Ghana's 400MW Bridge Power plant project, which was approved by the government in 2016, is nearing its opening after years of delays. The plant in Tema — the country's largest port — is due to become the largest LPG-fuelled power plant in the world when it opens, with its development steered by Africa-focused utility Endeavour Energy, Dubai-based trading firm Sage Petroleum and US company GE Power, with Sage managing feedstock supply — around 45,000 t/yr of LPG. The plant's start-up was scheduled for the fourth quarter of 2020 but the Covid-19 pandemic postponed it until this month. Argus spoke to Sage chief executive Emmanuel Egyei-Mensah to discuss the plant's imminent opening:
What is the latest from the Bridge Power plant project?
We are in the commissioning stage [of the 200MW first phase]. Covid-19 delayed the plant's start-up. Travelling that was scheduled for the experts needed to commission the plant was delayed. But now everything is back to normal — fairly normal. So we are in the final stages and expect the plant to begin commercial operations this month, but there is no start-up date yet. The LPG infrastructure is fully commissioned. There are some tests that need to be done that usually take one week, then we can declare the COD [commercial operation date] of the plant.
What LPG infrastructure is in place?
We have 13,600m³ (7,900t) of propane storage at the site, which is full at the moment — the plant can take a minimum of 80pc propane. The Tema LPG terminal linked to the power plant was actually commissioned in 2019. The pipeline has also been commissioned but could not start operations because it is tied to the COD of the power plant. So we expect the pipeline to start up this month.
What are the plans for phase two and when could this come on line?
While the signed power purchase agreement covers phase two, there are some aspects that are still under discussion. When we conceived the project, there was no natural gas in Ghana. Now we have domestic gas available and a floating LNG facility at Tema that was recently completed. The government wants cheaper power, and the cheapest option is gas. We asked them for propane to be used in phase two in the absence of natural gas, as a back-up, because gas is cheaper. To make the switch to natural gas, some changes will need to be made, pipelines built, and the plant reverted to run on natural gas. So the idea is to do this in the phase-two development. This is scheduled for completion in about 2025. If we decide to switch to natural gas or when the government makes us, then the LPG infrastructure will be made available for LPG trading.
How do you intend to secure LPG for the facility?
We have a term contract with [Geneva-based LPG trading firm] Geogas, with most of the LPG coming from Opec member Equatorial Guinea [on the west coast of Africa]. Any additional demand for LPG from phase two is likely to also be sourced from Equatorial Guinea. Other potential propane sources on the west coast are Nigeria and Angola. And we could bring supply in from the US east coast.
Ghanaian LPG demand fell by around 2pc to 332,000t in 2020, the National Petroleum Authority says. Why?
If you break the demand down into the first half and second half of 2020, the difference was material. Demand in the first two months of the year is usually low, before picking up from March. Last year, Covid-19 hit Ghana from March and demand remained subdued until May. But the average from July to December was substantially higher than the previous year. Another reason is that until 2009, there were a couple of captive power plants at mines in western Ghana running on propane. In late 2019 and early 2020, they switched these plants to run on natural gas.
Given about half of Ghana's demand is for cooking, why did Covid-19 pare sales?
Domestic supply fell sharply around the same time as there was some work taking place on pipelines. I also think [Covid-19] increased uncertainty among household users. Some people keep spare cylinders because of supply disruptions, so maybe they just burned through these during this period. And after that, demand surged. If you take out the fall in demand from the two power plants switching to gas, I think overall demand was up by about 6pc, meaning growth in the second half of the year was substantially higher.
What is constraining growth in Ghana's emerging LPG market?
Historically, there has been a mixture of factors. One has been supply constraints. Only so much LPG could be imported because the discharge infrastructure and pipelines were old and inadequate. Other oil products also come in on the same jetty as LPG at Tema, and given the time allocation, there was a limit on how much could be discharged. This is why most consumers have many cylinders, in the event of supply disruptions that can run for 2-3 months. The second issue is the distribution system. Ghana is unique in that LPG is sold like other road fuels. You go to a filling station with your empty cylinder and refill it. It is unlike the cylinder recirculation model [CRM] that operates in Kenya and Nigeria, where cylinders are distributed and exchanged for full cylinders. We are in the process of transitioning to the recirculation model. Hopefully when this arrives we will expand the distribution network and will have demand rising with it.
When is Ghana's CRM due to come into effect?
The project is ongoing — we are waiting for the first of a few licensed bottling plants to open. Construction on these has just started, and we expect at least one of them to open by the end of this year or the first quarter of 2022.
Are there plans to expand import infrastructure at the same time?
For the Bridge Power plant project, we recognised that import infrastructure was a key bottleneck, so we brought in a bigger discharge arm at the jetty. The pipeline from the jetty to the terminals was a six-inch line from the 1970s. We have put in a new propane 12-inch line so we can now import eight times as much LPG as we could before at Tema. In terms of storage, aside from our own there is storage by Fuel Trade and Blue Ocean — a Trafigura company. There are also two butane storage units under construction, one of 2,500m³ by a Nigerian company called Matris, and the other of 1,800m³ by us.
What kind of public-sector support is Ghana's LPG industry getting?
The government is the one pushing the CRM — it is providing the legislative support to ensure the programme is successful. And it wants demand to increase, with a target of expanding LPG use to 50pc of households by 2030 from about 23pc today. So it is looking at policies that need to be implemented to achieve this. As part of the CRM, there are some World Bank consultants that are helping the government look at the supply chain and the tax framework, to see what can been done to ensure the scheme is successful and the 50pc target is hit. A new domestic price formula is under development to coincide with the switch to the CRM. This could lead to possible price increases as new costs must be factored in, but the government is looking at how it could counterbalance this with possible tax cuts.
