Mahama’s 5,000 megawatts impossible – ACEP

Industry watchers are baffled at President Mahama’s insistence on achieving 5,000 megawatts of electricity supply by 2016, even as sector managers are struggling to keep available power plants running.

The country currently relies on about 1,600 megawatts of electricity, out of a possible 2,845 megawatts, due mainly to fuel supply challenges and maintenance and expansion issues.


That notwithstanding, Deputy Energy Minister in charge of Power, John Abu Jinapor, said, “We are committed to that [5,000megawatts by 2016] timeline,” in an interview with the B&FT.


“We have 2,845megawatts of installed capacity currently. We have some other projects that we are bringing onboard: the TiCO expansion [120 megawatts], the KTTP project [220 megawatts] and other private projects that we have commissioned; and so we are determined to ensure we bring that onboard. We are committed to that timeline,” the deputy minister said.


The president has been talking about making Ghana a net exporter of power; he said when he broke the grounds for the expansion of the Aboadze Thermal in April 2013 that the 5000megwatts by the set date was on course.


But the folk at the African Centre for Energy Policy (ACEP) disagree: the centre’s Senior Researcher, John Peter Amewu, said “It will be very difficult to say within the remaining period you’ll come out with two or three thousand megawatts of power. That is not achiefvable. It takes not less than three to four years to put up a power plant of even about 200 to 300 megawatts. If the Americans come and promise a thousand megawatts, it is just on paper. What do we have to show that we will have 5,000 megawatts by 2016?”


His reference to “Americans” is in regard to General Electric’s proposed 1000megawatt project in Ghana to be built within a seven-year period -- the first phase of which, involving some 240 to 360megawatts, is expected by 2016.

Even that depends on a number of things, including how quickly the parties hammer-out regulatory issues and a power purchase agreement with the Electricity Company of Ghana.


General Electric is particularly concerned about the credibility of the ECG as an off-taker, a company described by the World Bank in a 2013 report as “a large, top-heavy, over-centralised organisation with significant weaknesses in its management, corporate governance, and institutional culture that call for a profound change”.


In November 2013, Leslie Aruna Nelson, General Electric’s Country Manager, told the B&FT that: “The most important part of a project of this nature is to have a credible off-taker. In simple language, you have to make sure the person you are producing power for can pay”.


John Peter Amewu of ACEP believes that the regulatory environment is simply not attractive for Independent Power Producers (IPPs) because of “perceived unknown transmission and distribution losses”, and the fact that the PURC is not independent enough to assure IPPs of cost-reflective tariffs.


The World Bank’s report noted that: “ECG’s distribution losses are very high; they were 27% in the second quarter of 2012. ECG has to pay for lost energy it buys from VRA, but does not earn any revenue on it. Reducing these losses by 10% would save ECG US$85million per year”.


In an August 2013 sitting of the Public Accounts Committee of Parliament, Kwaku Agyeman Manu, Chairman of the Committee, said: “You cannot run an organisation like ECG with non-current assets running to the tune of about GH¢1.6million, current assets running to the tune of about GH¢946million, total assets of GH¢2.5billion -- and then you tell us in your profit and loss statement that at the end of the year your profit after tax is GH¢1million”.

Some have been calling for the distribution-end of the power supply chain to be opened up just as has been done for generation, so that Independent Power Distributors will relieve the ECG of its increasing burden. Another critical challenge that stands in the way of President Mahama’s 5,000 megawatts project is the nagging issue of fuel, Peter Amewu said.


“If you are committed to the 5,000 megawatts, where are you getting gas to power it? You don’t build a power plant without gas to power it,” he said.


While gas supply from Nigeria has been erratic, the country’s own gas project has been long in coming onboard, a factor that continues to make generation trail demand.


The country is said to spend about GH?7million on a daily basis to purchase light crude oil to power thermal plants, a figure that could be reduced by half if enough gas is available.


“So it is not just building the power plant. You need to do a lot along the value chain. I think he [President Mahama] has to go back and review it. It is just not achievable,” Peter Amewu said.