Energy Sector Needs $10 billion

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April 22, 2009

TEN billion dollars is required in the next five years to finance the numerous initiatives in the energy sector, the Energy Minister, Dr Joe Oteng-Adjei, has disclosed.
According to him, oil and gas alone would need about $ 5.5 billion.
He said while the government would continue to inject funds into the sector when available, a major policy shift was to encourage energy sector institutions to raise a substantial portion of their capital investment requirements on their own without recourse to the government.
“Government has, therefore, requested the sector agencies, particularly Volta River Authority (VRA), Ghana Grid Company (GRIDCO), Electricity Company of Ghana (ECG) and the Tema Oil Refinery (TOR) to raise financing from commercial loans and other private sector financing arrangements on their balances. The Ministry of Finance will provide technical support to the agencies,” Dr Oteng-Adjei said.
He was speaking at a meet-the-press encounter in Accra yesterday to present the ministry’s “Energy for Growth-Vision and Agenda”.
He said the involvement of the ministry in the development and management of the energy sector would be guided by the virtues of transparency in all dealings, transaction and commitment to job creation and local content in all energy endeavours and environmental responsiveness in all activities in the sector.
The ministry, he said, was committed to an open-door policy regarding information dissemination and that it intended to institute bi-monthly briefing sessions with the press and the public as much as possible.
Dr Oteng-Adjei noted that the vision of the energy sector was to assure universal access and choice of modern energy forms to all Ghanaians, which was intended to be achieved by 2020.
He said the ministry also envisioned a sector that would contribute significantly to national revenue and economic growth by becoming a net exporter of oil and power by 2012 and 2013.
He said at the inception of the new government in January, the installed operational power generation capacity in the country was 1,810 megawatts, adding that the Emergency Diesel Power Units that were purchased by the previous government were largely unused owing to high cost of operation.
“As we speak, the total installed operational capacity has increased to 1,925 MW from 1,810 owing largely to the completion and commercial operation of the 126 MW Tema Thermal One Power Project [inaugurated] in February, 2009,” he said.
Dr Oteng-Adjei indicated that during the power crisis in 2006/2007, the government procured 126 MW, consisting of 125 small (0.8 kVA and 1.2 kVA) diesel units that were part of the emergency power project, pointing out that “all these units will be made operational and distributed to serve as back-up to the national supply system”.
That, according to him, would bring the total system installed capacity to 2,051 MW, adding that 50 MW of this would be ceded to the VRA to be located in Tema, Kumasi, and Tamale as strategic reserves while the rest would be distributed to strategic state institutions such as hospitals, schools, universities, the military and the police as standby generation.
The objective of the government, he said, was to achieve a target of 5,000 MW of installed power generation capacity in the medium term as that level of capacity would enable the country to supply adequate power to meet growth in national electricity demand and also for export to neighbouring countries.
Dr Oteng-Adjei said although the establishment of GRIDCO had opened a new phase in the power sector, the company required a capital investment of about $500 million over the next five years to reinforce and expand the transmission system, including the building of new bulk supply points in Accra, Kumasi and other sub-stations in the country.
The ECG, he said, required about $1 billion up to 2012 to continue to upgrade and expand the distribution network to improve reliability of supply and also to increase access in the peri-urban areas and rural communities.
“A number of infrastructural development projects to improve supply are being undertaken with multi-donor funding from the Ghana Energy Development and Access Project (GEDAP), the World Bank as well as the French, Swiss and Norwegian governments.
“Contracts under these funding schemes have been awarded and we expect that before the end of the year, all these projects would be completed and electricity supply reliability will improve significantly,” he added.
Dr Oteng-Adjei said in addition to the technical improvement, a number of initiatives were being implemented in order to improve ECG’s customer care, which include the opening of 10 customer service centres in the 10 regions and extension of the ECG Call Centre with the call contact line to all regions.
The call centre, he said, was to enable customers to report faults, complain about a service, make enquiries or give information for prompt attention.
He announced that the government had initiated a programme to install Grid-connected PV solar systems in public institutions, especially ministries, departments and agencies, saying that the government had secured $169 million under GEDAP to improve distribution infrastructure while the US EXIM Bank had granted the government a $350 million loan facility to extend electricity to rural communities.
Dr Oteng-Adjei said $300 million would be invested in the Tema Oil Refinery (TOR) to increase its refinery capacity by about 100,000 barrels per day from its current level of 45,000.
In addition, the minister said about $685.3 million would be injected into the operations of the Bulk Oil Storage and Transportation Company Limited (BOST) in the medium period up to 2015 to improve bulk transportation of petroleum products to the northern parts of the country.
“Government is fully aware of the many challenges associated with the distribution of premix to its esteemed customers. We are reviewing the rules and regulations associated with the administration of premix,” he said, adding that the government would continue to encourage the development of bio-fuels as alternative transportation fuels.
He said the government was taking immediate steps to ensure the speedy refurbishment and operation of the Osagyefo Power Barge Plant, which had an installed capacity of 125 MW.