Ghana ready to open sub-Saharan Africa’s first LNG-to-Power project

Ghana is set to open its first liquefied natural gas-to-power project in sub-Saharan Africa as it moves to position itself as a hub for the region’s cleaner and cheaper fuels.

In recent years, LNG-to-power projects have boomed from Asia to Latin America as they allow countries to switch from dirtier fossil fuels to keep the lights on. And integrated LNG-to-power provides a guaranteed outlet for the fuel for the sellers.

Edmund Agyeman-Duah, project manager at the company, said that Tema LNG Terminal Co. received a floating regasification unit from Jiangnan, China on Wednesday, paving the way for the supply of 1.7 million tons of natural gas per year for power generation sometime this quarter.

Approximately two years ago, the company, backed by Helios Investment Partners and Africa Infrastructure Investment Managers, started building the $350 million project.

“Ghana can now start to service the rest of the region with fuel that is continuously growing in popularity because of the cost and the significant environmental benefits it provides,” Agyeman-Duah said.

According to the International Group of Liquefied Natural Gas Importers, on a life-cycle basis, LNG emits around half of the greenhouse gas emissions that coal emits when burned to generate electricity and, compared to a typical new coal plant, natural gas emits 50 to 60 percent less carbon dioxide when combusted in a new efficient natural gas power plant.

Ghana’s electricity consumption has grown alongside its economy for a country with 30 million people, but remains lower than Sub-Saharan Africa’s average per capita consumption and far below that of developed countries. For comparison, according to data from the World Bank, a U.S. resident consumes more than 30 times as much electricity as a Ghanaian resident.

The completion of the Tema LNG facility will be significant for Ghana and the wider West African sub-region because it will mean less dependency on the West African Gas Pipeline – which hasn’t always proved reliable,” Kissy Agyeman-Togobo, a partner and analyst at Songhai Advisory Group Ltd., said by phone from Accra, Ghana’s capital, reports Bloomberg.

Under a long-term contract with Royal Dutch Shell Plc, Tema LNG Terminal gets its gas, said Agyeman-Duah, who is not related to the analyst. Currently, state-owned Ghana National Petroleum Corp. is the mandatory off-taker that will receive regasified LNG for Tema power and industrial enclave fuel plants.

“There’s quite a bit of suppressed demand in the system,” he said. “There are a lot of industrial customers who work off-grid because of the interruptions they suffer in power supply.”

As reported by Bloomberg, the company has awarded the contract to Spain’s Reganosa Servicios SL for the operation and maintenance of the unit and the associated gas pipeline of 6 kilometers (3.7 miles).

According to Agyeman-Duah, the project was funded with a combination of equity and debt from a consortium of international banks and its processed LNG is expected to be 30 percent -35 percent cheaper than heavy fuel oil, he said.

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