Chinese company says to build 700MW coal power plant in Ghana

As Ghana struggles to come to terms with and deal with the country’s current energy crisis, a Chinese company is proposing to build a coal-fired power plant in the country at a cost of $700 million, with coal imported from South Africa.

A press release from the Ministry of Energy and Petroleum, issued July 5, 2013 and copied to ghanabusinessnews.com says the Chinese company, Shenzhen Energy Group (SEG), which is the mother Company of Sonon Asogli, an Independent Power Producer in the power sub-sector has made the proposal to the Minister of Energy and Petroleum, Mr. Emmanuel Armah-Kofi Buah during a visit in Accra.

According to the release, a Director at Shenzhen Energy Group, Mr. Hong Can, indicated that the company proposes to build a 700MW coal-fired power plant in Ghana. “The project which will take 24-30 months to complete will also include the construction of a coal port with approximately 50,000 tons berth,” it said.

It adds that the project which is projected to cost about $700 million, will need two million tons of coal per year to run when completed.

The coal, however it says, citing Mr. Can, “will be imported from South Africa.”

The press release noted that the company said desulfurization and electrostatic precipitator devices and technologies will be employed to increase the efficiency of the plant and “minimize environmental pollution to the barest minimum.”

According to the release SEG, which already operates different thermal plants of a total installed generation capacity of 8106MW with coal-fired plants constituting about 3700MW have decided to embark on this project “because coal as a fuel is cheap, abundant, widely used, efficient, safe  and that there are modern technologies to minimize environmental pollution.”

The Minister, the press release indicated, pledged the Ministry’s support for the project and requested SEG to present a roadmap of the project to the Ministry as soon as possible, highlighting the role the Ghana government can play to bring the project to fruition.

Ghana currently generates 2,125MW of power from hydro and thermal plants, and the government has been talking about increasing power generation to 5000MW by 2016.

Meanwhile, a recent World Bank report on the country’s energy situation, power and petroleum sectors showed that poor leadership and incompetence are major factors for the current distressing energy situation in Ghana.

The Electricity Company of Ghana was cited in the report as failing financially and operationally.

The report titled “Energising Economic Growth in Ghana-Making the Power and Petroleum sectors rise to the challenge” asked the government of Ghana to “think big”  and “provide proactive leadership” to avert the failure of the ECG and other institutions in the energy sector.

In its recommendation, the World Bank also told the Ghana government to stop the hidden subsidies it gives to the Volta Aluminum Company (Valco) because the company is not financially sound.

According to the Bank, if the government chooses to provide any subsidy to Valco, it should make this explicit and fund it transparently from the national budget.

“At the full cost of electricity, Valco is not viable,” said the the report. It also highlights the centrality of fixing the problems in the power sector as a path to ensuring that Ghana’s economic growth ambitions are not stymied by lack of electricity.

The report revealed that Valco’s subsidized power costs the sector around $150 million per year as the company still remains operational despite power shortages and its high economic cost for Ghana.

The World Bank noted that Valco’s subsidy which it describes as ‘hidden’, “degrades the Volta River Authority’s financial condition”.

By Emmanuel K. Dogbevi