GHANA: Pipeline to fuel industrial dreams

Ghana's long-held dream of becoming an industrial economy is based on a steady supply of relatively cheap power. The government, it seems, is putting its faith in gas rather than hydro for its future power needs. Neil Ford reports.

It is often argued, and rightly so, that the poor condition of vital infrastructure in much of Africa has held back economic growth since independence. Inadequate water supplies, unreliable power grids and the lack of fixed-line telecoms capacity is blamed for the scarcity of foreign investment and the inefficiency of many African companies.

Gas pipelines are relatively rarely considered, yet improved gas transmission infrastructure could be equally important if countries like Ghana are to transform from being steady but unspectacular economies into expanding industrial powers.

The Ghanaian economy has performed relatively well in recent years, as mining sector investment has increased and the key macroeconomic indicators have stabilised. Yet the country remains overly dependent on gold and agricultural exports such as cocoa. The government has made some strides towards widening mining sector participation, and there has also been some progress on utilising cocoa in domestic processing, but economic diversification is the key to moving the national economy on to the next level.

When Kwame Nkrumah led Ghana to independence in 1957, industrialisation was placed at the heart of the new nation's development plan. It was hoped that the Volta Dam scheme would generate the electricity to power the industrialisation of the country. Although the hopes of the early independence years foundered on a combination of political upheaval and ineffective economic planning, the Volta River Authority (VRA) did go on to provide the lion's share of electricity for the country, with enough left over to export to Côte d'Ivoire.

By the late 1990s, the situation had reversed. Ghana now imported electricity from Côte d'Ivoire and severe droughts in 1999 and 2000 resulted in lower water levels and greatly curtailed power production at the VRA hydroelectric power plants.

The government therefore decided to pursue the option of gas fired plants using either domestic reserves or gas imported from the proposed West African Gas Pipeline (WAGP). Despite some domestic discoveries, the lack of domestic gas reserves forced Accra to look to Nigeria and the WAGP.

Now that Ghana is as economically and politically stable as it has been in its independent history, thoughts are once again beginning to turn to industrialisation. WhOe it is now widely considered that grand industrial schemes are not the cornerstone of economic growth - despite their obvious attractions to politicians hungry for positive publicity - the WAGP is likely to play a key role in pushing Ghana and the wider West African region on to the next level of development.

The Chevron-led consortium that comprises the West African Gas Pipeline Company (WAPCo) began installation of the 569km offshore section of the project in September 2005.

Funso Kupolokun, the group managing director of Nigerian National Petroleum Corporation (NNPC) and chairman of the WAGP Company, commented: "As the first transnational natural gas transmission system to be developed in the sub-region, we had many complex challenges to overcome. However the commencement of the offshore pipeline construction is a testament of the commitment that the states and the pipeline company have always maintained towards the realisation of this important project."

Apart from Chevron, the other members of the development consortium are NNPC, Shell Overseas Holdings, Takoradi Power Company, Société Togolaise de Gaz and Société Bengaz.

The inclusion of three power companies in the destination states emphasises the importance of power generation in the $600m project. The pipeline will eventually have the capacity to transport up to 475m cubic feet of gas a day gas from Nigeria to Cotonou in Benin, Lomé in Togo and Tema and Takoradi Ghana.

Spirit of regional cooperation

That the four sovereign jurisdictions involved have managed to coordinate the required legislative changes to enable the construction of the pipeline is testimony to the spirit of regional cooperation.

However, it is still up to WAPCo to overcome the deeply felt doubts of some over the environmental and social impact of the scheme. Kupolokun commented: "WAPCo intends to operate as a good corporate citizen in the region through a well articulated social responsibility policy that will always have the input of our host communities. It is in this regard that we will soon be implementing a community assistance programme in the areas of health, sanitation, education and income generating ventures to communities who are our neighbours within the project corridor."

Ghana's power sector had relied very heavily on the VRAs 1,038MW Akosombo hydro plant but the expansion of the 550MW Takoradi facility has injected an element of diversification into the sector.