Commissioning Of The Ghana National Gas Company: Matters Arising - Epri

Due to the establishment of numerous thermal plants both at Aboadze and Tema Enclaves, and agreements to acquire a number of emergency power barges, it is becoming increasingly clear that the thermal generation share will eventually exceed hydropower very soon. Which is why the celebration that accompanied the recent official commissioning of the Ghana National Gas Company (GNGC) by most Ghanaians to provide lean gas to power the thermal plants was understandable.

The decreasing market share for hydropower in Ghana is primarily due to changing rainfall patterns. The Akosombo Dam, the biggest hydropower source, has a generation capacity of 1,020 megawatts (MW), but it is currently generating less than half. Kpone and Bui hydro dams are also not generating at full capacities. However, plans are far advanced to construct mini hydropower dams at Maham, Tarkwa-Breman, Nsuaem, Pwalugu and Juale to supplement the existing ones. This therefore, implies that substantial hydro generations will remain a significant power source by 2020 and beyond.

Clearly, harnessing natural gas has economic, environmental and health benefits to Ghanaians. Because of its environmental soundness and economic competitiveness, lean gas has been used by many countries as a transitional power source to minimise emissions of carbon dioxide. Among the fossil generation sources, gas is the cleanest fuel with minimal environmental effects.

GNGC is currently producing over 140 million standard cubic feet of gas daily (mmscfd) to power Aboadze thermal plants. Furthermore, GNGC provides about 180,000 metric tonnes, representing 70% of the total Liquefied Petroleum Gas (LPG) consumption of 240,000 to serve the Western, Central and Ashanti Regions. Undoubtedly, this will save the country huge sums of foreign exchange that would have been used for the importation of these products. Consequently, it is estimated that GNGC would help Ghana to save almost $500 million representing purchases of light crude oil (LCO) yearly. Furthermore, the gas infrastructure and its subsidiaries are expected to create over 5,000 of both direct and indirect jobs for unemployed Ghanaians.

EPRI was however, fretted about the president's announcement that the thermal generation share will increase up to 80% in the generation mix by 2020. This worry stems from erratic supply, projected deficit and price uncertainties associated with the gas market. Ghana is projected to have a gas supply deficit of over 300 mmscfd just in the same year. There is therefore little doubt that all our known potential sources cannot suffice our unquenchable appetite for gas. Hence, 80% thermal mainly from lean gas, diesel and light crude oil in the generation mix may be unsustainable and a policy anomaly.

If this is the Ministry of Power's policy underpinning, it therefore implies that the generation share of hydro, solar, clean coal and nuclear energy sources will altogether constitute only 20%. Imagine what would have happened to power generation in Ghana if Nigeria Gas (N-Gas) had gone ahead to curtail its gas supply to Ghana, or the country has inadequate funds to purchase LCO as it is usually the case. The tango between Ghana and Nigeria over the non-payment of the gas supplies should therefore serve the country some useful lessons going forward. Even though Ghana is desperately in search of solutions to the perennial load shedding, innovative and thought through policies should be considered in board room discussions.

Yes, the gas infrastructure is a remarkable milestone and may be a game changer in the power sector, but it should not be exaggerated to mean a remedy for the electricity deficit. The character of gas supplies through the West African Gas Pipeline (WAGP) and GNGC have not given us a reason for comfort. Therefore, most thermal plants have been converted to either utilise lean gas or light crude oil.

However, the frequent change over from gas to oil and vice versa always leads to technical glitches. Technical challenges, at the points of supply and utilisation, have remained a big obstacle associated with thermal generation. For instance, stripping of valves at GNGC and low pressure from N-Gas alone made the whole country to lose almost 600MW recently and nearly every part of Ghana went in darkness.

More so, it must be emphasised that all the companies in the power value chain are debt-ridden. The accumulated debts incurred by VRA from GNGC and N-Gas to the tune of $ 150 million and over $180 million respectively are frightening to say the least. On this backdrop, the financial position of the VRA has been very weak. The ballooning debts in the power sector are big threat and cannot guarantee the country a reliable, sustainable gas supply and subsequently electricity.

In view of the current development, to mimic the one sided generation, as was the case of hydropower between the 1960s and the late 1990s, is tantamount to policy retrogression. Reversed obsession on thermal power will be dangerous to the country's electricity security. EPRI therefore believes that diversification is one of the most effective solutions to the perennial power crises. Diversifying the country's portfolio of generation mix proportionally is an appropriate way of preventing the reoccurrence of the electricity crisis.

In recent years, Ghana had nearly gone into complete darkness, if our diversification policy did not include thermal power in the generation mix. The proportional generation mix of about 55.5% of hydropower and 44% of thermal have curtailed a near total blackout. These closest generation shares between hydro and thermal sources have saved what would have been a rather worst electricity crisis. Therefore, Ghana's generation mix should be well balance enough to avoid fixation on one or two sources.

A fuel source that can augment the gas from GNGC and N-Gas is Liquefied Natural Gas (LNG). It is a relevant source because it is much less expensive than the cost of light crude oil. Stakeholders should therefore locate LNG markets elsewhere to bridge the possible supply deficit. In this context, the government's commitment should be translated into the gas master plan aims at overcoming the deficit. The gas master plan is an innovative strategy to exert all efforts to ensure constant availability of gas in the country. Having substantial gas and oil in the power generation mix is a positive step, but it will be a policy anomaly if the sufficient supply is not guaranteed.

Optimal generation mix should be adopted to complement one another in such a way as to mitigate the risk of future load shedding. Any country that wants to secure affordable and regular supply of electricity does not invest heavily into a single energy source. Other generation targets that have been formulated by the government from different power sources should also be strictly pursued with alacrity. It is imperative for the government at this moment to cast its net wider in dealing with the starving national grid.

Another thermal source that the Minister of Power, Dr. Kwabena Donkoh, advocates for is the use of "clean coal technology". Therefore, it is EPRI's hope that he gives it his fullest support in order to reduce our high dependence on lean gas or light crude oil. The proposed 2,000MW of clean coal power plant by Shenzhen Energy Group with an initial construction of 700MW at Otuam, Central Region which is expected to be completed in 2019, should the needed impetus by all the stakeholders be given. The inclusion of the clean coal power in the generation mix could probably accelerate Ghana's current electricity penetration from 76% to over 80% by 2020 as projected by the ministry.

New technologies such as "Carbon Capture and Sequestration" and "desulfurisation" have been evolved through painstaking research to improve its environmental efficiency. Hence, many countries include the utilisation of coal power in their generation mix and Ghana should not be an exception. Countries such as South Africa (93%), Poland (87%), China (79%) and Australia (78%) still have significant generation from coal power. In fact, about half of global electricity generation is from coal. The Government of Ghana therefore needs to have a deliberate policy to promote a reasonable per cent of "clean coal" power into the total electricity requirements.

Ghana as a tropical country, where solar capacity abounds, has no reason to ignore its potential. Apart from hydropower, the government has set a renewable power generation target of 10% achievable by 2020. So far Volta River Authority (VRA) has established 2MW at Navrongo. It has embarked on another ambitious plan to construct 12MW of solar power at Jirapa to be funded by a $22.8 million grant facility from Germany. The potentials of winds and biomass could also be harnessed into the generation mix as supplements.

The potential of nuclear power remains one of the cheapest but untapped source by successive governments following the ousting of Dr. Kwame Nkrumah from office. As a result of its low cost, it has become an indispensable power source for electricity generation in many countries. However, its reactors, safety, waste management and proliferation of nuclear weapons have been major concerns globally. Ghana has long way to go in her quest to introduce nuclear power in the generation mix but a step in every important endeavour is crucial.

Every source of power has its own prospects and challenges in terms of environmental soundness, security of supply and economic efficiency. Therefore, a combination of different power sources could deliver stable, low-cost electricity for accelerated economic growth. It is critical that policy interventions should include other sources proportionally to supplement the existing ones. Stakeholders in the value chain should therefore endeavour to exert all their efforts to ensure that a lopsided thermal generation is avoided. EPRI therefore suggests that Ghana's relative reliance on the generation mix should be proportional to thermal, hydropower, "clean coal", nuclear and renewable energy sources.

Furthermore, EPRI implores GNGC to take safety standards and maintenance culture seriously to ensure that nothing untoward happens at operation sites. Strict security measures should be observed to prevent unwanted elements from sabotaging its smooth operations. The Risk, Health and Safety Department should be well equipped to execute its mandate. It is therefore to be commended the commissioning of four helicopters by the president in conjunction with the GNGC to monitor and provide security for this national asset.

Mustapha Iddrisu
Energy Policy Analyst
Energy Policy & Research Institute(EPRI)