Abu Dhabi National Energy Co. (TAQA), a state-owned oil explorer and power supplier said on Monday that it has secured a US$355million project financing and government approval to expand the Takoradi II expansion project, which holds a strong economic rationale and will be able to deliver base-load power at a highly competitive tariff and help the power system in the country diversify from hydro and oil dependency, and support the country’s growth and sustainable development.
The US$355million project financing will come from World Bank unit, International Finance Corp (IFC), and a consortium of financial institutions that include FMO, the majority Dutch government-owned development bank; the African Development Bank; Agence Francaise de Development (AFD); and Deutsche Investitions-und Entwicklungsgesellschaft (DEG).
Ghana’s economy has 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. The country’s installed power capacity will soon be insufficient if additional capacity is not added to meet the expected increase in demand (6.5 percent per year).
The project consists of the 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.
The plant expansion is a landmark project for the economy as it will allow the country to continue its economic transformation to a middle-income country and improve the living standards of its population.
In addition, this added capacity is an opportunity for Ghana to diversify its energy mix. Ghana’s domestic power supply currently comes mostly from hydropower (about 61 percent), 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. Furthermore, the plant has recently been converted from primarily using heavy fuel-oil to one in which the primary fuel is natural gas, to be sourced from the West African Gas Pipeline.
As mentioned by Ms. Tas Anvaripour, the AfDB’s Head of Infrastructure Finance and PPP, “this project is a model example of a “Green Growth” PPP project featuring a national utility investing alongside private sponsor.
“The project has a strong economic rationale behind it, which is 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 a conversion from simple to combined cycle will increase the power plant output capacity by 50% at no additional fuel and no additional carbon emission impact”
TAQA, which is 75 percent-owned by the government of Abu Dhabi, will expand the Takoradi 2 (T2) power plant's capacity from 220 megawatts to 330 megawatts, the firm said in a statement.
Japan's Mitsui & Co and Korea's Kepco will start construction of the plant this month, the statement added.
The TAQA-operated T2 power plant currently represents 15 percent of Ghana's installed power production capacity. The expansion is expected to be inaugurated in 2015.
The plant is owned and operated by Takoradi International Company LLC which is 90 percent owned by the Abu Dhabi National Energy Company (TAQA) and 10 percent by the Ghanaian state utility, the Volta River Authority (VRA).
In 2010, TAQA signed a Memorandum of Understanding with the Ghanaian government and the VRA in relation to the 110 MW expansion of the Takoradi plant. Both TAQA and the VRA have broad experience in the power sector and in developing power generation in Ghana.
TAQA is the operator of the facility through its wholly-owned subsidiary TAQA Generation International Operating.