ENERGY, OIL AND GAS DEVELOPMENT Consultative Group Meeting September 23, 2010 THE POLICY CONTEXT • Energy and related services play a major role in facilitating socio-economic development. • Recent discovery of oil and gas has also heightened expectations for remarkable improvement in the pace of national development. • However, the expectation of Oil and Gas to propel Ghana forward can be seen as a means to national development rather than an end. • The Policy Direction therefore seeks to harness the transformational opportunities presented by the discovery of oil and gas to industrialize Ghana. KEY FOCUS AREAS OF THE SECTOR The key focus areas of the Energy, Oil and Gas sector in the GSGDA-1 are: •Diversification of the Economy. •Employment Creation. •Protecting the Environment. •Revenue Management. •Capacity Development. •Increasing access to Petroleum Products and electricity; and •Pricing to support development priorities. OIL & GAS POLICY PRIORITIES The following will be the sector policy priorities: • Synergies and Linkages with other sectors of the economy; • Generating resources that can be used for a rapid development of national infrastructure; • Increasing agricultural productivity; • Enabling a paradigm shift in the structure of the economy toward increased gas-driven industrial value-added production; • Accelerating job creation and facilitating the building of national capacity to harness advanced technologies to support industrial development. POWER SECTOR POLICY PRIORITIES • The Policy Goal is to achieve significant improvements in power generation levels, and transmission and distribution infrastructure to meet local demand growth at 10% per year as well as regional demand for power, to restore Ghana’s position as a major exporter of power in the sub-region by 2015. • This will be achieved through – capacity addition, rehabilitation and modernisation of the transmission and distribution infrastructure. – increase in installed power generation capacity quickly from about 2,000 MW at present to 5,000 MW by 2015. – increased electricity access from the current level of 67% to universal access by 2020. – pursuit of further Power Sector Reforms to facilitate private investment. POLICY OPPORTUNITIES • The broad policy thrust is to use opportunities arising from oil and gas industry as a catalyst to diversify the economy to create jobs in other sectors, with incentives for investments along the industry value chain to expand its impact. • It also aims to prioritise the use of oil revenue for education, health, agriculture, infrastructure, rural development, water, sanitation and poverty reduction. • Make gas available for domestic utilisation and industrial value creation; • Prioritize availability of gas for power generation to meet domestic needs and export to sub-regional markets. • Expand Ghana’s oil refining and power generation and transmission and distribution capacity. POLICY CHALLENGES • Gas-driven industrial development requires early decisions on gas development, and prioritizing off-take and pricing regime to signal potential investors. • The Power sector is also hampered, among others, by poor transmission and distribution infrastructure, volatility of Volatility of hydro-generation, high cost of fuel for thermal, and inadequate access in some areas. • Also, while expectations are high for the oil and gas industry to employ many Ghanaians, the capacity to create jobs in the sector is limited and jobs are highly technical. • Moreover, diversification of the economy also requires crosssectoral approach which is currently lacking, as well as conscious build-up of Ghanaian human resource capacity in the oil and gas sector to drive targeted linkages. MOBILIZATION OF INVESTMENT FOR ENERGY SECTOR DEVELOPMENT • Energy infrastructure requires big investments. • The Policy will therefore encourage investment from the private sector to complement public investment. • In some contexts, private investors will require a framework of a public-private partnership (PPP), with the State perhaps providing special support.