By Elikplim Kwabla APETORGBOR (Dr)
The Volta River Authority (VRA), once a critical component of Ghana’s energy sector, now faces a significant operational challenge with its 1268MW of aging thermal power plants.
These plants – the oldest 27 years old and newest 9 years – are characterised by outdated open-cycle technologies that waste the country’s limited natural gas resources. With the world moving toward more efficient combined cycle technologies, VRA’s reliance on simple cycle gas turbines not only wastes useful financial resource but also contributes to and compounds the country’s electricity supply challenges.
Privatising these inefficient thermal assets is not just an option but a strategic necessity to optimise gas usage, increase generation efficiency and stabilise the broader energy sector. While concerns about privatisation – particularly among VRA staff – are understandable, they can be addressed with appropriate stakeholder engagement and solutions. I present a professional and industry-based case for why privatisation of VRA’s thermal assets is a critical step in improving Ghana’s energy sector and addressing long-standing inherent inefficiencies.
Inefficiency and waste
VRA’s thermal plants, primarily using open-cycle gas turbine (OCGT) technology, are outdated and inefficient by current industry standards. A simple cycle gas turbine wastes a significant portion of the energy from the gas it burns, as most of the heat produced is not captured or reused – leading to massive inefficiencies.
A typical example is the use of 30 million standard cubic feet per day (mmscf/d) of natural gas in a simple cycle plant. Ideally, this gas could generate about 200 MW in a combined cycle gas turbine (CCGT) plant, where the waste heat is used to produce additional electricity. However, in VRA’s simple cycle plants this same amount of gas can churn out less than 100 MW; essentially wasting more than half the potential energy.
- A list of VRA’s Thermal Assets that must be private to salvage waste in the sector.
| Tema Thermal Power Complex
TT1PP TT2PP MRP KTPP |
Technology | Installed Capacity |
| Simple Cycle | 126 | |
| Simple Cycle | 50 | |
| Simple Cycle | 80 | |
| Simple Cycle | 220 | |
| Takoradi Thermal Power Plant | ||
| Takoradi – T1
Takoradi – T2 Takoradi – T3
Total Capacity |
Simple Cycle | 330 |
| Combine Cycle | 330 | |
| Simple Cycle | 132 | |
|
1268 |
||
Key challenges with the Current VRA Thermal Plants
Outdated Technology: The VRA’s simple cycle plants represent technology that the global power sector has long phased out in favour of combined cycle systems. These old plants do not allow for the recovery of waste heat, which could otherwise be used to generate additional power and improve efficiency by as much as 60%.
Wastage of scarce natural gas: Ghana’s natural gas resources are limited, and the inefficient use of this scarce fuel resource in outdated plants is economically and environmentally unsustainable. The open-cycle plants require more gas to generate less power compared to modern combined-cycle systems.
Increased operating and maintenance costs: As plants age, maintenance becomes more frequent and costly. The operational cost of running these inefficient plants, coupled with their low power output, puts a financial strain on the VRA and by extension the entire energy sector. This is why VRA will submit a proposal to the PURC for an over 100% tariff increase to recover needless and avoidable costs.
- Impact on ECG and energy sector stability: ECG depends on and prefers reliable power generation at an affordable cost. The inefficiencies in VRA’s thermal plants contribute to ECG’s financial struggles, making it difficult to manage its already precarious financial position. Inefficient generation leads to higher costs, which ultimately trickle down to ECG and end-consumers – exacerbating the sector’s challenges.
Strategic benefits of VRA’s asset privatisation to the sector
Privatising VRA’s overaged thermal plants offers a pragmatic solution to inefficiencies plaguing the energy sector’s power generation segment. Privatisation brings in capital, expertise and modern technology, both of which are essential to salvaging VRA’s thermal assets and ensuring long-term energy stability for Ghana.
- Efficient gas utilisation through combined cycle technology
One of the most immediate benefits of privatisation would be an introduction of combined cycle gas turbine (CCGT) technology, which is significantly more efficient than the existing simple cycle technology in VRA’s plants. In a CCGT set-up, waste heat from the gas turbine is captured and used to produce additional electricity, improving fuel efficiency by up to 60%.
The introduction of modern technology under private ownership would reduce the wastage of Ghana’s gas resources, ensuring that this limited fuel is used more productively to meet the country’s growing energy needs.
- Capital Infusion for Plant Modernisation
Privatisation would enable private entities to invest the required capital for modernising VRA’s aging plants, something that government or VRA may not be in a financial position to do. Investment in upgrading equipment, integrating modern control systems and transitioning from simple cycle to combined cycle operations is capital-intensive but necessary for reducing inefficiencies.
Private operators, driven by the profit motive and backed by their experience in running efficient power plants, have a strong incentive to modernise these assets to maximise output and returns.
- Reducing the State’s Financial Burden
By privatising these thermal assets, the financial burden on VRA – and by extension government – would be significantly reduced. This would free-up resources to focus on other areas of the power sector: such as expanding renewable energy sources, improving grid reliability or addressing ECG’s financial challenges. Moreover, private sector participation would bring in efficiency-driven management practices that could reduce operational costs, streamline processes and introduce innovations that improve plant performance.
- Enhanced reliability and competitiveness in the energy sector
Privatisation can inject much-needed competition into the power generation landscape, incentivising all players – including VRA and independent power producers (IPPs) – to improve efficiency and service delivery. Private operators are more likely to adopt cutting-edge technologies, invest in workforce training and implement systems that boost reliability and reduce outages.
In the long run, this improved performance benefits ECG by ensuring more reliable and cost-effective power generation…which could help stabilise electricity tariffs and improve service to consumers.
Concerns of VRA staff
VRA staff concerns about job security and potential lay-offs in the event of privatisation are valid and must be addressed with empathy and strategic foresight. However, privatisation need not mean widespread job losses. Instead, it can be framed as an opportunity for upskilling and professional growth within a modernised power sector.
Measures to address staff concerns
- Transparent stakeholder engagement: A transparent consultative process should be initiated, involving VRA management, government representatives, labour unions and staff. This dialogue would aim to address concerns, outline the benefits of privatisation and ensure that workers’ rights are protected.
- Retraining and upskilling programmes: As part of the privatisation deal, a clause could be included to mandate retraining and upskilling programmes for existing staff. Modernised plants will require technically skilled workers to operate more advanced systems, creating opportunities for VRA staff to enhance their skills and remain relevant in a dynamic energy industry.
- Job transition guarantees: A phased privatisation process could include job transition guarantees whereby, for a specific period, all current staff are retained and severance packages are negotiated for those who may eventually leave.
- Local content and employee welfare provisions: Government can include local content provisions in the privatisation agreements, ensuring that a significant portion of the workforce remains Ghanaian. Additionally, employee welfare considerations such as pensions, healthcare and fair compensation should be protected under the privatisation framework.
Expert Summary
The privatisation of VRA’s 1268MW ineffecient and overaged thermal plants represents a strategic opportunity to improve the efficiency of Ghana’s energy sector, conserve scarce natural gas resources and enhance the performance of both VRA and ECG. By transitioning from simple cycle to combined cycle technology, Ghana could double its power output from the same quantity of gas; significantly improving fuel efficiency and stabilising the power generation landscape.
While concerns from VRA staff are understandable, these can be mitigated through careful planning, transparent stakeholder engagement and retraining programmes. Privatisation, if managed properly, holds the key to unlocking much-needed capital, modern technology and managerial expertise, ultimately benefitting Ghana’s energy sector and its citizens.
In a global energy landscape where efficiency and sustainability are paramount, Ghana cannot afford to let its valuable gas resources be wasted on outdated thermal plants. Privatising these assets is not just a choice – it is a strategic necessity.
