OBG talks to Kweku A Awotwi, Chief Executive, Volta River Authority (VRA)

Interview: Kweku A Awotwi

In what way will local gas production affect the price level and consistency of electricity supply?

KWEKU A AWOTWI: Local gas production should not increase the price of gas coming into Ghana. We are currently paying $8 per million British thermal units (BTUs) for the gas that comes from Nigeria. We do not see gas being that expensive here, but we consider $8 a ceiling for Ghanaian gas. Local production would not make the price of electricity more expensive; it may actually slightly lower it. Currently, Ghana has insufficient gas, so all the gas that comes is going to displace current crude oil. In the long term, an increase in the supply and affordability should help attract more investors. In the short term, it will not necessarily bring in more electricity, it will just make it more affordable.

To what extent will additional independent power producers (IPPs) help increase electricity output?

AWOTWI: The government is aiming to raise electricity output to 5000 MW. IPPs can help a great deal. In the last seven years, 600-650 MW have been added to the system, and IPPs contributed to almost half of that. Today we are close to producing just over 2400 MW of electricity. In addition to the VRA, other IPPs should help to fill in the gap. To reach our production target, we need around $2.6bn in additional investment.

What role can renewable sources play in boosting electricity supply in medium to long term?

AWOTWI: Ghana 2020 Vision foresees that 10% of electricity will come from renewable sources. We assume that by 2020 we would have built capacity of 4000 MW, which means we need to have 400 MW of renewable sources by 2020. To match this, we commissioned our first 2 MW in February 2013. We have been awarded the tender for 100 MW of wind and we have funding for the next 10 MW for solar that will also start in 2013. Though a modest start, it gives us the platform to build our solar and wind resources over the next five years, particular ly as their cost continues to decline. In the last two years the cost of solar has gone down by close to 50%. We recognise that there is a lot of international interest in starting these kinds of projects, incentivised by concessionary money and carbon credits. So, building 400-500 MW of wind and solar power in the next seven years at a cost of $1bn is very achievable. The VRA has already met companies that have been given an indicative tariff from the Public Utilities Regulatory Commission and want to supply into our grid, like the National Electric Power Company in the north and Electric Company of Ghana in the south.

How can rising levels of demand be met?

AWOTWI: In terms of conservation of energy and demand-side management, we are not doing enough, and we, as a utility sector, have recognised the need to address this in order to improve consumption efficiency. Commercial losses hamper efficiency, and we, as a country and as a sector, need to find a way to really bring them down. There are losses due to technical faults, which are more confined but still account for 15-20% of losses. Commercial losses are just processes and do not require much capital to fix, however, they account for 60% of total losses. Lastly, collection losses, which make up the remaining 20%, are defined by the inability to collect the total amount that is owed. These losses do not only affect the company, but also affect investors who only see $0.60 or $0.70 in returns.

What should be done to strengthen the benefits of the West African Power Pool?

AWOTWI: We must harmonise the various regimes for the nations to work with each other. There are currently projects under way for transnational power supply. However, the existing capacity of the Ghana-Burkina Faso line is very small with only 5 MW, but when the project is complete we will be able to send 100 MW, and extend it to Mali. There is another project from the Ghana-Côte d’Ivoire shore to send power as far as Sierra Leone. These are multi-year, $500m-700m projects.