Tag Archives: VRA

Solving “Dumsor” for Real: A Simplified Narrative

There are 8 thermal power plants in Ghana which can generate electricity from gas and, in the absence of gas, from light crude oil or diesel. If properly serviced and fueled, these plants can contribute 1300 MW steadily to our national grid (the government-owned hydro plants can add roughly 700 MW even at low capacity such as right now) and more or less help meet current demand. Nearly half of this thermal power is generated by fully private owned entities or private sector-led joint ventures with government.

Apart from the Government’s own VRA, and the SSNIT-owned CENIT, there are two other very critical players. These are private investors in the Ghanaian electricity sector, TAQA and Sunon Asogli, who between them contribute more than 500 MW of the 1300 MW mentioned above.

TAQA and Sunon Asogli raised the more than $500 million needed for these investments from overseas funds, among them the FMO, AFD, OPEC Fund, IFC, China-African Development Fund, and other really credible Development Finance Institutions (DFIs). Both companies, as well as others such as Cenpower, have been in the market for a while now justifying to investors why another $1 billion is needed to add 1000 MW of power to the Ghanaian grid as soon as possible.

An additional 1000 MW of power will more or less replace the highly unreliable hydro segment of our current electricity generation mix. Needless to say, that will *indeed* end dumsor, and even create a surplus for export (at least 700 MW from the three main hydro plants). Sunon Asogli has been working on this for 4 years now, and TAQA for 2 years. CENPOWER has been chasing funds for about a decade.

One major reason why raising funds to pay for this fairly credible prospect of 1000 MW of fresh power is the fact that a good chunk of the 1300 MW power that is *already* available to be delivered to homes and workplaces in Ghana doesn’t get paid for on time. In fact, the government-owned company that buys virtually all this power, ECG, owes the producers about $500m. This leads to lack of fuel and other inputs, and poor servicing, which in turn reduces how much in practice gets generated on a day to day basis. Consequently, it takes a lot to convince investors to put up the necessary cash when existing players are owed so much money.

This is the simplified context of the current power crisis. If you were the government, what would you do? Wouldn’t you, in your search for solutions, call the 4 main players in the sector – VRA, TAQA, Sunon Asogli, and CENIT – and give them even half the concessions currently being promised the likes of Ameri Energy and Karpower to encourage them to:

A. Produce at full capacity, and thereby reduce the average shortfall accounting for the worst of the load-shedding from about 600MW to about 250 MW?

B. Add an additional 300 MW in output, just like TAQA added 110MW to the Takoradi T2 plant within a year based on revamped terms with the government?

Why would you go and engage a whole set of new characters with dubious track records in supplying energy and pay through the nose for this ’emergency’ power that takes as long as ‘routine’ power to come on-stream?

AND WHY WOULD YOU COMMIT $1.5 BILLION OF OUR SCARCE RESOURCES OVER 5 YEARS TO GENERATE 600 MW YEARLY when with 20% of that amount you can spur the private sector to GENERATE 1000 MW?

CREDIT:   Bright Simons

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