Page two

Continued....

PARLIAMENTARY STATEMENT BY MINISTER OF ENERGY
HONOURABLE JOSEPH KOFI ADDA (MP), ON THE CURRENT ENERGY SITUATION IN GHANA


MEDIUM AND LONG TERM PROJECTS

Mr. Speaker, in order to ensure that adequate generation capacity is available to meet the medium term requirements of the country, the Ministry of Energy is in the process of procuring additional power plants to be installed in the next 12 –18 months. This forms part of the plan to have an installed capacity of over 3,000 MW by 2010. This programme will result in a substantial increase from the current installed capacity of 1,730 MW.

Mr. Speaker, the objective of the medium term programme is to develop sufficient generation reserves to ensure that the country does not go through this experience again in the future. The projects currently being implemented by the Ministry of Energy are: 220 MW power plant procured from ALSTOM of Switzerland . This plant is expected to be operational by September, 2008. The plant will be converted into a 330 MW combined cycle plant in the future.

Again there is a 84 MW power plant procured from Ranhill of Malaysia. This is expected to be operational in July, 2008. Operationalisation of the 125 MW Osagefo Barge in 2008/9

The implementation of the 400 MW Bui hydroelectric power plant. Construction work is expected to commence in the 3rd quarter of 2007 and is scheduled for completion in 2011/2012.
The addition of 110 MW to convert the Takoradi International Company (TICo) plant to a Combine Cycle plant in 2009.

GENERATION BY INDEPENDENT POWER PRODUCERS (IPP's)

Mr. Speaker, Members of this august house, the Ministry of Energy is implementing a policy to allow Independent Power Producers (IPPs) to develop and operate power plants in the country. The objective is to allow the private sector to support part of the investment requirements of the power generation sector. This will enable the Government deploy the resources that would otherwise have been used for power generation for other sectors such as health, education, road etc.
Mr. Speaker, in order to facilitate the entry of the IPPs, a new company, the Ghana Grid Company has been set up to be responsible for the operation of the transmission sector which hitherto was the responsibility of the VRA.
Further, Mr. Speaker, the Ministry of Energy has received proposals from a number of IPPs who are in the process of establishing power plants in Ghana . These are:

* CenPower - 300 MW
* Shenzhen group - 200 MW (PPA with ECG)
* GECAD - up to 300 MW
* Ranhill Consortium - up to 300 MW
* Brazilian Consortium up to 300 MW
* Ranhill of Malaysia - up to 300 MW

The Ministry of Energy is facilitating the development of these projects.

WASTE TO ENERGY POWER PLANT

Mr. Speaker, construction work has recently started on the first waste to energy plant in Kumasi . This will produce up to 50 MW of electricity from the combustion of municipal waster collected in the Kumasi metroplis. The project is planned for completion in 2008.

IMPROVEMENT IN THE POWER DISTRIBUTION SYSTEM

Mr. Speaker, as part of the arrangements to improve the delivery of power to consumers, the Government has made an allocation of 300 billion cedis in the 2007 Budet to Electricity Company of Ghana (ECG) to support critically needed investments in the power distribution sector. These projects when completed will result in a significant improvement in the operations of the ECG.

The sector has also been allocated US$ 172 million in the 2007 budget to enable them carry out other improvements required in the power system.

OTHER RELATED ISSUES

Mr. Speaker, with your kind permission, I wish to turn my attention to some major issues that have been debated in the public domain in recent times so as to give my honourable colleagues and the general public a sense of the government’s position on them or the status of development in those areas.

· Investment in the Energy Sector

Mr. Speaker, it is been said in certain circles that this Government has not invested substantially to augment generation capacity in the country. The context within which this is said should always take into consideration how President Kufuor’s administration started its tenure. Any objective analyst would not fail to appreciate the fact that a country heavily burdened in debt, would be severely constrianed in terms of making significant investments in all areas of the economy at the same time within a comparatively short in office. Mr. Speaker, it was not too long ago when as a nation we adopted the HIPC initiative because of huge debts that hung on our necks at the time. Manifestly, at the outset, the New Patriotic Party’s administration faced these serious investment constraints.
Mr. Speakers, had it not been for the prudent and pragmatic decision by His Excellency President John Agyekum Kufuor to take the HIPC path, we probably would not be having the benefits of multi donor debt relief today to be able to acquire some of the generating plants that we are procuring now.
Mr. Speaker, that not withstanding, one can list the completion of retrofitting that added 108 MW to Akosombo, the investment in the West African Gas Pipeline that is now attracting IPP investors in the energy sector. The ability of this government to pay demurrage and invest in the pond construction as well as other related costs to facilitate the bringing down of the Osagyefo Barge which had been rotting away in Italy, as well as the Performance Enhancement of the Takoradi Termal 1 Power Station are also other examples of financial outlays by the NPP administration led by His Excellence President Kufuor.
Mr. Speaker, to conclude on the investment issue, let me state that we just got out of HIPC, we are now getting our debts cancelled. We are barely two years into this chapter of debt cancellation and my appeal is that Ghanaians should exercie a little bit of patience. Before long, the fruits of the NPP government’s endeavours will become crystal clear.

· VALCO

Mr. Speaker, a lot has been said about VALCO and the view of some seems to be that we should not own that vital asset or that we should not give Ghanaians jobs.

Mr. Speaker while others may have the right to their own views let me remind this Honourable House that during the two previous load shedding programmes I referred to in the eighties and nineties, VALCO was out of commission before the programmes started. This means that the situation then would have been worse off than it is now if VALCO was running at these various times. In our time, we bought back VALCO, put people to work and sold products globally. In mu view the power was well used. It is unfortunate that VALCO had to be shut down. In any case Mr Speaker, I am glad to announce that VALCO is exploring its dedicated source of power to enable it resume operations and that the government of the NPP would assist it so that we can get Ghanaians employed and run the asset to our benefit as a nation.

· West Africa Gas Pipeline Project

Mr. Speaker, the Government of the New Patriotic Party has dedicated US$118 million of investible funds into this project to help increase generation capacity due to the relatively lower cost of gas as opposed to other fuels. This project will definitely add on to the generating capacity of the country.

Mr. Speaker, the laying of the pipelines as well as the cross-shoring pipes work have been completed and the metering and regulating stations would be ready soon. The necessary regulatory instruments to facilitate operationlization of the secondary gas market are at the Cabinet stage and should be coming to this august House soon. It is expected within the next three to four months that the first uncompressed flow of the gas would occur, with the compressed gas to follow soon thereafter.

· TICO Expansion Project

Mr. Speaker, it is a fact that if the TICO expansion were undertaken, we would have an addition 110 MW through the combined cycle machanism. However, the Government did not consider the cost presented by our then partners as acceptable. Simply put, we did not thank it wise to pay US$110 million for 220 MW and now have to pay US$215 million for only 110 MW. The delay resulted from our search for acceptable financing to carry out this expansion. We were also of the viewthat we would be paying for a project that would raise the value of the asset only for it to be sold a premium by our partners. Today, we are vindicated as our partners did not regard even the soverignty of our country when they sold their stake to TAQA, an Abu Dhabi Company without offering us the first right of refusal. The matter has been taken up seriously and every effort would be made to ensure that we are not only treated fairly but that we would get our due share and still get additional generation capacity from the venture. As I speak, Mr. Speaker, there are plans to even expand this to 1,000 MW.

· Osagyefo Barge

Mr. Speaker, the much advertised movement of the Barge to Tema has not taken place because we missed the weather window last year due to prolonged negotiation to get reasonable funding for that move. As we speak, a number of companies have expressed interest in operating the barge where it is and we are in negotiations with them and hope this would happen in the course of the year.

· Nigeria

Mr. Speaker, the President, His Excellency, J.A. Kufuor, requested the Government of Nigeria in February, 2007, to supply up to 80 MW to Tog/Benin. This request was within the framework of the West African Power Pool (WAPP). The objective was for Ghana to “claw back” 80 MW which it contractually supplied to Togo/Benin.

Mr. Speaker, this arrangement has been fulfilled and Nigeria currently supplies Togo/Benin with 70-80 MW of electricity. The VAR has consequently reduced its power supplies to Togo/Benin thereby making more power available to Ghanaians.

Mr. Speaker, the direct supply of power from Nigeria to Ghana will be dependent on the resolution of the technical issues regarding the joint operation of the two power systems.

Mr. Speaker, a technical team from Ghana is currently in Cotonou, Benin assisting their Nigeria and Beninois counterparts to resolve the problem. It is my understanding that they are close to a solution.

· La Cote d’Ivoire

Mr. Speaker, the arrangement with La Cote’dIvoire for the supply of 120 MW of power did not materialize as they had difficulties with their power facilities and the natural gas infrastructure. The Ivorians are currently in the midst of a load curtailment programme as stated earlier and are therefore unable to supply us the required levels of power to help us in this time of need.

· Togo and Benin

Mr. Speaker, we have been compelled by the circumstances to withdraw a substantial level of the power we supply to Togo and Benin. Out of a total of 80 MW, we are now giving them only 20 MW essentially to Togo while Nigeria is supplying power to Benin through a special ‘looping’ arrangement and not through the transformer system.

· Rural Electrification

Mr. Speaker, let me also assure this house that based on the confidence of this government that there will be adequate generation in the near future, we are continuing with the rural electrification and indeed would even endeavour to speed it up while also working on intensification of distribution in the urban areas.

CONCLUSION

Mr. Speaker, it is clear from earlier sections of this statement that this is not the first time that Ghana is going through a load shedding arrangement. Indeed the past ones were more severe than this one.

Mr. Speaker, as I have enumerated, the Government is tackling the energy crisis with all the seriousness that it deserves. The Government has also committed substantial funds to support the resolution of the energy problem. While some of my colleagues may continue to make political capital out of the current energy situation, we firmly believe we are on top of the situation and are confident we shall be out of it within the next three to four months if all things go as planned.

Mr. Speaker, the government has a very clear and effective programme to deal with this situation in the Short, Medium and Long Term. The programme is backed by a policy and Energy Strategic Plan to lead the country into the future and guarantee OUR FUTURE ENERGY SECURITY. We are confident that the policy of becoming self-sufficient in our energy supply requirement and eventually becoming a net exporter will be a successful one.

Mr. Speaker, within six years in office, the NPP government has invested substantial funds in the energy sector and we are convinced that within the next two to three years, Ghana would be in a position to ensure that this situation does not recur again.

Thank you, Mr Speaker for this opportunity.


Kweku Asare, Accra, June 23, 2007, Ghanadot


.....Previous page