- The Power Sector as the Anchor in the Budget
The budget exposed the country’s over-reliance on energy for achieving the transformation agenda. Particularly, the fundamental pillars expected to derive the economy in 2015 are:
- The completion of Ghana’s own gas pipelines and processing plant to exploit the free 200 billion cubic feet (bcf) of gas from the Jubilee fields for which the commissioning of gas flows from the oil fields to the plant has started;
- The future coming on stream of additional gas and crude oil production and supplies from the Sankofa and Tweneboa-Enyenra-Ntomme (TEN) fields; and
- The prospects for further boosts to the economy from the energy sector through the implementation of the Millennium Challenge Corporation (MCC) Compact II Agreement with the United States of America (USA). This means that barring these major projects; the economy would continue to suffer from low growth. We observe however that whist the gas from the Jubilee field will ensure improvement in power supply, it will not add to generation capacity. At most, it will substitute for light crude oil, save VRA of millions of US dollars from the procurement of light of crude oil, complement gas from Nigeria, lengthen the maintenance period of power plants from 6,000 hours to 12,000 hours, and ensure the burning of cleaner fuel. However, our analyses of the measures announced in the Budget shows that the budget does not provide a serious indication of how government plans to address the current challenges of load shedding. The measures will however be useful for the medium to long-term resolution of the power sector challenges.
- Gas Supply Security
However, given that Jubilee gas peaks at 120mmscfd, and TEN gas expected by end 2016 peaks at 80mmscfd, the cumulated indigenous gas will still fall below the total current demand of 400MW (according to estimates from Energy Commission). Government has delayed the approval of the Plan of Development for Sankofa, which will delay gas delivery until 2018. The additional gas expected from Sankofa at 180mmscfd peak, will take indigenous gas to 380mmscfd by 2018 or 2019. The government plans to increase generation capacity to 5,000MW by 2016 largely from thermal generation, yet plans for gas supply will not be sufficient to fire additional power plants.
*Published in collaboration with the Africa Center for Energy Policy