AfDB approves $60 million loan to Ghana

Category: Business & Economics Created on Wednesday, 18 July 2012 09:25 Published Date Written by GNA Hits: 509

Accra, July 17, GNA – The Board of Directors of African Development Bank (AfDB) Group, through its private sector window, has approved a $60 million loan for the expansion of Takoradi II Thermal Power Plant.  

    A statement made available to the Ghana News Agency in Accra on Tuesday said the expansion aimed at improving electricity supply and energy security in Ghana,

     The project consists of expansion of the existing 220 MW single cycle gas/fuel oil power plant to a 330 MW combined cycle by adding a 110 MW steam turbine to the exhaust vent of the existing plant which has been in operation since September 2000.

     Ms Tas Anvaripour, AfDB’s Head of Infrastructure Finance and Public Private Partnership (PPP), described the project as a model example of a “Green Growth” PPP project featuring a national utility investing alongside a private sponsor.

     She explained that the project had a strong economic rationale behind it, which was able to deliver highly competitive base-load energy and help the power system in Ghana to diversify from hydro and oil dependency.

     “Moreover, the project will reduce Ghana’s over-reliance on climate-vulnerable hydropower and as a conversion from simple to combined cycle will increase the power plant's output capacity by 50 per cent at no additional fuel and no additional carbon emission impact,” she explained.

     Ms Anvaripour said the plant expansion was a landmark project for Ghana’s economy as it would allow the country to continue its economic transformation to a middle-income country and improve the living standards of its population.

    " In addition, the added capacity is an opportunity for Ghana to diversify her energy mix."

     Ghana’s domestic power supply currently comes mostly from hydropower (about 61 per cent) with the rest from imports and thermal sources.    

     This high reliance on hydropower has exposed the country to the risk of inadequate supply resulting from frequent and increasing droughts during the dry season.

     Ms Anvaripour said the plant had recently been converted from primarily using heavy fuel oil to the use of natural gas, to be sourced from the West African Gas Pipeline.

    The plant is owned and operated by Takoradi International Company LLC which is 90 per cent owned by the Abu Dhabi National Energy Company (TAQA) and 10 per cent by the Ghanaian State Utility, the Volta River Authority (VRA).

     In 2010, TAQA signed a Memorandum of Understanding with the Ghana Government and the VRA in relation to the 110 MW expansion of the Takoradi plant, the release stated, adding that both TAQA and VRA have a broad experience in the power sector and in developing power generation in Ghana.

    It said the Takoradi II expansion project holds a strong economic rationale and would be able to deliver base-load power at a highly competitive tariff, help the power system in Ghana to diversify from hydro and oil dependency, and support the country’s growth and sustainable development.

    The AfDB touted Ghana’s economy which it described as having experienced tremendous growth in the last decade, increasing the aggregate demand for electricity and creating an energy challenge that has been primarily addressed by further electricity imports.

    It noted that Ghana’s installed power capacity would soon be insufficient if additional capacity was not added to meet the expected increase in demand of approximately 6.5 per cent per year.