In Ghana, development follows infrastructureFebruary 4, 2022
Boaz Lavi, managing director of Sienna Services, talks to The Energy Year about challenges and opportunities in Ghana’s gas and power generation sectors and the possibilities for financing energy projects in the market. Sienna Services is an EPC company that works in the country’s power generation sector.
What major challenges are holding back the development of Ghana’s gas sector?
We have seen in the last decade that in Ghana, development follows infrastructure. When pipelines or transmission lines are built, developments spring up along their route. For example, Aboadze was developed by the government as an energy hub and had all required infrastructure built there to support generation projects; therefore, private power plants followed and developed their projects there as well.
Raising finance for generation projects depends heavily on having the required supporting infrastructure in place; if you cannot show the financier that the pipeline/transmission line is there, it will be very challenging to secure financing.
To finance critical infrastructure (gas pipelines for example) in a BOT structure, there is the need to prove an offtaker is there. This creates a cycle, which is often solved by the government coming in and building the required infrastructure followed by the private sector then being able to secure financing for the generation facilities, which then serve as offtakers for the private sector to support with additional infrastructure.
The Aboadze enclave, as an example, started with the government developing the first thermal-based generation facility and as such supporting with the required fuel and transmission infrastructures. This led to the private sector opting for Aboadze to locate their private power plants. Once the plants were there, additional infrastructure was added to support them and private initiatives have joined to benefit from the enclave.
What upcoming projects can companies take advantage of in the power generation sector?
There is a lot of potential in infrastructure projects such as transmission lines and gas pipelines. The need for additional lines and pipes to support the growing system is there. The current legal structure is being put in place to allow for the private sector to participate and in some cases even own the assets.
How difficult is it to gain financing for energy projects in Ghana?
Ghana has come far in the last 10 years in involving the private sector in the energy industry. Although we still have some way to go to clear all hurdles, the current market structure is private sector friendly.
The interest from financial institutions, both local and international, is there. In my opinion, if one is looking to participate in the market, the main question today is where is the need. My personal belief is that the need has shifted in the last decade from the generation area to the supporting infrastructure area.
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