IFC is providing an $80 million loan to Takoradi International Company (TICO), to help expand its gas-fired Takoradi 2 power plant (“T2”) in Ghana, increasing the generation of electricity in the country to spur economic growth.
TICO is a joint venture between Abu Dhabi National Energy Company PJSC (“TAQA”) (90%) and Volta River Authority (“VRA”) (10%), the main generator and supplier of electricity in Ghana. TAQA is the operator of the facility.
T2 will use waste heat recovery technology for the expansion, which means the plant will be able to generate 50% more electricity with only marginal incremental fuel consumption and without increasing greenhouse gas emissions. The increased efficiency will also lower the cost of electricity generated by T2.
Alongside the $80 million, IFC will provide an additional $15 million loan to TICO on behalf of the Canada Climate Change Program, for which IFC is the implementing agency. The OPEC Fund for International Development will be providing $22.5 million, and the balance of the $330 million debt financing will be provided by a consortium of international development finance institutions, led by FMO.
T2’s expansion responds to increasing demand for electricity in Ghana. While the country enjoys a relatively high electrification rate of 61%, Ghana’s growing economy has stretched the power sector, which mostly relies on hydro generated power from Lake Volta. The plant previously ran on light crude oil, but with increasing offshore gas finds in Ghana and Nigerian gas now flowing to Ghana through the West African Gas Pipeline, the existing turbines have been converted to dual fuel capability, to also run on natural gas.
Frank Perez, Executive Officer and TAQA’s Head of Power & Water said, “We are delighted to have jointly developed this landmark project with our partner VRA and the Government of Ghana. This is the culmination of hard work by all parties to ensure that we deliver the best possible electric tariff for the Ghanaian consumer in an environmentally responsible way. We have played a vital role during the last ten years in delivering a reliable source of electricity to the population with an excellent safety record, and this project will enable us to continue to do so for another 25 years.”
Yolande Duhem, IFC Director for West and Central Africa said, “The expansion of Takoradi 2 demonstrates how the private sector can help increase supply and reduce the cost of power generation in West Africa. Takoradi 2 is the first commercial project financing for an independent power project in Ghana, and will serve as a landmark as the Government of Ghana continues to encourage private sector participation in power.”
Increasing power generation is at the heart of IFC’s strategy for infrastructure development in sub-Saharan Africa. IFC invested $1 billion in infrastructure projects in Africa in fiscal year 2012, up from $200 million five years ago.