Ghana set to commence first LNG-to-power project in sub-Saharan Africa

Ghana is set to revolutionize its energy sector with the commencement of the first LNG-to-power project in sub-Saharan Africa. The Tema LNG Terminal Company has announced the arrival of its floating regasification unit in Ghana, which will enable the company to start delivering liquefied natural gas to customers through its unique energy terminal in the first quarter of the year. Kwaku Boakye-Adjei, Director at Tema LNG Terminal, shared insights into the project in an interview with CNBC Africa. The facility is designed to provide approximately 1.7 million tons of LNG to Ghana, meeting about 35% of the country's total energy demand. This introduction of LNG into Ghana's energy mix is expected to boost industrial growth significantly. The immediate impact will be felt by industrial users, including off-grid consumers who currently rely on heavy fuel oil and diesel. LNG offers a secure and cost-effective alternative for these users, ensuring reliable access to fuel for electricity generation. The financing structure for the project is also noteworthy, with a focus on innovative and African-based solutions. By utilizing equity and leasing through Africa-based private equity firms, and securing financing from debt providers like DBSA in South Africa, the project embodies an African approach to addressing energy challenges on the continent. One key takeaway from Ghana's approach is the focus on identifying the cheapest and most reliable fuel sources while prioritizing economic development and environmental sustainability. Gas emerges as a transition fuel that not only reduces emissions by displacing heavy fuel oil and diesel but also offers cost-effective energy generation solutions, aligning with the goal of sustainable development. Looking ahead, Tema LNG Terminal plans to tap into the broader West African market, leveraging economies of scale to benefit neighboring countries like Benin, Togo, and Sierra Leone. As the African Continental Free Trade Area gains momentum, the company aims to extend the benefits of their infrastructure and secure gas supply to foster development across the region. The future pipeline for Tema's projects looks promising, with a focus on delivering LNG and gas benefits to more countries in the region. Over the next 18 months, the company aims to execute these projects diligently, delivering cheap and reliable energy sources directly to customers, particularly in off-grid areas. By bypassing transmission networks and prioritizing direct delivery, Tema LNG Terminal seeks to catalyze economic growth and provide a brighter future for West African nations post the challenges of 2020. In conclusion, Ghana's Tema LNG Terminal project signifies a significant milestone in the energy landscape of sub-Saharan Africa. With a commitment to economic development, environmental sustainability, and regional cooperation, the project holds the potential to reshape the energy sector in the region and drive inclusive growth and development.