Exec on Ghana power plant projectNovember 2, 2018
TOGY talks to Mohamed Haji, the CEO of Rotan Power, about the need for power in the Ghanaian market, the legal framework in the country and its natural gas network. Rotan Power is planning to construct a power plant in Takoradi.
• On outlook: “We saw the challenges when we came here but, despite them, loved the opportunities, so we went all in.”
• On LNG: “We think there is a need for LNG in Ghana, but recent developments in domestic production have made the need in the western enclave not immediate.”
• On gas supply: “All domestic gas sources, whether it is via GNPC or Ghana Gas, need to be co-ordinated into a pool so each power plant gets one price. Where the gas comes from in any given day should not be of concern to the IPP, and then the gas supplied needs to matched to a dispatch merit order on the generation side. Whoever is the most efficient with the lowest cost should get the gas first.”
• On the power sector: “Because Ghana had a lot of interest in recent years and there has been procurement of emergency power plants, the sector needed to be cleaned up. Decisions have been made on which project should go forward and instruction set on when they should actually come on line.”
Most TOGY interviews are published exclusively on our business intelligence platform, TOGYiN, but you can find an abridged version of our interview with Mohamed Haji below.
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Is there expertise in Singapore that you can leverage on or even closer to home, such as Equatorial Guinea or Nigeria?
We think there is a need for LNG in Ghana, but recent developments in domestic production have made the need in the western enclave not immediate. There is Jubilee, which is owned and operated by Ghana Gas. It is a Tullow field, but it is associated gas. There is TEN as well. Those are producing today. Sankofa should be coming on line from July-September 2018. That is a significant step in domestic gas sources. When we came on board, there was the West Africa Gas Pipeline from Nigeria, which has been doing surprisingly well in the past few months in terms of volume though it has historically been quite unreliable.
In Ghana, there were two existing plants in the western enclave when we arrived in 2012: Tapco, owned by the Volta River Authority, and the other owned by TAQA, the Abu Dhabi-based utility which has operations in the UK and other places. Between those two and constraints on the existing gas processing plant in Atuabo, the gas volumes were spoken for. There was no other gas when we came here in 2012. We did not expect the Eni-Vitol project to actually be for domestic sources, but its non-associated gas was not large enough to go into the export market. The World Bank provided USD 1.2 billion of support in a mix of guarantees and direct loans for the USD 7-billion Sankofa project. USD 3.9 billion is for the two oilfields, and the three gasfields cost about USD 4 billion in construction costs.
While LNG was the strategy for us, we had to figure out what the government’s priority is. We came here to deliver kilowatt hours. Fuel is a key component. There was a challenge and we wanted to control getting our own fuel, but now that the government has decided domestic gas first, we decided to rethink our strategy. We happen to be located in the right place to receive that gas. The connection point is going to be 50 metres from our boundary, so it made sense for us. We believe there is a long-term LNG need in this country, but at least in the next five years, domestic gas will be able to meet the majority of the need. We are in negotiations with GNPC on getting gas allocation from the Eni-Vitol gas fields.
Is Ghana’s legal framework for gas up to scratch?
All domestic gas sources, whether it is via GNPC or Ghana Gas, need to be co-ordinated into a pool so each power plant gets one price. Where the gas comes from in any given day should not be of concern to the IPP, and then the gas supplied needs to matched to a dispatch merit order on the generation side. Whoever is the most efficient with the lowest cost should get the gas first. Contractually it might work differently, so we are waiting for that process to conclude.
Do you have any agreement or framework in place in terms of number of kilowatt hours you are going to put out to consumers or even the number of consumers that you can supply with power?
We have a PPA with ECG. The contracted capacity is 660 MW. Because Ghana had a lot of interest in recent years and there has been procurement of emergency power plants, the sector needed to be cleaned up. Decisions have been made on which project should go forward and instruction set on when they should actually come on line.
We are going to come in two phases of 330 MW each. Phase one will be at the beginning of 2023, which means that we should start commissioning towards the end of 2022. Assuming three years of construction, we have to get to financial close by the end of 2019.
The second 330-MW phase is going to be on line at the end of 2025. We should have an up-time of 97-98% if gas supply is not an issue, producing maybe 2.9 billion kWh per year per phase. It depends on consumption per household, but could each phase power 300,000 households? Probably yes. If we look at it differently, when we do both phases, the installed base in Ghana today is about 4,000 MW and the actual dependable available capacity is about 2,800 to 3,000 MW. If we are adding 660 MW to the grid, that is a big contribution. The grid may grow, but we will probably be supplying more than 10% of Ghana’s electricity when we do both phases. We will be the largest thermal power plant and also the largest plant after the hydropower plant at Akosombo.
How much greener is a combined-cycle plant than a more traditional type of power plant?
It depends on what you are comparing it to. If you compare it to a smaller gas turbine like the 9Es, the answer is still yes, and compared to coal, it is probably 30-50% better. It is not as good as solar or wind, but this country needs base load with some renewable mix. The power base is so small that if you really want to have a manufacturing base, whether light or heavy, you need reliable and dependable power and because of the choice of the gas turbine we are making we will be the cheapest thermal power plant in town. Depending on which other thermal plant you are comparing this to, with the prevailing gas prices domestically, it is saving the country anywhere between USD 100 million and 200 million per year if we were to run and shut down another 660 MW of alternative technology.
What is the outlook for Ghana?
The opportunity for power in sub-Saharan Africa is huge. New York State has over 50,000 MW of installed capacity. They do have a manufacturing base and about 25 million people. Nigeria has 170 million-185 million people, so seven or eight times that of New York, and on any given day, dependable capacity on the grid is 4,000 MW.
If you think there is a path for these countries to get to even 20% of energy consumption per capita in the developed world, we are talking about hundreds of thousands of megawatts to be built over the next 20-40 years. They are not moving as fast because financing is difficult, but I would not be here if it was not difficult because all the big global companies will be here competing. We are a small fish, but we believe we will be a big player, and when the continent opens up, which it has been, we will be there to deploy more and more power. Like I said, Uganda, Kenya, Nigeria, Tanzania, Ivory Coast and Ghana are our priorities for now, but we are also opportunistic and looking at other areas. I have to get Ghana done, though. There is no confusion about that.
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