China to fund 700MW VRA coal plant

The China-Africa Development Fund (CADFund) is to provide about US$1.5billion long-term loan for the construction of two 350MW coal-fired plant to meet future power demand.

The coal power project to be undertaken by the Volta River Authority (VRA) and its Chinese partners, Shenzhen Energy Group Co. Ltd. of China (SEC), is to be sited at Aboano in the Ekumfi district of the Central Region.

This represents the first phase of developing coal plants by the largest power producer, as it seeks to strengthen the country’s base load and forestall any future shortage of power when existing plants are due for mandatory maintenance.

The plant is to be further expanded either by a 4×350MW (or 2×600MW) supercritical coal-fired generating units in the future as demand is expected to continue increasing.

Current demand for the country currently stands at about 2,225MW and this is expected to hit 7,000MW by 2030.

VRA and SEC, after a successful prefeasibility study and design of the plant, have since served scoping notice to allow individuals, groups and organisations with special interest, concerns and expert knowledge on the environmental impact to furnish the Environmental Protection Agency (EPA), VRA and SEC with it.

The country was plunged into two years of erratic power supply brought on by poor water inflow into the Akosombo Lake for hydro -ower generation by the 1,020 MW-Akosombo Generating Station. This was compounded by the unavailability of gas from Nigeria via the West African Gas Pipeline and challenges with continuous availability of indigenous gas, which forced the hand of power distributors to ration power.

Government working with power producers and the Ghana National Petroleum Corporation (GNPC) has since secured two emergency power barges to generate about 500MW of thermal power to remedy the power crisis that led to collapse of many businesses.

The main challenge for power companies over the years has been their inability to cover their cost of operation -- given the rather low tariffs and subsiding of power by successive governments. The subsidies were not paid to the power producers, leading to huge debts.

Government this year imposed an Energy Sector Levy to generate enough revenue to pay off the legacy debts of power companies

President John Dramani Mahama, in his State of the Nation address, apologised for any hardship that imposition of the Levy might have caused Ghanaians; but justified it as an imperative action needed to solve the energy sector challenges permanently.

“I deeply regret any hardship the Energy Sector Levy may have caused; but if we are to fix our energy sector challenges permanently, then this decision was absolutely imperative. It was the only option available after all others had been evaluated,” he said.

President Mahama said: “All these gains will be undermined if the issue of financial viability for our utility companies is not addressed. For nearly two decades now, our power sector companies have piled on debts that have severely impeded their ability to perform at the optimal level. It is a mark of their resilience and commitment to the national cause that they have survived till this day. Together, the Volta River Authority (VRA), Ghana Grid Company Limited (GRIDCo) and Electricity Company of Ghana (ECG) owe a colossal amount of billions of cedis”.