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UNCLAS ACCRA 001523 
 
SENSITIVE BUT UNCLASSIFIED 
 
SIPDIS 
 
WHITE HOUSE FOR USTR LAURIE-ANN AGAMA 
DEPARTMENT FOR OES/STP 
 
E.O. 12958: N/A 
TAGS: ENRG ECON EINV EIND EFIN GH
SUBJECT: GHANA ENERGY SECTOR HIGHLIGHTS, DECEMBER 
2008 
 
Please note Department action request in paragraph 
¶8. 
 
¶1. (SBU) SUMMARY: 
 
¶A. (U) New hydro generation projects are moving 
ahead with Chinese and Brazilian financial 
assistance and tied contractors.  Based on the 
assumption that new gas-fired thermal plants will 
also be online by 2011, the Minister of Energy has 
announced a target power price of 9 cents per 
kilowatt hour by 2012. 
 
¶B. (SBU) Ghana announced its intention to pursue 
nuclear power generation by 2018.  Although they are 
still at the notional stages of drafting a national 
strategy for nuclear power, the Government of Ghana 
(GOG) has requested USG assistance through the 
Global Nuclear Energy Partnership (GNEP) program. 
 
¶C. (U) Ghana has established an independent power 
distribution agency, further opening the door to 
increased participation in the power sector by 
independent power producers.  The Ministry of Energy 
is seeking over one billion USD in investments and 
upgrades for GhanaQs electricity distribution 
system.  Progress on rural electrification is being 
accomplished in Ghana through the MCC and 'self- 
help' programs funded by the U.S. Ex-Im Bank, as 
well as Japan and the PRC. 
 
 
--------------------------------------------- ------- 
- 
¶A. Generation: Plunging Ahead, Back Into Debt 
Finance 
--------------------------------------------- ------- 
- 
 
¶2. (SBU) Energy Minister Felix Owusu-Adjapong 
announced that Ghana would reach 3,500 megawatts in 
domestic power generation by 2013 following the 
completion of all power projects currently underway. 
(Note: The 2013 GOG target is 4,000 megawatts.  End 
Note.)  Anticipating a supply of natural gas from 
both Nigeria and from domestic offshore facilities, 
the Minister announced that the GOG is investing USD 
400 million in thermal generation projects.  He 
added that GhanaQs National Petroleum Corporation 
(GNPC), Volta River Authority (VRA), and Electricity 
Company of Ghana (ECG) have been directed to ensure 
that tariffs do not exceed 9 cents per kilowatt hour 
by the 2011 to 2012 timeframe. 
 
¶3. (SBU) Ministry contacts told econoffs that after 
an assessment of Qbest practicesQ from other 
countries, the 9 cent rate was viable based on 
electricity supplied from both hydro and thermal 
sources.  COMMENT: This rate may be based on a set 
price for natural gas rather than market pricing. 
Econ will report on domestic natural gas 
commercialization SEPTEL.  END COMMENT. 
 
¶4. (SBU) Construction work is underway at the Bui 
Dam hydro-electric project, financed by a USD 292 
million buyerQs credit facility from the Chinese Ex- 
Im bank, USD 270 million in a sovereign concessional 
loan, and an additional USD 60 million from internal 
GOG resources.  Once completed, the dam will 
generate 400 megawatts and provide irrigation water 
for the Brong Ahafo region.  Construction work by 
the PRCQs Sino Hydro has been interrupted 
periodically by Ghanaian workers agitation for 
better wages, job security and collective 
bargaining.  The arrival of Pakistanis to augment 
the Chinese workforce decreases the leverage of the 
800 local laborers. 
 
¶5. (SBU) At a recent donor meeting, the Ministry of 
Energy announced that the Chinese have backed out of 
prior stated interest in financing and constructing 
three additional dams (estimated cost: USD 900 
million) on the Ankobra, Tano and Pra rivers.  The 
Ministry of Energy did not discuss the reasons for 
the Chinese change of heart, but noted that 
alternative finance sources were being explored. 
 
¶6. (U) Parliament approved a USD 500 million loan 
from Brazil to finance the construction of two 
hydro-electric projects.  GOG will contribute USD 55 
million to the projects.  The Juale project on the 
Oti River in the Northern Region is expected to 
generate 90 megawatts.  The Pwalugu project on the 
White Volta in the Upper East Region will generate 
50 megawatts.  Both projects were originally scoped 
in 1993, with a grant from the French Government 
(awarded to French firm Coyne ET). 
 
 
--------------------- 
¶B. The Nuclear Option 
--------------------- 
 
¶7. (SBU) The Minister of Energy and Director-General 
of the Ghana Atomic Energy Commission, Professor 
Edward Akaho, announced Ghanaian intent to explore 
nuclear energy.  The Director-General suggested that 
a Ghana Nuclear Regulatory Authority be constituted 
independently from the likely nuclear operator (the 
Ghana Atomic Energy Commission).  To reach the goal 
of nuclear generation by 2018, the National 
Committee on Nuclear Energy, headed by Professor 
Daniel Adzei Bekoe, is currently developing a 
national Nuclear Power Policy. 
 
¶8. (SBU) The case for nuclear energy is based on 
projected increases in demand for power: according 
to GOG estimates, by 2020 peak power demand will 
rise to 4,400 megawatts.  Contacts at the Energy 
Ministry confirmed to econoffs that Ghana intends to 
Qgo nuclearQ-- eventually.  NOTE: Ghana is a Global 
Nuclear Energy Partnership (GNEP) Partner Country 
even though its civilian nuclear industry still 
consists of a small research reactor housed at the 
University of Ghana.  The Minister of Energy 
recently signaled to Ambassador Teitelbaum the GOG's 
interest in greater nuclear cooperation through 
GNEP.  We await Department guidance in responding to 
the GOG.  END NOTE. 
 
 
--------------------------------------------- ------ 
¶C. Live Wires: Transmission, Distribution, and Rural 
Electrification 
--------------------------------------------- ------- 
 
¶9. (U) Transmission: Ghana has established an 
independent transmission entity: the Ghana Grid 
Company (GRIDCO), drawn out of the Volta River 
Authority (VRA)'s transmission department.  The GOG 
maintains that GRIDCO will facilitate private, 
independent power production and development of 
renewable energy sources.  The establishment of an 
independent transmission company will enable Ghana 
to more effectively participate in the West Africa 
Power Pool,and will facilitate tariff 'unbundling' 
and greater transparency in electricity pricing. 
 
¶10. (U) Distribution: The Energy Minister announced 
the need for USD 1 billion of investment in the 
Electricity Company of Ghana (ECG).  This includes 
proposed investment in new infrastructure and 
replacement of old systems, much of which has not 
been adequately maintained due to 
undercapitalization of utility companies and 
subsidized energy tariffs. To that end, parliament 
 
approved a 65.1 million euro loan from Norway's 
export credit agency and Fortis Bank of the 
Netherlands.  This loan will be used to finance 
upgrades for ECGQs distribution system in Accra, 
Tema, and Kumasi, including new substations, cable 
works, and staff capacity building.  (The contractor 
for the work will be NorwayQs Jacobsen Electro.) 
 
¶11. (U) Rural Electrification: The Millennium 
Challenge Corporation (MCC)'s Compact includes a USD 
5.5 million rural electrification program 
implemented by GhanaQs Millennium Development 
Authority working in three regions (Northern, Afram 
and Southern).  In August, the U.S. Ex-Im Bank 
announced the fourth in a series of loans for 
GhanaQs Self-Help Electrification Program (SHEP), 
which aims to connect all eligible communities (with 
a minimum population of 500 individuals, or 
approximately 3,800 villages) to the national power 
grid by 2020.  The SHEP IV loan project is worth USD 
350 million, and will be awarded to a small U.S. 
business: Weldy-Lamont Associates Inc. of Mount 
Prospect, Illinois.  (NOTE: Ex-Im is providing a 
loan of USD 344 million.  END NOTE.) 
 
¶12. (U) It was also reported that Ghana has also 
established a USD 30 million credit facility with 
the ECOWAS Bank of Investment and Development, also 
for SHEP IV.  In a separate project, the Japanese 
government has granted Ghana approximately USD 6 
million for rural electrification in the eastern 
region.  Japan's support for rural electrification 
began in 1989 and is currently on its fifth grant 
series in the power sector.  Additionally, Chinese 
grants for self-help rural electrification projects 
have benefitted 28 communities in the Central Region 
(Twifo Hemang, Lower Denkyira District.) 
 
TEITELBAUM