direct -- and severe -- impact on critical parts of an economy. The water level at the Akosombo Dam is at 235 feet, 41 feet below the dam's high-water mark. Engineers have had to shut down four of the hydroelectric plant's six turbines because the water doesn't come up high enough to run them. The spillways, used to empty excess water in times of surplus, are completely above the lake surface.


In the 1980s, the dam accounted for 100% of the country's power. Now it supplies closer to 60%. While the country has brought two oil-fired generating plants on line in recent years, that hasn't been sufficient to make up for Akosombo's diminishing returns. And Ghana hasn't moved quickly to find alternative sources of electricity to relieve the pressure on Akosombo, according to economists.


"From where we stand as a nation, I think we could have done better in terms of planning ahead and making alternative sources of energy available," says Daniel Tetteh, head of research for Databank Financial Services Group, an Accra investment bank and brokerage firm.

Officials say they will bring emergency generators on line and hope a long-dormant plan to add a Chinese-financed dam on the Black Volta River, upstream from Akosombo, will become a reality within a few years. It isn't clear, however, what effect that project would have on water levels in Volta Lake, especially during the long period during which the upstream dam, the Bui, would be closed to allow its reservoir to fill.


Burkina Faso has already put a hydropower plant upstream from Akosombo, which analysts believe may be contributing to the low water in Volta Lake.


Not all scientists blame global warming for the dry weather here. Chris Gordon, senior fellow at the Volta Basin Research Center at the University of Ghana, says he believes global warming is occurring, but doesn't know whether the basin is being affected by that or by the dry phase of an extended weather cycle.


"For the past 25 years, we have gone through a dry spell," Prof. Gordon says. "On a global timescale, it's nothing, the wingbeat of a hummingbird. But on the scale we live in, it's important."


Whatever the cause of the dryness, the potential impact could be devastating. Ghana "may have to shut down the whole hydro operation and switch to thermal energy, which they don't have," says John Mason, executive director of the Nature Conservation Research Center in Accra. He says excessive use and poor management are in part to blame for the dismal state of the Volta reservoir.


The Volta River Authority began rationing power a year ago and increased the power cuts this year after a disappointing rainy season. The authority publishes a rotation of 12-hour outages in the newspapers. "You don't have an option," says Rev. Gansah.

Databank estimates that the outages are forcing companies to spend $62 million a month, or about $744 million a year, on extra power generation, or about 6% of the country's entire economic output. Databank forecasts the power shortage will cut 2007 economic growth from 6.5% to between 4% and 5%.


"Power rationing is taking its toll on industry," says Tony Oteng-Gyasi, president of the Association of Ghana Industries, which counts 1,200 member companies.


Among those hard-hit is Unilever's Unilever Ghana Ltd.'s plant in the industrial town of Tema. The factory produces margarine, oils, laundry detergent, hand soap and other consumer goods. When the power rationing began, the authorities gave Unilever a choice: Either the factory could voluntarily cut power consumption by 25%, or adhere to the schedule of rotating power cuts.


Unilever chose the first track, but had to purchase diesel generators to make up for the lost electricity from the power grid. In the meantime, turning parts of the grid on and off so frequently has itself made the power system less reliable, above and beyond the planned cuts.


"The systems keep breaking down," says Richard Nkrumah, Unilever's chief engineer.