Identifier
Created
Classification
Origin
05ACCRA2584
2005-12-20 17:23:00
UNCLASSIFIED
Embassy Accra
Cable title:  

AMBASSADOR DISCUSSES GAS PIPELINE AND CMS ENERGY

Tags:  EINV ENRG GH 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 ACCRA 002584 

SIPDIS

PASS TREASURY FOR LUKAS KOHLER

E.O. 12958: N/A
TAGS: EINV ENRG GH
SUBJECT: AMBASSADOR DISCUSSES GAS PIPELINE AND CMS ENERGY
INVESTMENT WITH ENERGY MINISTER

UNCLAS SECTION 01 OF 02 ACCRA 002584

SIPDIS

PASS TREASURY FOR LUKAS KOHLER

E.O. 12958: N/A
TAGS: EINV ENRG GH
SUBJECT: AMBASSADOR DISCUSSES GAS PIPELINE AND CMS ENERGY
INVESTMENT WITH ENERGY MINISTER


1. Summary: Ambassador Bridgewater made a courtesy call on
Minister of Energy Professor Mike Oquaye December 19. The
Minister and Ambassador discussed Ghana's preparation for the
completion of the West Africa Gas Pipeline, the status of CMS
Energy's expansion project, alternative energy sources,
offshore oil exploration, and opportunities for American
companies in Ghana's energy sector. End Summary.

Status of West Africa Gas Pipeline (WAGP)
--------------

2. The Ambassador asked about the GoG's preparations for
delivery of first gas from the WAGP, which is scheduled to be
completed late 2006. The Minister said he was working with
the Volta River Authority (VRA -- Ghana's parastatal
electricity producer) to ensure that the thermal plants owned
by VRA and U.S. energy company CMS Energy (co-located in
Takoradi) would be ready to use gas when the pipeline is
completed.


3. The Minister also gave a progress report on the creation
of a secondary gas market for industrial customers. A
regulatory framework -- which is being drafted in partnership
with consultants from USAID's Trade and Investment Program
for a Competitive Export Economy (TIPCEE) program ) would be
submitted to Parliament for legislative action as soon as
possible. He said that the Attorney General's office had
ruled that no legislation would be needed to draft a tender
for a company to act as distributor, and expressed his hope
that American companies would bid. (NOTE: If the tender for a
distribution company can be put out before the legislation is
passed it will speed up the process of creating a secondary
gas market in Ghana. END NOTE.)

Expansion of CMS Energy Plant
--------------

4. The Ambassador and Minister Oquaye also discussed the
status of CMS Energy's expansion project for its thermal
power plant in Takoradi. The GoG, CMS, and lending agencies
are holding a crucial meeting in London on January 9, and
Post is working closely with all parties to support their
effort to close the deal that will enable the construction to
commence.


5. Note: CMS built and operates a 220 MW thermal power
plant, and also provides critical technical support to VRA's
co-located 330 MW thermal plant. CMS has negotiated for
years with the GoG to add a 110 MW steam-powered "second
cycle," which will increase output by 50%t with no
additional fuel costs. This expansion is, therefore,
critical for the CMS plant to take full advantage of the WAGP
supply of gas. The expanded CMS plant added to VRA's 330 MW
plant combined will significantly reduce the cost of
electricity in Ghana. Unfortunately, the slow negotiations
mean that CMS will complete the construction up to a year
after WAGP first gas. End Note)

Alternative Energy Sources
--------------

6. The Minister said that problems with rural
electrification could be reduced if Ghana had greater access
to alternative energy sources such as wind and solar power.
He said he would like to have further discussions with energy
officials from U.S. states and companies with experience in
alternative energy production.

Offshore Oil Exploration
--------------

7. The Ambassador said she had been informed by Amerada-Hess
and Kosmos Energy ) two American companies currently in
negotiations with the GoG for offshore oil exploration
concessions ) that the Minister had been particularly
helpful in the negotiations. The Minister said he felt that
American companies were, in his opinion, desirable partners
since they were committed to exploiting any commercially
viable deposits found.

Comment
--------------

8. The Minister was enthused about the meeting and well
prepared to discuss issues in detail. Post's Economic and
Commercial Sections will follow up with business contacts to
ensure American companies are as engaged in the tender
process for the creation of a secondary gas market as they
have been in oil exploration concessions. The U.S. Trade and
Development Agency (TDA) has expressed interest in providing
a grant to outline the tender requirements for the GoG. This
could provide a U.S. company with the opportunity to get in
on the ground floor of Ghana's soon-to-be-created gas market.
End Comment.
BRIDGEWATER