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Joseph harrison mensah ffdmooc final assignment

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This artifact informs the general public, governments and private sector about how a catalytic role of the World Bank can generate private finance to solve infrastructure problem is developing countries. It shows the case of a recent catalytic role played by the World Bank is going curtail electrical power outages in Ghana after project completion in 2018. Energy has a link to almost every economic sector with major impact on the present and future prosperity of a nation. The World Bank committed $700 million in guarantees in raising $7.9 billion from the private sector for the Sankofa Gas Project.

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Joseph harrison mensah ffdmooc final assignment

  1. 1. The    Sankofa  Gas  Project  in  Ghana    A  world  bank  financing  for  development     ac6vity  to  assist  the  energy  sector  in  Ghana         By       Joseph  Harrison  Mensah     Financing  for  Development  MOOC       Final  Assignment      
  2. 2. Introduc6on     This piece illustrate how a very recent catalytic role played by the World Bank is going curtail electrical power outages in Ghana after project completion in 2018
  3. 3. Background     •  Energy has a link to almost every sector of the economy with major impact on the present and future prosperity of a nation. It contributes to employment, productivity, income and living standard. •  Ghana sources her power production from hydropower facilities (affected and rainfall and water inflows) and thermal plants (affected by fuel supply).    
  4. 4. Hydro   Thermal  
  5. 5. •  Power outages are phenomenal in Ghana. Historically there has been major episodes which have had severe consequences on the Ghanaian economy. The present present power crisis which began 3 years ago, has proven hard to solve. On the average, one could experience a 24hrs power outage and 12 hour power on with disruptions.
  6. 6. Current  Supply  and  Demand     •  Installed capacity: 2830MW •  Electricity demand at peak level is 1,980-2,300 MW •  The annual growth in demand is about 10 -12 % •  It is estimated that Ghana requires capacity additions of about 200MW to close the gap with increasing demand in the medium to long term. •  The country supply electricity to neighboring Burkina Faso, Benin and Togo
  7. 7. Power  Crisis  in  History   •  1982 – 1985: Caused by poor rainfall •  1998 – 2000: Caused by drought in the sub-region due to the El Nino climatic phenomenon and the increase in demand for power in the country •  2006 - 2007: Caused by poor rainfall and insufficient reliable thermal power generators at the Aboadze thermal plant •  2012 - Present: Caused by insufficient fuel to run the thermal plants which is attributed to faults on the gas pipeline, and Lack of financing for fuel procurement. Maintenance work on the thermal plants There is also Poor rainfall, reducing hydro power generation
  8. 8. The  impact  of  power  outage  in  Ghana   Power outages affect everyone and every sector of the economy including households services, industry, agriculture     Power  outage  at  Sports  stadium   Effect  on  teaching  and    learning     Power  Outage  at  the  Parliament  of   the  Republic  of  Ghana   Impact  on  factories    
  9. 9. The  effect  on  Gross  Domes6c  Product   The  current  power  outage  couple  with    macroeconomic   problems  (high  debt,    currency  deprecia6on)  and    infla6on  the   Economic  Growth  has  falling  dras6cally     Annual  Real  Growth  Rate  of  GDP   Source:    Budget  Statement  and  Economic  Policy,  Ghana,  2016     *  Revised      **  Provisional    
  10. 10. The  Way  Forward    in  solving  power  crisis     •  Increase  power  genera6ng  capacity     •  U6lize  available  power  genera6ng  capacity  by  procuring   sufficient  fuel      
  11. 11. World  Bank’s  Financing  for   Development  Assistance  to  Ghana   In July 30, 2015, the World Bank’s Board of Directors approved a record investment of $700 million in guarantees for Ghana’s Sankofa Gas Project - a new clean and affordable natural gas for domestic power generation meant to tackle the country’s serious energy shortage. Ghana took the proposal to the World Bank in 2014.
  12. 12. The  Sankofa  Gas  Project  
  13. 13. The  world  Banks  cataly6c  role       •  The $700 million are made up of two guarantees, an IDA* Payment guarantee of $500 million that supports timely payments for gas purchases by Ghana National Petroleum Corporation and an IBR Enclave Loan guarantee of $200 million to enables the project to secure financing from its private sponsors. •  The two guarantees together are to mobilize $7.9 billion in new private investment for the project, which will be biggest foreign direct investment in ever made in Ghana. •  Note that the $700 million used in leverage is raising $7.9 billion from the private sector.
  14. 14. The  effect  of  the  banks  cataly6c  role     •  Private investors, Eni of Italy and Vitol Group of the Netherlands will carry out the exploration and commercialization of the natural gas in partnership with Ghana’s National Petroleum Corporation, (GNPC). •  The Sankofa Gas Project will be completed by 2018 •  When completed, it will supply the thermal plants with the need fuel for power generation and replace polluting and costly oil-burning electricity. •  Of significance it will fuel up to 1,000 MW of clean power generation, •  Ghana will be able to reduce its oil imports by up to 12 million barrels a year and cut carbon emissions by 1.6 million metric tons of CO2 annually.    
  15. 15. Conclusion   •  Aside rainfall, inability to procure fuel for the thermal is one of the two major causes of power outages in Ghana •  The world banks catalytic role will help curtail power outage in Ghana significantly •  The Sankofa Gas Project will sustainably generate 1000 MW •  This will huge impact on employment, production, income, standard of living, reduce importation of crude oil, reduce the drawdown on foreign reserves etc. •  Note that the $700 million used in leverage is raising $7.9 billion from the private sector. Thus with millions, the catalytic role of the World Bank in the form of Guarantees is helping to mitigate risk and mobilize private investment in billions to solve energy infrastructure problems in Ghana
  16. 16. References     •  2016 Budget Statement and Economic Policy, Government of Ghana, http://www.mofep.gov.gh/?q=content/2016-budget-statement-and- economic-policy-government-ghana •  Energy Supply and Demand Outlook for Ghana, Ghana Energy Commission, 2015 http://energycom.gov.gh/files/Energy%20Outlook%20for%20Ghana %20-%202015.pdf •  The politics of power crises in ghana – Mohammed Amin Adam, 2015 http://thechronicle.com.gh/the-politics-of-power-crises-in-ghana- chronology-of-government-responses-and-lessons-for-ending-the- current-crisis/ •  The world Bank, July 20, 2015 http://www.worldbank.org/en/news/press-release/2015/07/30/world- bank-approves-largest-ever-guarantees-for-ghanas-energy-transformation •  http://www.theafricareport.com/West-Africa/electricity-ghanas-power- crisis-deepens.html

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