What Next For Government As Dumsor Clock Ticks?
In 1984, Ghana was confronted with its first electricity crisis as a result of a severe drought of the lake, very much attributable to climate between 1982 and 1984. It was reported that the total inflow into the dam between 1982 and 1984 was less than 15% of the expected total, and that triggered power rationing and a reduction of electricity supply to neighboring countries, including Togo and Benin. Yet another prolonged power outages emerged in 1998, largely as a result of low rainfalls and inflows to the Volta Lake. Even though the demand for electricity had falling slightly from 5110 GWh in 1991 to 4965 GWh by 1998, the electricity supply deficit was significant enough to introduce the second round of power rationing.
Beyond these two power crisis which was largely blamed on act of God, the country had to experience several periods of inadequate power supply, including the 2006 to 2007, and 2012 to 2016 power outages. The uniqueness of the 2012 to 2016 power crisis was the longest period the Ghanaian had to endure, with rotating Load Shedding timetable, which earned the name “Dumsor”. Up until the 2012 to 2016 power crisis, the major contributing factor to the persistent, irregular, and unpredictable electric power outage had largely been power generation shortfalls. But today, the narratives have changed tremendously.
Today, Ghana can boast of over 4,750 (megawatts) MW of installed generation capacity from largely hydro-electric and thermal sources. Net dependable capacity exceeds 4,320 MW, and the current Peak Demand rarely exceeds 2,700 MW. The country is also significantly endowed with natural gas to fuel the power plants which are largely dual-fuel-fired. And the Volta Lake is currently at a decent level of over 79 meters (79.754m at January 4th 2019) compared to the prior year level of 76 meters (76.557m at January 4th 2018).
In spite of these favourable conditions which are seen as recipe for aggressive and rapid industrialization, the country is still grappling with unreliable power supply. Since November 2018 till now, the country has been experiencing a recurring power outages.
The problems attributed to the recent inconsistent electricity supply are technical, commercial, regulatory, structural, planning, funding, political, and procurement related. However, the most predominant challenge to the provision of reliable electricity supply is the poor financial status of the power utilities which impacts on the ability to procure the required quantity of fuel for power plants in a timely manner, carry out maintenance services to ensure the availability of the required plant capacities, maintain and expand transmission and distribution infrastructure to ensure system efficiency et cetera.
It is the operating revenues, in the form of tariffs and service charges collected by the power utilities, and capital injection from the state as the sole shareholder of the state owned enterprises (SOEs) in the power sector that yields liquidity for the entire value chain (generation, transmission, and distribution).
However, the financial performance of the state owned utilities have been abysmal in recent times. At the end of 2018, all SOEs in the power sector reported losses, a clear sign of weak sector performance. The deteriorating financials of these entities makes it difficult for them to operate efficiently, and to guarantee reliable and consistent supply of electricity.
Finance Committee Warns
A report by the Finance Committee of Ghana’s Parliament that was discussed in early July 2019, warned that liquidity challenge in the power sector may spur the return of Dumsor.
According to the legislative committee, Ghana’s energy sector is currently overburdened with growing indebtedness as it battles with a debt portfolio of over US$4billion. In the report it is captured that State Owned Enterprises in the energy sector like Ghana Grid Company (GRIDCo), Power Distribution Services (ECG/PDS) and the Northern Distribution Company (NEDCo) have for the past two and half years all posted a revenue loss of GH¢118million, GH¢2billion and GH¢163.7million respectively. And that the situation is worsened by the government’s indebtedness to Karpower Plant to the tune of US$150million, ENI US$160million, NEDCo US$162million, Independent Power Producers (IPPs) US$1billion, GRIDCO US$171million and Ghana Gas Company US$735billion.
According to the report, the total amount accrued from levies collection for 2018, fell short by 9.2 percent over the projected figure of GH¢3.507 billion due to the significant (65.5 percent) fall in the targeted Price Stabilization and Recovery Levy (PSRL) amount, as well as the fall in the targeted amount set for the Public Lighting Levy (PLL) and National Electrification and Scheme Levy (NESL) by 45.76 percent and 43.69 percent respectively. However, the report concluded that the Energy Debt Recovery Levy (EDRL), Road Fund Levy (RFL), and Energy Fund Levy (EFL) all outperformed their targets by 7.9 percent, 0.72 percent and 7.29 percent respectively, at the end of 2018 based on account of 11.79 percent increase in petroleum products consumption volumes in 2018 compared with the same period in 2017.
The falls were attributed to the reduction in electricity tariffs, change in consumer attitude towards energy conservation, gradual shift towards the consumption of renewable energy such as solar and the lower than estimated recovery of electricity bills.
ESLA Accounts, according to the report, recorded a closing balance of GH¢615,417,858 at the end of 2018. During the period, a total amount of GH¢1,353.71million was transferred to ESLA Plc from ESLA Accounts. This amount, the report observed, excluded GH¢16.33million transferred in December, 2018 and received by ESLA in 2019. And that out of a total amount of GH¢1,353,706,144.00 received by ESLA Plc, an amount of GH¢1,104,334,498.02 was used to pay two coupons held by ESLA Bond holders in May and November, 2018. The balance of GH¢326,697,267.78 was transferred into a LOCKBOX Account.
According to the report, even though an amount of GH¢5,453.20 million out of the total proceeds realized from ESLA Plc Bond was applied to redeem part of the legacy debt of the Energy Sector, substantial portions of the debt still remain on the books of the State Owned Enterprises which continue to accumulate new debts.
IPP’s Threatens
Barely a week after the Finance Committee of Ghana’s Parliament warned that there could be Dumsor due to liquidity challenge in the power sector, six Independent Power Producers (IPPs) which currently supply about 1,500 MW of electricity have threatened to shut down their power plants if Power Distribution Services (PDS) Limited fails to settle debts amounting to over US$700 million within eight working days.
The companies includes, Sunon-Asogli Power (Ghana) Limited, BXC Solar Ghana, Cenit Energy Limited, Cenpower Generation Company Limited and Karpowership Ghana Company Limited – are members of the Chamber of Independent Power Producers and Bulk Consumers (CIPDIB).
Even though these IPPs acknowledge the negative impact a shutdown of power plants will have, they claim they are left with no choice since they cannot continue to be saddled with huge debts, while they struggle to pay creditors, suppliers, and employees’ salaries.
According to the IPPs, as at the time the Electricity Company of Ghana (ECG) was taken over by PDS, they were owed over US$400 million. However the debt has shot to over US$700 million since the PDS took over, suggesting that the PDS has accumulated additional debt of over US$300 million, without a dime paid.
In a statement, the Chief Executive Officer (CEO) of CIPDIB, Mr Elikplim Kwabla Apetorgbor, urged the government, through the Ministry of Energy, to compel PDS to clear the accumulated invoices presented by the IPPs within eight working days, and pay interest on all overdue invoices which the IPPs could have profitably utilized. He charged the Millennium Development Authority (MiDA) to compel PDS to adhere to best business practices and respect the terms of the PPAs and ensure the nation derives the optimum benefit from the concession arrangement.
Mr Apetorgbor stated that following a successful concession, IPPs expected PDS to honour and abide by the terms of the Power Purchase Agreements (PPAs) inherited, particularly by avoiding the delay in paying for power purchases, with respect to the bargained credit days. He regretted that PDS appears to be reliving some of the very bad contractual and business practices that characterized the operations of ECG. He explained that energy can neither be stored nor destroyed, which presupposes that consumers are paying for the power consumed while PDS is accumulating the revenues.
Clock Ticks, What Next?
While the clock ticks, one is left to see how government would reacts to the threat issued by the IPPs to first, forestall any blackout.
It may also be in government’s own interest to investigate the circumstances that might have led to this unfortunate situation, and institute measures to avert the immediate consequences, for it definitely comes as a surprise to Ghanaians that since the takeover of ECG by the PDS four months ago, not a dime have been remitted to the IPPs.
May be, it is about time to take a cue from the Finance Committee of Parliament’s report which discloses that the growing debt portfolio in the energy sector is largely due to the non-adherence to the Energy Sector Levies Act, 2015 (Act 899) as amended in 2017 (Act 946).
Written by Paa Kwasi Anamua Sakyi, for the Institute for Energy Security (IES)
The writer has over 22 years of experience in the technical and management areas of Oil and Gas Management, Banking and Finance, and Mechanical Engineering; working in both the Gold Mining and Oil sector. He is currently working as an Oil Trader, Consultant, and Policy Analyst in the global energy sector. He serves as a resource to many global energy research firms, including Argus Media.
Ghana: We Don’t Have Agreement With You, So Go To ECG For Your Monies Instead Not Us -PDS Directs Cash-Trapped IPPs
The Power Distribution Service (PDS) Ghana Limited has denied claims by the Independent Power Producers (IPPs) that the service owes them huge sums of money for power supplied.
According to PDS, it does not have any contractual agreement with IPPs, as far as power purchase issue is concerned and, therefore, expressed surprise over their claims.
The response from PDS follows threats by the Chamber of Independent Power Producers and Bulk consumers (CIPDIB) that they will plunge Ghana into darkness if some $600m debt owed its members is not paid in eight days.
Chief Executive of CIPDIB, Eliplim Kwabla Apetorgbor, said the decision to cut power supply to PDS has been necessitated by debts they have incurred in running their operations.
These operations, he said, include fueling and maintaining their plants and paying workers.
Eliplim Apetorgbor said the six IPPs had a ‘wonderful marriage’ with the Electricity Company of Ghana until PDS took over the work of ECG.
ECG was paying IPPs every week from earning made from consumers, butt that stopped when PDS took over in March 2019.
Attempt to retrieve these debts have been met with resistance from PDS. They have also failed to respond to their demand letters or invitations to a meeting to discuss outstanding payments.
The way out, Mr. Apetorgbor threatened, is to stop supplying their 1,500 megawatts of power to PDS, which constitutes more than 50 per cent of what is required to meet the demands of consumers.
However, speaking on Accra-based Oman FM, William Boateng, who is the Head of Communications at PDS, said his outfit rather has a contract with Electricity Company of Ghana, which is currently bulk power trader, adding that PDS has not reneged on it.
“We have honoured all our concessional obligations to ECG. ECG gives us bulk bills and we pay every week,” he pointed out.
Background
It will be recalled that Manila Electric Company (Meralco) officially took over running of ECG from March 1st this year, under a 20-year concession agreement.
The negotiated Transaction Agreements – namely the Lease and Assignment Agreement, Bulk Supply Agreement, and Government Support Agreement – to secure the proposed Private Sector Participation (PSP) in ECG were approved by Cabinet and ratified by Parliament.
The Concessionaire, according to the agreement, is expected to inject an amount of $580m into the distribution system during the agreement period’s first five years.
The Bulk Supply Agreement between ECG and the Concessionaire deals with the Concessionaire’s back-to-back purchase of the capacity and energy made available to ECG under the Power Purchase Agreements (PPAs).
Exploring Pilot Independent Power Transmission Lines
Africa’s power sector leaders must devise new mechanisms to attract more private sector investment into power transmission lines, energy experts agreed at a technical roundtable last week.
The meeting, hosted by the African Development Bank to mark the 3rd Africa Energy Market Place (AEMP), explored how to structure private sector financing to meet the investment needs of transmission lines.
It also covered the investment priorities of transmission companies, alternative funding options, and bankable transaction structures.
Chairing the discussions, Batchi Baldeh, Director for Power Systems Development at the Bank noted that private investments in transmission networks under Public Private Partnership arrangements, will be critical to complement Government budgets and ensure timely delivery of cost-effective power to consumers.
Annual investments required for 2015-2040 to expand the transmission networks are estimated at $3.2 billion to $4.3 billion.
“The private sector is key to closing this finance gap. Private finance has supported the expansion of electricity transmission infrastructure in many regions of the world and the same can happen in Africa,” Baldeh said.
Participants included energy stakeholders from the African Development Bank, World Bank, USAID’s Power Africa, Commonwealth Development Corporation’s Gridworks, private developers and public utilities.
They discussed how mechanisms that have worked elsewhere could be replicated in sub-Saharan Africa, especially the need for strong government support and credit enhancement.
“We know how to structure, finance, build, operate IPPs. We have also seen Independent Power Transmission models succeed in Africa (e.g. Mozambique Transmission Company, MOTRACO),” said Angela Nalikka, the bank’s manager for national and regional power systems.
Nalikka said the meeting helped participants to explore the possibility of implementing pilot independent power transmission lines and understand the structuring and financing prerequisites.
Danger: Nationwide Blackout Looms In Ghana In Few Days Over Growing Energy Sector Debts
Ghanaians are likely to experience a nationwide blackout in the next couple of days, if the huge debts owed members of the Chamber of Independent Power Producers and Bulk Consumers (CIPDIB) in the West African country are not settled.
According to CIPDIB, their members will be compelled to shut down all their plants within one week, if the Power Distribution Services (PDS) fails to pay huge debts owed the Independent Power Producers (IPPs).
In a statement issued and signed by the Chief Executive Officer of CIPDIB, Elikplim Kwabla Apetorgbor, it urged the government, through the Ministry of Energy, to compel PDS to expressly pay all accumulated invoices to the IPPs within the next seven days.
The statement further urged the government not to only make PDS pay its debts to the IPPs but also be made to pay interest on all overdue invoices, which the IPPs could have profitably utilized.
It also called on the Millennium Development Authority (MiDA) to compel PDS to adhere to best business practices and respect the terms of the PPAs and ensure that the nation derives the optimum benefit from the concession arrangement.
Elikplim Kwabla Apetorgbor, CEO of CIPDIB
“Should PDS fail to respect the terms of the PPA and make payment to the IPPs within the 7-8 working days period, our members would be left with no choice than to shut down PDS’s plants as they could not continue to be saddled with huge debts,” CIPDIB warned.
PDS took over some operations and management of Electricity Company of Ghana (ECG) from March 1, 2019, with the expectation to deliver a quality service to power consumers to its host, ECG.
Below is the full statement:
CHAMBER OF INDEPENDENT POWER PRODUCERS, DISTRIBUTORS AND BULK CONSUMERS, GHANA (CIPDIB)
DANGER! ENERGY CRISES LOOM OVER GROWING POWER SECTOR DEBT!
Elikplim Kwabla Apetorgbor, CEO of CIPDIB
“Should PDS fail to respect the terms of the PPA and make payment to the IPPs within the 7-8 working days period, our members would be left with no choice than to shut down PDS’s plants as they could not continue to be saddled with huge debts,” CIPDIB warned.
PDS took over some operations and management of Electricity Company of Ghana (ECG) from March 1, 2019, with the expectation to deliver a quality service to power consumers to its host, ECG.
Below is the full statement:
CHAMBER OF INDEPENDENT POWER PRODUCERS, DISTRIBUTORS AND BULK CONSUMERS, GHANA (CIPDIB)
DANGER! ENERGY CRISES LOOM OVER GROWING POWER SECTOR DEBT!
- It would be recalled that the operations of the Electricity Company of Ghana (ECG] came under a barrage of criticisms because of perceived inefficiencies which included but not limited to the huge indebtedness to power generators particularly the Independent Power Producers [IPPs].
- This effort eventually culminated in the takeover of some operations and management of ECG from March 1, 2019, by the Power Distributions Services [PDS].
- This implies that various stakeholders in the power sector have high-performance expectations from PDS. The consumers, for instance, expect a reliable, affordable and sustainable power supply.
- Regrettably, however, the PDS appears to be reliving some of the very bad contractual and bad business practices that characterized its host -ECG.
- In the midst of this issue, one would have expected PDS to engage the players in a bid to inform them of any challenges, if there is, but efforts so far made to cause PDS to honour its contractual bargains has yielded virtually no result.
- For love of country and its people, some IPPs had gone a step further to incur an extra financial cost in borrowing to procure fuel to ensure reliable power supply.
- CIPDIB is urging the government through the Ministry of Energy to cause PDS to expressly release funds to pay all accumulated invoices to the IPPs within seven days.
- We caution that should PDS fail to respect the terms of the PPA and make payment to the IPPs within the 7-day period; our members will be left with no choice than to shut down their plants as they cannot continue to be saddled with huge debts. This action although has huge implications for jobs – cannot be avoided.
- Finally, CIPDIB is urging all participants in the power sector to ensure transparency in our dealings as it is key to the growth and sustainability of the sector.
Ghana: Driver, Mate Set Fuel Tanker Ablaze After Selling 54,000-Litre Diesel
Police in the Republic of Ghana have arrested a tanker driver and his mate for setting ablaze a diesel tanker in a bush near Osino in the Eastern Region after they had emptied and sold its 54,000-litre diesel load.
The tanker, with GH¢280,260 worth of diesel from Fuel Trade in Tema, was headed for Yendi in the Northern Region but was diverted and its content sold in Accra, after which the suspects drove the empty tanker to Osino, where they set it ablaze.
The suspects are Awudu Yakubu, 34, the driver, and Isaac Boadi, 19.
An accomplice, Fataw Mohammed, a former driver employed by the truck owner and said to be the mastermind of the deal, is, however, on the run and the police have mounted an intensive search for his arrest.
The Deputy Director General of the Criminal Investigations Department (CID) of the Ghana Police Service, Assistant Commissioner of Police (ACP) Mr George Tweneboah, who disclosed this to the Daily Graphic, said the complainant in the case was an Accra businessman and transporter who dealt in petroleum products.
He said some time last year the complainant gave his DAF CF 460 truck, with registration number GS 264 14, to Awudu to drive and also engaged Boadi as his mate.
ACP Tweneboah said the two suspects had since been loading petroleum products to supply to a number of customers in different parts of the country.
He said on June 24, 2019, the accused persons were loaded with 54,000 litres of diesel, valued at GH¢280,260, at Fuel Trade in Tema to supply to a customer in Yendi.
He said they left Tema in the night and met the complainant at the Community 18 Junction on the Accra-Tema Motorway, where he gave them GH¢2,400 as their per diem to Yendi and back.
Sale of fuel
He said police investigations revealed that the suspects set off on the journey to Yendi, but on reaching the Accra end of the motorway, they claimed to have run short of fuel and so Yakubu parked the vehicle on the shoulders of the road and the mate was sent to buy fuel.
While Yakubu was waiting for the mate, Mohammed, the complainant’s other driver, went to meet Yakubu and they hatched a plan to sell the fuel and burn the tanker.
The three suspects took the fuel back to Tema, where they sold it to one Nana Yaw, and after their nefarious act, they drove the empty tanker to the Unity Oil Filling Station at Achimota and bought 75 litres of petrol which they put into gallons, put them in the truck and set off on the journey with the empty tanker.
On their way, ACP Tweneboah said, they drove to a spot between Osino and Anyinam in the Eastern Region, where they feigned an accident, depicting that the tanker had landed in a ditch because it was being driven at top speed.
Truck set ablaze
He said the suspects poured the petrol that they had bought at Achimota on the head of the tanker and set it ablaze, after which Yakubu called the complainant’s secretary and told him that while they were on their way to Yendi, the truck had been involved in an accident.
The secretary then informed the complainant who, thinking that the driver and his mate had sustained injuries, quickly dispatched the secretary to attend to the two while he followed up later.
On reaching the scene of the supposed accident, the secretary detected that the tanker was empty.
By then the driver was nowhere to be found but the mate was sitting near the bushes by the burnt truck.
When the mate was asked about the whereabouts of the driver, he said the driver had asked him to wait while he rushed to Kumasi and back, the police said.
Plan uncovered
When the mate was asked to narrate what had led to the accident, he could not speak, but when probed further, he broke down and confessed that they had hatched a plan with Mohammed to sell the fuel and burn the tanker.
The owner of the truck then picked the mate from Osino to Accra, where he lodged a complaint at the CID Headquarters and handed the mate over to the police for further investigations.
Investigations by the police led to Yakubu’s arrest from his hideout in Kumasi and brought to Accra where, upon interrogation, he confessed to the crime and mentioned Mohammed as the mastermind of the whole plan.
The Head of the Intelligence Unit of the CID, Superintendent Ebenezer Nketsiah , advised tanker owners and businessmen to endeavour to do proper background checks on all prospective employees before engaging them.
Source: Graphic.com.gh
Iran Threatens British Shipping In Retaliation For Tanker Seizure
An Iranian Revolutionary Guards commander has threatened to seize a British ship in retaliation for the capture of an Iranian supertanker by Royal Marines in Gibraltar.
“If Britain does not release the Iranian oil tanker, it is the authorities’ duty to seize a British oil tanker,” Mohsen Rezai said on Twitter.
The Gibraltar government said the crew on board the supertanker Grace 1 were being interviewed as witnesses, not criminal suspects, in an effort to establish the nature of the cargo and its ultimate destination.
U.S. President Donald Trump, while not specifically mentioning the supertanker incident, repeated a warning to Tehran: “We’ll see what happens with Iran. Iran has to be very, very careful,” he told reporters at the White House.
British Royal Marines boarded the ship off the coast of the British territory on Thursday and seized it over accusations it was breaking sanctions by taking oil to Syria. They landed a helicopter on the moving vessel in pitch darkness.
The move escalates a confrontation between Iran and the West just weeks after the United States called off air strikes on Iran minutes before impact, and draws Washington’s close ally into a crisis in which European powers had striven to appear neutral.
A U.S. State Department spokeswoman said, “We welcome international partners’ resolve in upholding and enforcing these sanctions.”
Tehran summoned the British ambassador on Thursday to voice “its very strong objection to the illegal and unacceptable seizure” of its ship, a move that also eliminated doubt about the ownership of the vessel.
Foreign Ministry spokesman Abbas Mousavi said the crude oil cargo was from Iran. The ship’s paperwork had said the oil was from neighboring Iraq, but tracking data reviewed by Reuters suggested it had loaded at an Iranian port.
European countries have walked a thin line since last year when the United States ignored their pleas and pulled out of a pact between Iran and world powers that gave Tehran access to global trade in return for curbs on its nuclear program.
Over the past two months, Washington has sharply tightened sanctions against Tehran with the aim of halting its oil exports altogether. The moves have largely driven Iran from mainstream markets and forced it to find unconventional ways to sell crude.
The confrontation has taken on a military dimension in recent weeks, with Washington accusing Iran of attacking ships in the Gulf and Iran shooting down a U.S. drone. Trump ordered, then canceled, retaliatory strikes.
With nuclear diplomacy at the heart of the crisis, Iran announced this week it had amassed more fissile material than allowed under its deal, and said it would purify uranium to a higher degree than permitted from July 7.
The Grace 1 was impounded in the British territory on the southern tip of Spain after sailing the long way around Africa from the Middle East to the mouth of the Mediterranean, a route that demonstrates the unusual steps Iran appears to be taking to try to keep some exports flowing.
The Gibraltar spokesman said the 28-member crew, who have remained on board the supertanker, were mainly Indians with some Pakistanis and Ukrainians. Police and customs officials remained on board the vessel to carry out their investigation, but the Royal Marines were no longer present.
While the European Union has not followed the United States in imposing broad sanctions against Iran, it has had measures in place since 2011 that prohibit sales of oil to Syria.
Gibraltar said on Friday it had obtained an order extending the detention of the supertanker by 14 days because there were grounds to believe it was breaking sanctions by taking crude oil to Syria.
Shipping experts say it may have been avoiding the more direct route through the Suez Canal, where a big tanker would typically be required to unload part of its cargo into a pipeline to cross, potentially exposing it to seizure.
Olivier Dorgans, an economic sanctions expert at Hughes Hubbard & Reed law firm in Paris, said the British move appeared intended to send a warning to the Iranians that if they pushed on with their nuclear breaches, European countries would act: “This was done for political effect. The British are warning the Iranians.”
Source: Reuters
Ghana: Smuggled Petroleum Products Intercepted At Volta Region
Personnel of Ghana’s Immigration Service (GIS) at Akanu in the Volta region have impounded a caravan loaded with about 150 gallons of diesel, suspected to have been stolen from Libya and transported via the high seas to some parts of West Africa.
The products in the blue Ford caravan with registration number AS 4077 U was believed to be from Nigeria.
Akanu Sector Commander, Chief Superintendent Attoprah Godson told Accra based Starr FM, the vehicle carrying the products was intercepted around 4:30 am of Saturday 6 July by a three-member patrol team between Zukpe and Gali Dzafe within the Ketu North District of the region.
Sources say the products upon arrival in Togo were smuggled into Ghana through unapproved routes, avoiding security checkpoints and joined the main urban road before the arrest.
The leader of the three-member team, Inspector Samuel Ampofo said the team spotted the vehicle being led by a man on a motorcycle but both the driver and the motor rider fled when they sensed the presence of the team.
Inspector Ampofo said smuggling of fuel into Ghana through Togo is common. “It has stopped for some time now so it’s unfortunate that it is now rising.”
Illegally imported petroleum products are priced lower for consumers, selling at Ghc3.80 pesewas per litre against the national price which is about Ghc5.50pesewas
The Volta Regional Commander of the GIS, Peter Cleaver Nantuo Esq who led a team of reporters to Akanu after the interception said, he had an intelligence that “a petroleum product, especially from Togolese side, was coming into the country so I alerted all my men to intensify patrol especially on unapproved routes, low and behold this is one outcome of the positive efforts of my men.”
He said GIS is ready to combat any illegal activities that will drain the country of its security and economic developments and called on border residents to “count on them and deliver such information to us, we will not sell them out because if Ghana is good it is good for us all.”
He called for enhanced collaboration among Ghana’s security agencies across the country to help sustain the country’s economy and security. He said the Service will do the necessary works and will later hand over the car and the product to the Customs Division.
Akanu Sector is the second largest entry point to Ghana after Aflao in the Volta region, it stretches from Afegame to Pillar 15 within the Ketu North District with a total number of 165 officers and 25 patrolmen.
Source: Starrfm.com.gh
President Of Angola To Attend GECF Heads Of State Gas Summit
The President of Angola, H.E. João Lourenço, has accepted an official invitation to attend this year’s Gas Exporting Countries Forum (GECF) 5th Heads of State Summit to be held in Malabo, Equatorial Guinea, in November.
The invitation was delivered by the Minister of Mines and Hydrocarbons of Equatorial Guinea, H.E. Gabriel Mbaga Obiang Lima, during an official meeting at the Angola Oil & Gas 2019 conference.
In a meeting with the President during the Angola Oil & Gas 2019 conference held in Luanda, the Minister of Mines and Hydrocarbons of Equatorial Guinea, H.E. Gabriel Mbaga Obiang Lima, delivered the invitation and solicited Angola’s participation in the event.
Angola joined the GECF as an Observing Member in November, representing the sixth African country to join the organization following Algeria, Egypt, Equatorial Guinea, Libya and Nigeria.
Angola’s gas sector has been bolstered by the recent introduction of legislation promoting the monetization of the country’s gas reserves, including the country’s first natural gas law passed last May to regulate the natural gas exploration, production, monetization, and commercialization.
Taking place in Malabo, the 5th Heads of State Gas Summit represents the first time that the Summit will be held on the African continent and constitutes a key facet of Equatorial Guinea’s Year of Energy initiative, which seeks to position Equatorial Guinea as the energy capital of the continent through a series of Africa-focused events.
In addition to the 5th Heads of State Summit (November 26) and the Ministerial Meeting (November 28), the country will host the Second International Gas Seminar (November 27), which unites Ministers of GECF member countries, heads of international organizations, CEOs of international and national oil companies and public and private sector gas leaders to exchange information and ideas on industry developments through panels, presentations and interactive sessions.
Founded in Tehran in 2001, the GECF is an intergovernmental organization made up of 12 of the world’s leading natural gas producers that serves to foster collaboration among member countries and provide a framework for the exchange of information and the management of natural gas resources independently of oil. Together, GECF member states account for 44 percent of the world gas production, 67 percent of the global gas reserves, 64 percent of the world’s pipeline gas transmission and 66 percent of the liquefied natural gas trade.
The Sankofa Gye Nyame Gas Project: Transparency, Savings And Pricing
There have been lots of assertions that Sankofa Gye Nyame (SGN) projects’ gas price is higher than the price of Gas that is landed in Ghana from Nigeria or is higher than the price of Jubilee gas or TEN gas.
In the development of a project, whether ENI was to develop the project or GNPC was to develop the project, the cost would be about the same or maybe even less when ENI develops it because ENI is the single-A rated company or at worst B+.
If ENI goes to raise money for the project, it would raise money at a far cheaper price than Ghana will raise because this is a 25-year project at least. So we have to look at the total economics of the project and then decide whether we want to embark on this project or not and that was the main criteria for negotiation between ENI and the government of Ghana, unlike Jubilee which is an oil project.
There was no gas in the calculation of whether they would do this project or not. ENI had to make a decision whether they would invest in ‘SGN field development which has about 150million barrels of oil (oil in condensate combined). It also had gas of approximately an additional 180/190 million barrels of gas equivalent. That was the data they submitted to us in the plan of development.
If you look at the amount of the gas, it is much larger than the oil and the revenue or the economics of the oil alone will not be able to support the development of this project. So the only way this project could be developed is if gas and oil field is developed as an integrated project and that was the decision the government took at that time, that yes we want the gas to be the driver of this project.
In summary, it is predominantly a gas field development that was approved. The oil is going to be 40,000 barrels per day for about five years and it drops to 20,000 barrels per day for the next 3 years or so and finally dwindles to 10,000 and no financial institution or no investor would invest in the project only based on the oil flows. The only way an investor would invest in this particular project is if the gas was included. Now we had a big problem with the gas because they had an alternative to liquefy the gas and export it which would then make the risks and economics similar to that of an oil only development.
Remember, with oil, it’s quite easy to finance because there is a very little the country risk in the off-taker. First of all, the field is offshore gas. Secondly, the off-taker would be an international trader or a refinery of repute like TOR. So anybody who is financing this project would look at the risks and economics of the project and the rate of return and also the financing cost. They would also want to know whether financing institutions would be able to get enough banks who have a country risk for that tenure.
Remember, most banks have a country risk for one year, some even six months. When you go to three years, the number of banks drop exponentially. When it goes to five years I can count on my fingers the number of banks that would finance a Ghana project with that tenor. When it goes to 10 years now, we have left banks I can count on my fingers on one hand.
It also depends on what support government is going to give to the project. If government is not going to give any support there would be no bank. I can assure you that for a 10-year gas development project with no government support there will be zero Banks interested. This particular sector is very technical, it is very financial and a lot of people are misconstruing based on literature that they are reading. I even heard somewhere someone said the cost of recovering oil from the ground is $10/bbl.
Jubilee field which is a world-class field has reserved, we can’t even count. It’s going to produce 120,000 barrels per day for the next 10 years or so. The cost of producing oil from Jubilee is more than $24/bbl. Jubilee is a world-class field. There are no many world-class fields in the world.
TEN nor SGN are not world class fields. The cost of producing this oil has been misconstrued to make people think that the people negotiating on behalf of the Government of Ghana knew nothing and don’t have data to support the negotiations.
The negotiations that are done whether you do it by tender or you do it by concession or by direct negotiations is all dependent on the economics. How much is the investor prepared to take as the rate of return for the risk he is taking? Ghana government’s risk is almost zero risk in Ghana yet investors in GoG 10year bonds in Ghana are paying 19% in cedis and almost 10% for the same risk dollar bonds. An investor who is coming here and added risk of an offshore field, deep water – very risky conditions – they expect a higher rate of returns.
The price of gas from such a development will depend on the number of reserves you have, how fast you are going to produce them, and the cost of the project, and the return to the investor. There is no magic, if you change the rate of return you get a different gas price. If you change the cost of development, you get a different gas price. If you change the number of reserves you get a different gas price.
At the time when the petroleum PoD was brought, certain assumptions were made, they assumed how much reserves they can extract from the field based on the science – not the actuals but projections backed by science. This is the proposal that was in the PoD. They assumed the cost of the project of about 7.3bn which include the cost of the FPSO lease and operations for 20 years.
All of that was assumed in the PoD document that went to the ministries.
Of course, the ministry had to consult all the companies like GNPC, Petroleum Commission, most likely in parliament. It’s a public document. It is stated exactly how this project is going to be financed based on how the assumptions are made. It was also stated that if there were any costs savings it would reflect in the price of gas not the price of oil. The project cost would split between gas and oil.
Any savings on the project would only affect the gas price and that is where the focus should be, because there were significant savings at the time of doing this project oil prices were about 4 dollars. The time the PoD was submitted the oil prices were in the 80/90 dollars range. By the time of executing the project prices of oil had dropped and prices had also dropped on the services.
In the negotiation on the gas price the first data that were received were savings of $691 million which translated into some good savings of 55 cents per hundred million. All of a sudden the savings dwindled from $691 million to about less than $200 million. Why? How transparent was that? There were other costs to be incurred. In the agreement, GNPC was supposed to bear those costs. Why?
If you have a project, an overall project where the rate of return is greater than 10% and you can finance less than 10% why would you let somebody finance it. GNPC decided that they could raise some money 5/6 % may be lower than government and finance these additional part of the project which were not as risky as drilling the ENP. GNPC was supposed to raise the money. GNPC had the money.
GNPC had access to the money to raise. What did GNPC do with the money, they lend it to BOST instead of using the money for the project. So at the time that they were supposed to finance it, they didn’t have the money to do it. So they had to go back to ENI. When they went back to ENI, this savings dwindled from $691million to less than $200million.
So the price that were set at $9.8 which would then have benefited for the deductions from the savings of $691million now is going to result in less than $1.5mmmtu which is another problem we have. We should have allowed the total reductions based on the 691million. Then gone and sat down with ENI and our financiers to see how we are going to finance the remaining amount of how much it was going to cost. If we had done the calculation we would have realized that it was better for us to reduce the gas price than to allow ENI or somebody else to invest in this.
Source: Alex Mould, Former GNPC Boss
Ghana-Togo Maritime Dispute: Peaceful Resolution Always Better Than Full-Scale Arbitration -Lawyer
One of Ghana’s Legal luminaries and arbitration advocate, Nana Prof. S.K.B Asante, believes seeking international arbitration on Ghana’s maritime dispute with Togo must be a second option.
The West African country has indicated that it will not hesitate to seek international arbitration if their counterparts from Togo fail to cooperate with its Technical Delegation Team that is negotiating a maritime dispute along the eastern border of the country.
Already, both countries have failed to come to a consensus after three rounds of negotiations on the maritime boundary demarcations.
Speaking in interview with Accra based Joy FM at a breakfast meeting to commemorate the Centenary of the International Chamber of Commerce (ICC), Nana Prof. Asante argued that arbitration must be the final option.
According to him, “peaceful resolution is always better than a full-scale arbitration which is a drawn-out business but I’m hopeful these peaceful methods may prevail. This is a matter which is under the active consideration of the government. I hope that we can resolve the matter peacefully.”
Commenting on the same issue, Ghana’s immediate past Attorney General, Marietta Brew Appiah-Oppong also implored the government to ensure the delimitation of the country’s border boundary with neighbouring Togo to avert future dispute
She said a definite resolution of the border boundary with Togo will save Ghana the experience it went through with the four-year-old maritime dispute with Ivory Coast.
“We should remember that litigation is always the last resort especially when it comes to your neighbouring state or country. I believe that negotiations will take place between Ghana and Togo on that particular boundary,” she said.
Meanwhile, Head of Ghana’s Technical Team negotiating the maritime boundary delimitation with Togo, Lawrence Apaalse, has revealed to the Ghanaian Times that there is no consensus in sight in the raging disagreement between the two countries on their boundary on the high sea.
Mr Apaalse who is the Chief Director of the Ministry of Energy said that though there was no solution in sight, negotiations with their Togolese counterparts would continue.
“Giving the three rounds of negotiations so far, it is quite possible that we are not reaching consensus very soon,” he said.
Togolese officials between December 2017 and May this year, seized two seismic vessels from Ghana setting the disagreement and the subsequent negotiations in motion.
Source: Myjoyonline.com
Noor Abu Dhabi Commences Operations With A Capacity Of 1,177MW
Emirates Electricity and Water Company (EWEC) has revealed that the Noor Abu Dhabi, one of the world’s largest independent solar plants, has commenced operations.
The plant, located in Sweihan in Abu Dhabi, has a total capacity of 1,177MW, and is a joint venture between the Abu Dhabi Power Corporation and a joint effort between China’s Jinko Solar Holding and Japan’s Marubeni Corporation.
The $871 million plant will allow Abu Dhabi to increase renewable energy production, helping offset carbon emissions by one million metric tons per year, the equivalent of removing 200,000 cars off the street, as the region reduces its reliance on natural gas.
The plant consists of over 3.2 million solar panels, over an area of eight square kilometres, and besides its size, it sets a record for the world’s most-competitive tariff, at just 8.888 fils per kWh.
Mohammad Hassan Al Suwaidi, chairman of EWEC, said: “The completion of the project marks a significant milestone in the UAE’s Energy Strategy 2050, launched in 2017, to increase the contribution of clean energy in the total energy mix to 50 per cent by 2050 while reducing the carbon footprint of power generation by 70%.
“This is in line with the sector’s transformation strategy by providing alternative sources of energy that can help us improve the sustainability of the water and electricity sector.”
Source: Esi-Africa.com
Ghana: Vice President To Speak At Ghana International Petroleum Conference
Ghana’s Vice President Dr. Alhaji Mahamudu Bawumia is expected to deliver a keynote address at this year’s Ghana International Petroleum Conference (GhipCon).
The conference, which is under the auspices of the Ministry of Energy, the National Petroleum Authority (NPA), in partnership with the Chamber of Bulk Oil Distributors Companies (CBOD) and the Association of Oil Marketing Companies (AOMC’s), will take place at the plush Movenpick Hotel in Accra, capital of Ghana, from 10th to 12th July, 2019.
The theme for the conference is “Regional Collaboration; A Catalyst for Transformation”.
GhipCon 2019 promises to be an exciting platform for panellists drawn from across the West African sub-region including Senegal, Mali, Burkina Faso, Nigeria, Cote D’Ivoire and Togo.
Panelists would discuss issues of governmental and regulatory policy, and best practices for the advancement of the industry.
For participation, visit https://www.ghipcon.com/2019/site/ or call +233 (0) 54 012 1426.
Nigeria Hosts 2019 PowerAfrica Conference In August
West African country, Nigeria, will be the host for this year’s PowerAfrica Conference scheduled 20th and 23rd August, 2019, in Abuja.
This year’s PowerAfrica Conference, which is the 6th edition, is expected to bring together academics, professionals and other stakeholders to review the state of power and energy challenges in Africa and proffer sustainable solutions.
Ahead of the conference, General Chair of 2019 IEEE PES-IAS PowerAfrica Conference Engr. Tunde Salihu, has explained what the conference is all about, objectives and expectations.
Qtn. Would you please introduce IEEE, PES and IAS?
Ans…IEEE has the largest membership of any professional body in the world. We are responsible for about one third of all standards in electro-technology. IEEE delivers access to industry’s most essential technical information; provides both local and global networking opportunities and offers career development tools to its more than 400,000 members globally.
Both PES and IAS are specialty societies in the IEEE. PES is the Power and Energy Society while IAS is the Industry Applications Society. They are collaborating to sponsor the PowerAfrica Conference, now in its 6th edition.
Qtn. What are the objectives of the conference in Africa?
Ans. PowerAfrica Conference (PAC) seeks to bring together academics, professionals and other stake holders to review the state of power and energy challenges in Africa and proffer sustainable solutions.
Qtn. What is the Power Africa conference in Abuja aiming to achieve?
Ans. The conference theme is: “Power Economics and Energy Innovations in Africa”, because we have recognized that finance is a major problem in tackling energy access and quality in Africa. So, we are trying to address this through new cost-effective innovations.
Qtn. What are the criteria for choosing the hosting country each year?
Ans. IEEE is a world class organization, so the major criteria are the readiness of a proposed hosting country to provide world class facilities and good ambience for the conference attendees. It is also important for the hosting nation to show that there are capable volunteers to host an international event successfully.
Qtn. Who can participate in this event, and how?
Ans. Everybody working in the power sector or carrying out research such as engineers, financiers, lawyers, policy makers, researchers from various departments and stake holders such as power consumers can attend the conference. Also, students are particularly welcome to gain new insights in their profession and widen their network.
Qtn. What, in your opinion, can be done by governments and investors to develop the power sector in Africa?
Ans. The most important effort from government is sincerity. Governments need to find a way to reduce corruption in the area of contract awards so that people can get more mileage from power projects. Governments in Africa also need to carry out campaigns to make consumers realize that energy is expensive and people should be ready to pay cost-reflective tariffs to encourage investment. Investors coming to Africa should try to be more open in their projection and so must come up with more sophisticated business models suitable to the political and economic climate in Africa.
Qtn. Which African countries do you think are currently making progress in the power sector?
Ans. There are many African countries making progress in the power sector in Africa. In the area of energy access for example, Egypt, Morocco, Algeria etc., have achieved or almost achieved 100% access to electricity for their people. However some countries are not doing so well in that aspect, for instance, Nigeria (59.5%) access and Liberia (19.8%). Commendably, some other countries such as Ghana have achieved about 80% access to good quality electricity supply. We also note that governments in Africa are working assiduously to share and access knowledge and information within and without the continent to bring about better access and quality of electricity to their constituents. PAC is a definite partner in this regard.
Qtn. What should delegates to the conference expect at the event?
Ans. Our delegates should expect high quality interactions with top professionals, academics and policy makers who share a common interest in the access to energy for African growth and development. The delegates should also expect a good time networking with people from diverse cultures and outlook so as to enrich their knowledge and horizon. We have also prepared opportunities for them to take in the cultural and technical richness of Abuja, the beautiful capital of Nigeria. I and my wonderful team are leaving no stone unturned to give all conference attendees a memorable experience.
Qtn. What are the objectives of the conference in Africa?
Ans. PowerAfrica Conference (PAC) seeks to bring together academics, professionals and other stake holders to review the state of power and energy challenges in Africa and proffer sustainable solutions.
Qtn. What is the Power Africa conference in Abuja aiming to achieve?
Ans. The conference theme is: “Power Economics and Energy Innovations in Africa”, because we have recognized that finance is a major problem in tackling energy access and quality in Africa. So, we are trying to address this through new cost-effective innovations.
Qtn. What are the criteria for choosing the hosting country each year?
Ans. IEEE is a world class organization, so the major criteria are the readiness of a proposed hosting country to provide world class facilities and good ambience for the conference attendees. It is also important for the hosting nation to show that there are capable volunteers to host an international event successfully.
Qtn. Who can participate in this event, and how?
Ans. Everybody working in the power sector or carrying out research such as engineers, financiers, lawyers, policy makers, researchers from various departments and stake holders such as power consumers can attend the conference. Also, students are particularly welcome to gain new insights in their profession and widen their network.
Qtn. What, in your opinion, can be done by governments and investors to develop the power sector in Africa?
Ans. The most important effort from government is sincerity. Governments need to find a way to reduce corruption in the area of contract awards so that people can get more mileage from power projects. Governments in Africa also need to carry out campaigns to make consumers realize that energy is expensive and people should be ready to pay cost-reflective tariffs to encourage investment. Investors coming to Africa should try to be more open in their projection and so must come up with more sophisticated business models suitable to the political and economic climate in Africa.
Qtn. Which African countries do you think are currently making progress in the power sector?
Ans. There are many African countries making progress in the power sector in Africa. In the area of energy access for example, Egypt, Morocco, Algeria etc., have achieved or almost achieved 100% access to electricity for their people. However some countries are not doing so well in that aspect, for instance, Nigeria (59.5%) access and Liberia (19.8%). Commendably, some other countries such as Ghana have achieved about 80% access to good quality electricity supply. We also note that governments in Africa are working assiduously to share and access knowledge and information within and without the continent to bring about better access and quality of electricity to their constituents. PAC is a definite partner in this regard.
Qtn. What should delegates to the conference expect at the event?
Ans. Our delegates should expect high quality interactions with top professionals, academics and policy makers who share a common interest in the access to energy for African growth and development. The delegates should also expect a good time networking with people from diverse cultures and outlook so as to enrich their knowledge and horizon. We have also prepared opportunities for them to take in the cultural and technical richness of Abuja, the beautiful capital of Nigeria. I and my wonderful team are leaving no stone unturned to give all conference attendees a memorable experience.
LPG Tanker Explosion Kills Crew Member In Turkey
One crew member has reportedly died while fifteen others have been injured in an LNG tanker explosion at the port of Aliaga, Turkey.
At the time of the incident, the Italy-flagged tanker Syn Zania was anchored at the Petkim petrochemical plant operated by the Azerbaijani state oil company SOCAR, media outlets cited Aliaga province’s sub-Governor Erhan Gunay as saying.
He added that a Petkim worker was also hospitalized due to injuries sustained following the explosion that occurred in the evening hours of June 1 at Petkim Pier 5.
In a statement on the matter, Petkim said that a fire “broke out due to an unspecified reason during the connection to the Italian flagged Syn Zania for the filling of liquid hydrocarbons.”
The fire was soon extinguished and teams at the site continued cooling works.
Relevant authorities launched an investigation into the incident, while SOCAR informed that the operations at the petrochemical plant in Turkey’s western Izmir province continued.