Energy & Utilities
From The Report: Ghana 2016
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Ghana’s energy sector is both young and growing fast, with a second major oil and gas field set to commence production in 2016 and a third to follow soon thereafter. Legal and regulatory regimes are still being established, while improvements are being made to infrastructure to catch up with a rise in demand. This will help to remove obstacles to the use of domestic energy supply to speed up development. In the downstream market, deregulation is likely to be the highlight of 2015, after a decision to end government price setting for main consumer fuels. Increasing oil production, even in a lower price environment, will be particularly valuable at a time when Ghana is grappling with a budget deficit estimated at 7.5% of GDP.

This chapter includes interviews with Joe Mensah, CEO, Kosmos Ghana; William Amuna, CEO, GRIDCo; and Samuel Nana Brew-Butler, Chairman, CenPower Generation.

Articles from this Chapter

Overview

On the rise: New discoveries and increased investment have contributed to Ghana’s growth as an oil exporter
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Ghana’s energy sector is both young and growing fast, with a second major oil and gas field set to commence production in 2016 and a third to follow soon. Legal and regulatory regimes are still being established, while improvements are being made to infrastructure to catch up with a rise in demand. This will alleviate obstacles to the use of domestic energy supply to speed up development. In the downstream market deregulation is likely to be the highlight of 2015, after a decision to end government…

Interview

Increasingly competitive: OBG talks to Joe Mensah, CEO, Kosmos Ghana
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Interview:Joe Mensah To what extent have low oil prices impacted the country’s energy industry? JOE MENSAH: The drop in export revenues has obviously had significant implications for Ghana, but the country has been somewhat less impacted than other producers. The breakeven price, for example, is quite low, at around $30, and Ghana is very competitive when it comes to lifting costs. This means that capital expenditures have not been substantially affected. There is, of course, still room…

Analysis

The rule of law: The role of the national petroleum corporation is being adapted
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With the era of oil and gas under way in Ghana, the country’s legal and regulatory regime is still evolving and the roles of state agencies are changing. Yet amid the reforms the Ghana National Petroleum Corporation (GNPC), which is now more than three decades old, will continue to play a major part. GNPC is mandated to incorporate other agencies under its corporate structure, such as the state’s gas company. As new projects begin producing and revenue grows, GNPC will look to boost technical…

Analysis

Spend and save: Discoveries of oil have made revenue management a legislative priority
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Energy sector revenue management has been a legislative priority for the Ghanaian government since 2007, when commercial quantities of oil were discovered offshore. The government started with a revenue management act, called the Petroleum Revenue Management Act of 2011 (PRMA). The PRMA is likely to be amended, given the difficulties involved in budgeting for it. According to Minister of Finance and Economic Planning Seth Terkper, amendments to the plan for parliamentarians to consider would be forthcoming,…

Analysis

Local knowledge: Participation of Ghanaian firms has been assured
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Ghana’s legal and regulatory regime for local content came into force in February 2014, setting in motion a process designed to retain as much value from the energy sector as possible. The country has a goal of attaining 90% local participation in all aspects of the sector by 2020. This would put it at the heart of a trend in the region and worldwide, whereby locals are seeking not only to profit from extractive industries but also to gain technical expertise, building up their own capacity to…

Analysis

A period of flux: Government control over downstream markets is being liberalised, creating new opportunities for the private sector
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Ghana’s downstream sector is going through a period of flux, with the most significant change of recent months coming in June 2015, when the government decided to give more control to market participants to set prices for consumer fuels. The gradual removal of control over downstream markets has long been in the making – and is in line with what is happening in other African markets like Nigeria and Egypt – yet is controversial, due to the concerns of highly price-sensitive consumers reliant…

Overview

Top of the agenda: Institutional reform and partnerships with private business are set to transform the sector
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For decades Ghana’s power supply outstripped demand, but that equation has shifted in recent years, with inconsistent electricity generation and transmission constraining economic growth. Traditionally the country has been a strong performer when it comes to power investment, and indeed, as the US Power Africa initiative notes, “as compared to regional countries with similar energy and oil-and-gas investment opportunities, Ghana is well-ranked as an investment destination”. High Priority However,…

Interview

A powerful delivery: OBG talks to William Amuna, CEO, GRIDCo
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Interview:William Amuna What measures can be taken to ensure that power tariffs reflect the actual cost of generation? WILLIAM AMUNA: Up until now, we have worked very carefully to ensure that we take a studied approach to increasing tariffs. We certainly do not want to have a situation in which a sudden rise in tariffs ends up making local companies uncompetitive, nor one that places a greater financial burden on households. Ideally, the situation that we should be looking for is one that…

Analysis

Generating progress: A number of projects and initiatives will address the energy deficit
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Based on what is currently in the pipeline, Ghana could potentially face a glut of power in less than a decade. While not every project may make it from proposal to reality, there are nonetheless 22 entities with provisional licences to build conventional plants, and another 33 with similar permits to develop renewable energy facilities, according to the US government’s Power Africa initiative. According to the group, projects that would bring an additional 2206 MW of generation capacity to Ghana…

Interview

The power of positivity: OBG talks to Samuel Nana Brew-Butler, Chairman, CenPower Generation
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Interview: Samuel Nana Brew-Butler How did you assuage investors’ concerns about the creditworthiness of the Cenpower Kpone Independent Power Plant (KIPP)? SAMUEL NANA BREW-BUTLER: This was the main concern of potential investors in developing the thermal plant. Our board created a team of financial, technical and legal experts to find conditions that would make the plant commercially viable. CenPower finally reached a compromise deal with the government instead of a sovereign debt guarantee.…