Energy sector think-tank, African Centre for Energy Policy (ACEP), is predicting a supply deficit in the power sector in 2017 on the back of anticipated shortages in gas supplies to thermal plants.
The gas supply shortages will be occasioned by the suspension of gas inflows from Nigeria and the persisting defects on the Floating Production, Storage and Offloading (FPSO) vessel used to produce oil and gas at the Jubilee Field, the centre said in its latest report titled; ‘Beyond the 2016 Elections: Energy Sector Priorities for the next Government of Ghana.’
Already, the challenges with the turret bearing of the FPSO Kwame Nkrumah has led to a reduction in gas supply from 90 million standard cubic feet (mmscf) per day to 50 mmscf, a deficit that has since not been bridged.
Given that majority of the country’s electricity comes from thermal plants, ACEP said a reduction in gas supplies, as it anticipates, would mean that most of the plants would be deprived of fuel to operate.
“The 2017 outlook, therefore, faces uncertainty due to the decision to permanently moor the FPSO, which will lead to suspension of oil and gas supply from the Jubilee Fields for three months, starting from April 2016. This threatens power supply from the Ameri and Aboadze power plants,” the report added.
The result would be a return of the dreaded power outages in the early part of next year when the winner of the December 7 polls is expected to take office.
Although about 50 mmscf per day is expected from the Tweneboa-Enyera-Ntomme (TEN) fields in 2017, ACEP said it would not be enough to make up for the shortfall in gas supply from Nigeria and the Ghana Gas Company Limited.
This, therefore, means that if any of the two main contenders for the presidency – the ruling National Democratic Congress (NDC) and the opposition New Patriotic Party (NPP) – is voted into power in the general election, the winner will be welcomed by the infamous power outages commonly called ‘dumsor’.
The winner would then have an enormous task of finding quick fix solutions to the power crisis, and that could have implications on budget targets, ACEP said.
Supply challenge
The suspension of gas supply from Nigeria is as a result of Ghana’s indebtedness to the West Africa Gas Pipeline Company (WAPCo), the sub-regional company that supplies gas to Ghana from N-Gas.
Sourcing the International Monetary Fund (IMF), ACEP said the total debt owed the power sector agencies – Volta River Authority (VRA), Electricity Company of Ghana (ECG) and the Ghana Grid Company Limited (GRIDCO) – had risen to GH¢16 billion.
Alternatives
The Head of Policy at ACEP, Dr Ishmael Ackah, in an interview, said the major challenge to the power sector going into 2017 had to do with fuel security.
“If we are going to lose what N-Gas and Ghana Gas will give us, then we should find an alternative to using either light crude oil or heavy fuel to power some of the plants to cater for the shortfall,” he stated.
The issue is further compounded by recent setbacks in hydropower generation sources.
In spite of rising to an average of 253.05 feet in 2016, water levels in the Akosombo Dam have been generally below the minimum levels of 234 feet, raising concerns over the ability of the country’s hydro-electric power plant to contribute meaningfully to the electricity supply basket.
Financial constraints
The government has introduced a number of measures, including a recent restructuring programme for debts power utilities owed local banks, and the introduction of the energy sector levies, which are being used to service part of the debts.
The ACEP report added that fuel-related debts owed to N-Gas, Ghana Gas and WAPCo which currently stood at about US$500 million constituted a major component of the financial exposure of the energy sector companies.
“We can predict that the financial challenges of the utilities will not be addressed over the next two to five years as VRA’s cash flows have been taken over by the government through an escrow for direct procurement of fuel and other related payments,” the report stated.
Join GhanaStar.com to receive daily email alerts of breaking news in Ghana. GhanaStar.com is your source for all Ghana News. Get the latest Ghana news, breaking news, sports, politics, entertainment and more about Ghana, Africa and beyond.
