NEW ENERGY INVESTMENT PROSPECTS IN GHANA

UNCLAS ACCRA 001951

SIPDIS

SIPDIS

DEPT PLEASE PASS USDOE - TOM SPERL
DEPT PLEASE PASS USTR - LAURIE-ANN AGAMA
USDOC FOR MARIA RIVERO
TREASURY FOR LUKAS KOHLER

E.O. 12958: N/A
TAGS: ENRG GH EINV
SUBJECT: NEW ENERGY INVESTMENT PROSPECTS IN GHANA

REF: ACCRA 1634


1. On August 11, A/Econ Chief and the Commercial Officer met
with Ghanaian Minister of Energy Joseph Kofi Adda, at his
request. The Cabinet had approved a new energy policy which
identified the need to double the country's power generation
in the next 5-7 years, he said. He hoped to expand access to
electricity, including in rural areas. Because of government
resource constraints, most of the investment in generation
plants and distribution equipment will have to come from the
private sector, he added. He hoped to identify new
generation and distribution options by the end of 2006 and
negotiate agreements in early 2007 for projects to begin in
late 2007.


2. According to Adda, the GOG is most focused on enhancing
its hydropower potential and is finalizing proposals for 16
mini-hyrdros. The Chinese have been discussing the large Bui
Dam hydro project (Brong-Ahafo region),but this deal is not
yet finalized and the governmentwould consider other offers.
The Chinese and Idian are constantly on the ministry's
doorstep, dda said, but he preferred the high quality and
tandards of U.S. companies. He noted that he had studied in
the U.S. (Indiana Weslyan and Columbia Universities) and
liked U.S. products. He anticipated approval for $350
million in EXIM Bank financing for rural electrification
distribution products and he also saw growing business
opportunities for U.S. companies in the oil and gas sector.
Adda suggested inviting U.S. energy companies to a special
event where the GOG would discuss its plans and hope to
interest U.S. investment.


3. Emboffs responded that U.S. companies were already active
in Ghana and would be interested in exploring more
opportunities. We requested a detailed list of proposed
projects. Commerce Officer said she would look into the
possibility of recruiting a trade mission for the energy
sector.


4. Comment: It remains to be seen if the minister will move
quickly on new plants, especially given the GOG's slow
decisionmaking on power projects in the past. It also
remains to be seen how these anticipated new investments will
be selected. Adda did not mention the word "tender" in his
presentation to us. Even if open tendering is used, the
tendering process can be slow and non-transparent. For
example, the GOG has let a tender three times for a new 300
megawatt VRA thermal plant, without making a decision.
Nonetheless, we are cautiously optimistic. Adda is a
financial economist with strong U.S. credentials. His
initiative in seeking out Emboffs and his enthusiasm for
attracting U.S. energy investments offers hope that the GOG
may finally be taking a more urgent approach to meeting
Ghana's anticipated need for 500 megawatts of new power over
the next five years (see reftel for more background on the
sector and its challenges).







BRIDGEWATER