The country is expected to make a major shift from the reliance on imported oil and gas to the complete use of domestic gas for power generation.
This is expected to cut imports of gas and reduce usage of liquid fuels for power generation.
The Vice President and Head of the Economic Management Team (EMT), Dr Mahamudu Bawumia, who announced this at the maiden Town Hall Meeting on April 3 said by August this year, there will be a large switch to the use of domestic gas and an end to the importation of gas.
The meeting was on the theme “our status, our progress, and our future.”
“Ghana has enough gas to power all our plants without relying on imported gas. Gas is so much cheaper than liquid fuel and this is why a policy decision has been taken to switch largely to the use of gas in energy generation.”
“If we do this switch and this should be done this year, the estimation is that we will save about US$300 million annually,” he said.
He said most of the country’s gas was situated in the Western Region while most of the power plants are located in the East, hence the need to overcome the transportation bottleneck.
To this end, government he said, was doing a reverse flow that will connect the pipelines of the West Africa Gas Pipeline (WAGP) and the Ghana Gas Company Limited to be able to move the gas from the West to the East in Tema.
“The first phase of the reverse flow will be completed this month which will allow us to transport some 60million metric standard cubic feet (mmscf) of gas from the West to the East,” he said.
The second phase is expected to be completed between July and August after which no gas should be imported anymore for power generation.
“With the reverse flow phase two, an additional 55mmscf should be completed between July and August. Once this is done, Ghana will not need imported gas in the foreseeable future,” he said.
Energy sector key
Dr Bawumia noted that the energy sector was key to industrialisation and although the government inherited many challenges in the sector, they are being addressed.
He said although the country had excess capacity in energy generation, contracts that were entered into with many of the Independent Power Producers (IPPS) were expensive.
“Many of these contracts are take or pay arrangements, this means that even if we do not need the power, we still have to pay for it. Ghana is currently paying US$24million a month in excess capacity charges alone for the power we do not use.”
“This will increase to over US$41million a month later this year with the coming on stream of CEN power, Early Power and Amandi Power plants. Even though we do not have problems with power generation capacity, we have problems with transmission,” he noted.
He noted that the takeover of the Electricity Company of Ghana (ECG) by the Power Distribution Services (PDS) should help bring in much needed investments. The Millennium Challenge Compact (MCC) is expected to bring in some US$1billion investments in the power sector over the next five years.
Pay bills directly
Dr Bawumia also announced that one of the major problems at the heart of the energy sector was the short collections by ECG which often put them in a position not to be able to pay the other players in the value chain.
Government, he said, has been the major culprit in not paying and it has therefore directed that the Ministry of Finance should henceforth pay the bills not through the Ministries, Departments and Agencies (MDAs) but pay directly to PDS so there will be no middle person.