ATUABO, September 10 – Can a long delayed natural gas plant transform a nation’s economy? Ghana’s President John Dramani Mahama certainly hopes so, labelling a new facility even more important than the discovery of oil.
The plant in Atuabo, outside a village on Ghana’s remote west coast, is finally due to open in December, producing a projected 500 megawatts of electricity. It will help save the treasury about $500 million (385 million euros) every year in crude oil imports.
In turn it is hoped that the facility will boost oil production to ease the power outages that are becoming increasingly common nationwide — both vital improvements as Ghana’s economy stutters.
“This plant, I believe, is even more important than oil because of its multiplier effect in terms of job creation and in terms of its importance to Ghana’s energy security,” Mahama said on a visit to the facility last week.
“I feel more excited about this gas plant than I did with the production of (Ghana’s) first oil,” he told reporters, calling the towering facility a “game-changer”.
Ghana — a rare stable democracy in turbulent West Africa and a major producer of gold and cocoa — needs help to restore its economy’s flagging fortunes.
The country has lost some of its lustre among investors in recent months as dropping commodities prices and a stubborn 10.1 percent budget deficit have sent consumer prices and business costs soaring.
The local currency has plummeted against the dollar and things have become so serious that Mahama decided last month to turn to the International Monetary Fund for help, while also issuing a reported $1 billion in Eurobonds.
The government’s money worries have had a knock-on effect on the oil sector, which before Mahama’s election in 2012 was hailed for its potentially transformative power.
In particular, Ghana’s inability to process the natural gas that bubbles up along with its crude oil has frustrated Mahama’s efforts to arrest the economic slide.
Anglo-Irish firm Tullow, lead operator on the offshore Jubilee Field, for example, said they were unable to produce more than 100,000 barrels of oil per day because there was no plant to handle the gas.
– No quick fix –
Construction on the Atuabo facility started two years ago and the government last said that it had been due to come online in December last year.
But several deadlines for opening have been missed, as Ghana quibbled with China over a $3 billion loan it was using to fund the construction.
Last year, a container of crucial equipment was lost at sea as it was being shipped to Ghana.
Analysts agree that a more reliable power sector could help Ghana restore confidence.
“Clearly, we could have made better progress than we have made now,” said Steve Manteaw, chairman of the Civil Society Platform on Oil and Gas.
“If the infrastructure had been ready earlier, we would have been producing much higher volumes than we are now.”
The World Bank said in a report last year that Ghana was spending $1 million per day on crude oil imports to keep its power plants turning, with thermal and hydro-electric facilities operating below capacity.
As a result, rolling blackouts sweep the country, driving up costs with businesses such as mines and large firms forced to rely on generators to keep the lights and machinery on.
“That has affected business confidence,” said Sebastian Spio-Garbrah, managing director of New York-based consultancy DaMina Advisory.
“Had the gas come online earlier as scheduled, it would have strengthened business confidence.”
Mahama said the plant would save around $500 million annually in crude oil imports.
But the World Bank suggests that Ghana requires $4 billion of investment over the next 10 years to close its power deficit.
The Atuabo plant will not be a quick fix: a reliable supply of gas to the plant will only be guaranteed in 2017, when two new oil fields are expected to begin production off Ghana’s coast.
“It (the new plant) has not really met our total energy demand,” Manteaw said. “But it will reduce substantially the load shedding which has become quite a thing recently.