The discovery of gas resources in abundance and efforts to invest in the necessary infrastructure will guarantee the power sub-sector’s future in the medium-term, while ongoing investments in nuclear and clean energy will ensure the economy enjoys reliable and cheaper power in the long-term, Minister of Energy Peter Amewu has assured.
In a speech read on his behalf on the final day of the Ghana Economic Forum 2020 – a two-day event themed ‘Resetting the economy beyond COVID-19: building economic resilience and self-sufficiency’ – the minister said having secured the sector’s immediate future through strategic Investments and interventions, government is now looking at domestic gas resources – a shift from oil-based power generation to gas – to continue powering the economy’s medium-term future.
“In the medium-term, the strategy is to focus and harness the abundant gas resources which has been discovered. In this regard, government is supporting investment in the gas infrastructure to ensure significant shift from oil based power generation to gas based power generation,” he said.
Meanwhile in the long-term, he said: “the plan is to invest in nuclear power which can be a cheaper and cleaner energy source to support our commitment to combat climate change.”
With respect to Ghana’s nuclear-power plans, he noted that all requirements of the global atomic energy regulatory body, the International Atomic Energy Agency, needed to pursue a nuclear power ambition have so far been fulfilled.
While an owner and operator – the Nuclear Power Ghana – has been established, efforts are currently also being made to identify a suitable site as well as an investor country for construction of the country’s first nuclear power plant. “I wish to assure you and Ghanaians in general that this administration is relentless in its efforts to provide the needed impetus for sustainable industrial growth,” he stated.
How gov’t has stabilised the sector
Since assumption of office in 2017, he said, government has met the challenge of overcapacity in the electricity sub-sector. While this may be seen as a positive sign, he explained that most of the Power Purchase Agreements (PPA) were signed on a take-or-pay basis – which means the country has to pay for the excess regardless of whether it uses it or not.
To reverse this situation, he said, all existing thermal and renewable PPAs are being reviewed with renegotiated price reductions and rescheduled commercial operation dates.
Government has also suspended issuance of provisional wholesale electricity supply licences for utility-scale power projects, while a moratorium has been placed on the state-owned power distributor – Electricity Company of Ghana, not to sign new PPAs. Another cost-saving move was to direct procurement of all energy supply contracts by government and state-owned entities to be done through competitive bidding and on take-and-pay basis.
“These painful measures have helped to sanitise the power sub-sector,” he said, adding that: “The situation laid a severe financial burden on government, and had it not been handled well it would have led to higher tariffs for consumers as government would have had to pass on the extra costs to consumers.”