Ghana will sell stakes in three thermal power plants as it seeks to cut state-owned companies’ debt and boost electricity production following years of outages that hurt investor confidence. The West African nation has identified the fossil fuel-burning plants capable of producing a combined 501 megawatts, or about a third of its total thermal power-generating capacity, that it’ll at least partly privatize, James Demitrus, head of revenue monitoring at the Energy Ministry, said in an interview in the capital, Accra. While thermal power plants can burn oil or gas to generate electricity, the country can also produce 1,180 megawatts from hydro-power.
The World Bank says Ghana’s economy will probably expand 8.3 percent this year, which may boost demand for electricity. Structural reforms in the country’s energy sector, including improving the management of state-owned enterprises, are crucial to sustain growth, the International Monetary Fund said last year. The country has thermal generation capacity of about 1,451 megawatts, 1,325 megawatts of which is from facilities belonging to the VRA, which operates thermal plants in addition to the hydro-power facilities at the Akosombo and Kpong dams. Authorities first announced plans to sell stakes in an unspecified number of thermal facilities in August.
State power companies had accumulated loans of a combined 10 billion cedis ($2.3 billion) by the end of 2016, with the government starting selling bonds last year in part to pay them off, Demitrus said. The government is reorganizing VRA and will create a holding company with subsidiaries, one of which will be for thermal power operations, he said. “After those debts are cleared the government does not want the cycle to be repeated,” he said. Those plants “are not very efficient. They’ve been lying idle for almost a year,” he said.
The facilities being offered include a 125-megawatt thermal plant in the port city of Tema belonging to the state pension fund, and VRA plants in Kpone and Tema that have installed capacities of 250 megawatts and 125 megawatts respectively, Demitrus said. Other VRA plants won’t be offered to investors because some are relatively efficient while others already have private partners, according to Demitrus.
Sources and photo-credits: Bloomberg