Power and Industrialization Drive

One district One factory policy

By Benson Afful

Akufo-Addo - President, The Republic of Ghana

The Nana Akufo-Addo’s government has given assurance to industry and manufacturers its determination in stabilizing electricity supply as the government continues to implement proactive measures to solve the current crisis.

President Akufo-Addo’s administration has set an ambitious district industrialization agenda, known as the One district One factory policy, which his government intends to achieve to move Ghana from one that exports raw materials to a value-added industrialized economy.

Key areas need critical attention if the government could meet this target bringing factories to all 216 districts across the country’s 16 administrative regions is a cheaper and reliable energy source.

The government has already released GH¢465 million for the commencement of the project. It has also released GH¢256 million for the revamping of 100 private commercially viable and distressed companies throughout the country. Finance Minister, Ken Ofori-Atta during the 2019 Budget Presentation in Parliament stated government has so far disbursed GH¢227 million as a stimulus package to support various distressed companies, and that additional funds will be disbursed to support other distressed companies next year. 79 factories in 9 regions of the country should be at various stages of construction or operation under the '1D1F' scheme is expected.

Industrialization agenda

Ghana has not had it easy when it comes to the cost industry pay for a power outage. The Institute of Statistical, Social and Economic Research (ISSER) which conducted a study on the impact of the four-year power crisis that hit Ghana revealed that 885 small and medium-sized manufacturing firms in Accra, Tema, Kumasi, and Sekondi-Takoradi lost GH¢250 million within the period. The productivity of these firms fell as many were using generators as an alternative source of power.

Additionally, the power outages, to a large extent, led to a 10 percent fall in monthly productivity of those firms, with as many as 55 of such businesses folding up in the four locations of the country.

Ghana’s economy, like any other economy in the world, depends on local production and export goods and services, thus industrialization. For many industries in the West African country, energy supply is a major challenge. Players in the sector have been complaining about the intermittent power outage they sometimes experience. A situation that in the past cost many job layoffs.

The Nana Akufo Addo’s government has given assurance to industry and manufacturers its determination in stabilizing electricity supply as the government continues to implement proactive measures to solve the current situation.

The Association of Ghana Industries (AGI) in a communiqué after its National Council Retreat this year said they are resolved to continue making input into the electricity tariff negotiations with the country’s utility regulator, Public Utility Regulatory Commission, and appropriate agencies to ensure competitive tariffs for Industry.

The industry is expecting reliability and efficiency in service delivery and competitive tariffs from the new company—Power Distribution Service (PDS) taken operations in the distribution network in southern Ghana. AGI recognizes the need for a tariff structured in a manner the service providers can recover cost to remain viable.

Ghana is in the category of countries with high energy cost in the sub-region and for the industry to remain competitive industry sector players have called on the government to review the electricity tariff.

It is therefore right to say that a high cost of energy leads to a high cost of production; and will subsequently make Ghana unattractive for the setting up of factories thus generating a consistent increase in imports. This explains why locally-produced goods more expensive than the same imported goods in spite of the high duty charges at our various ports of entry.

UNIDO to boost industrial development

The government, in terms of urgency, must explore other cost-effective forms of energy like solar, bio-energy, nuclear, and wind energy to enhance Ghana’s business destination for West Africa.

Ghana’s total installed generator capacity at the end of 2016 was 3,795 MW with proportions as follows; 57.8 percent thermal, 41.6 percent hydro and 0.6 percent renewable.

Most thermal facilities run on natural gas (a cheaper fuel source compared to liquid fuels) as the primary fuel source, with the exception CENIT Power Plant and the Karpowership power plant, which depend solely on liquid fuels (LCO/DFO and HFO respectively). Makes natural gas supply very crucial for the effective operation of Ghana’s electricity sector. The West African Gas Pipeline transporting natural gas from Nigeria, is the major supplier of natural gas for generating electricity until the commissioning of the Atuabo gas processing facility, owner of the Ghana Gas Company in 2015. Gas supply has not been reliable with the Nigerians citing non-payment of debt as the major reason.

The Atuabo gas processing facility is capable of supplying up to 150 Mscf per day to the western power generation enclave at the Aboadze thermal facility with supplies from the Jubilee oil fields. Plans are underway to process natural gas from the Tweneboa, Enyenra, Ntomme (TEN) oil fields to augment supplies from the Jubilee fields and make Ghana self-sufficient. However, the Tema thermal power enclave still depends on natural gas supply through the WAGP.

The Atuabo gas processing facility is capable of supplying up to 150 Mscf/d (abbreviation for a thousand standard cubic feet per day, a common measure for volume of gas) to the western power generation enclave at the Aboadze thermal facility with supplies from the Jubilee oil fields. Plans are underway to process natural gas from the Tweneboa, Enyenra, Ntomme (TEN) oil fields to augment supplies from the Jubilee fields and make Ghana self-sufficient. However, the Tema thermal power enclave still depends on natural gas supply through the WAGP.

Huge investment to increase the power-generation capacity of the country. More power plants have also been constructed to increase the supply of power in the country. These include Takoradi Thermal Power Plant, Takoradi T3 Plant, Tema T1 Power Plant, Mines Reserve Plant, Tema T2 Plant, and the Kpone Thermal Plant. Notwithstanding the efforts made by successive governments to expand power generation capacity, the country is still far from becoming power sufficient.

The government of Ghana is still pursuing policies to improve the shortcomings in the power sector.

The Millennium Challenge Corporation (MCA) plans to invest a maximum of US$498 million in total to help transform the power sector of Ghana and also stimulate private investment over the next five years. The objective is to create a power sector, which is financially viable, and be able to meet the current needs as well as the future needs for both businesses and households.