Investing in Ghana's Energy Sector


The energy sector in Ghana contributes significantly to the economy. The sector can be classified into two main sub-sectors as follows:
  • Petroleum sub-sector
  • Power sub-sector
Ghana’s petroleum sector involves upstream and downstream activities. The upstream activities include the production and refining of crude oil and the downstream activities include distribution and marketing of petroleum products and premixing of petroleum products for industrial uses, including fishing. Production from phase 1 development of the Jubilee field commenced on 28th November 2010 and was inaugurated on the 15th of December 2010. This milestone was achieved around 40 months after discovery of the field. Gross production of over 69,000 bopd has been achieved from five wells and full production capacity of 120,000 bopd is expected to be reached within the next five months as the remaining four wells are being completed and brought on line.
Ghana relies mostly on Tema Oil Refinery (TOR) for its petroleum product supplies. The products are retailed through gas stations which are either owned by the Oil Marketing Companies (OMCs) or private individuals.
Distribution of petroleum products in Ghana is dominated by multinational oil marketing companies. Following the deregulation policy of the government, the oil marketing companies have increased in numbers to include several local Ghanaian companies. There are over twenty oil marketing companies in Ghana. The private sector, including the OMCs and others source and supply finished products through an open competitive tendering system.
The power sub-sector involves the generation, transmission and distribution of electrical energy for industrial, commercial and domestic use in Ghana. The Power System of Ghana is run by three utility companies; the Volta River Authority (VRA), Ghana Grid Company Limited (GRIDCO) and Electricity Company of Ghana (ECG).
The Volta River Authority has the primary function to supply electrical energy and therefore the Authority is responsible for the generation of electricity and GRIDCO is responsible for the transmission of electricity in Ghana. VRA supplies electricity in bulk to Electricity Company of Ghana and Northern Electricity Department for distribution to consumers. The total installed generating capacity of electric power in Ghana is about 1650 MW, comprising of 1100 MW of hydro generation (Akosombo and Kpong stations) and 550 MW from Takoradi Thermal Power
Ghana is endowed with several renewable energy resources. These include solar radiation, small hydro, biomass and wind. Technologies to harness most of these resources have been
demonstrated in Ghana.
The government’s energy policy is embodied in the Strategic National Energy Plan 2006-2020. The policy aims to develop a sound energy market that would provide sufficient, viable and efficient energy services for Ghana’s economic development through the formulation of a comprehensive plan that will identify the optimal path for the development, utilization and efficient management of energy resources available to the country.
The energy sector has been a vital component of Ghana’s industrial and socio-economic development. In this regard, the sector has been undergoing a number of developmental initiatives to improve overall operational efficiency and supply security.
Ghana has relied mainly on hydro-power plants for electricity generation. A few thermal plants are used to regulate the peak load. However, recently the net demand for electrical power has been considerably greater than the supply.
On January 5 2011, the first lifting of Jubilee crude oil, a 650,000 barrel Tullow cargo was successfully completed and three liftings have now been completed by 1st March 2011. Once plateau production is reached an average of three offtakes are expected each month.
With reference to the total amount of US $1,104.30 million imported in 2007, the share of Tema Oil Refinery and Volta River Authority amounted to US$1,104.27. The leading importer of crude oil, however, was Tema Oil Refinery with total imports of US$666.62 million.
Table 1 - Ghana: Value, Volume and Unit Price of Exports (2007)
Table 2 – Import of Crude Oil and Petroleum Products 2007
As part of the strategies to achieve the objectives in the National Energy Strategic Plan, the Government through the Ministry of Energy is encouraging public-private sector partnership by securing private sector investment in partnership with the public sector for re-capitalization of the energy supply system.
Investment opportunities therefore exist for the development of a viable local industry for the production of components and systems locally, to meet future spare-parts requirements of future investments thereby making savings and ensuring sustainability.
Investment opportunities in the sector include:
1. Energy service companies to provide energy services in these areas:
  • Energy Audits & Energy Management Strategies
  • Power Factor Correction
  • Electrical Load Management
  • Boiler Efficiency/Heat Recovery
  • Monitoring and Targeting Energy Management
  • Tariff Analysis
  • Refrigeration and Air Conditioning Systems
  • Compressed Air Systems
  • Kilns and Furnaces
  • Fuel Substitution
2. Energy Manufacturing Companies to supply energy-monitoring equipment to better meet the increased requests for power monitoring and tariff analysis from industry in the
3. Companies to provide an alternative decentralized sustainable energy system that can easily be deployed in remote and deprived communities into the overall national energy mix.
4. Companies to provide solar vaccine refrigerators for the preservation of vaccines for child immunization programmes in remote and off-grid parts of the country.
5. Provision of solar energy systems to schools in off-grid communities.
6. New, higher quality and cost competitive energy services to the poor, for cooking, transport, water heating and other home appliances.
  • Penetration of rural electrification by decentralized renewable energy complementation
  • Penetration of solar energy in hotels, restaurants and institutional kitchens using solar water heaters
  • Increased LPG penetration
  • Improved efficiency cook-stove penetration
  • Penetration of biogas for cooking in hotels, restaurants and institutional kitchens
  • Increase the penetration of modern energy into agriculture for increased agricultural production, to help achieve the nation’s food supply security objectives
  • Substitution of diesel with bio-diesel in agricultural mechanization
  • Drying of exportable farm produce such as pepper with solar dryers
  • Displacing the use of diesel for irrigation with grid electricity and mechanical wind pumps
  • Large-scale commercial poultry farmers to meet at least 10 percent of their electricity needs from biogas, using the droppings from the birds
Incentives to the sector may apply under the following provisions:
  • There is custom duty exemption for agricultural, and industrial plant, machinery and equipment imported for investment purposes
  • Listed companies enjoy corporate tax of 25% and newly listed companies enjoy 25% corporate tax for the first three years
  • Location Incentives (tax rebate) for manufacturing industries located in the regional capitals
The Ghana Investment Promotion Centre Act, 1994, also provides for automatic incentives and benefits. Please consult our website, for further information.
Ghana is a safe investment destination. Guarantees against expropriation of private investments provided under law are buttressed by the Ghanaian Constitution. Some investment guarantees are
detailed below:
i. Free transferability of capital, profits and dividends
ii. Insurance against non-commercial risks – Ghana is a signatory to the World Bank’s Multilateral Investment Guarantee Agency (MIGA) Convention
iii. Double Taxation Agreements (DTAs) – to rationalize tax obligations of investors in order to prevent double taxation. DTAs have been signed and ratified with France and the United Kingdom. DTAs have been signed with Germany and concluded with Belgium, Italy and Yugoslavia
  • Viable companies and projects can easily attract financing both on the local and international financial markets. The main sources of funding are:
  • 28 Banks
  • 43 non-bank financial institutions
  • 133 rural banks
  • The Ghana Stock Exchange – note that in the last four years, many issues of shares on the GSE have been oversubscribed by 100% - 300%, meaning that there is a lot of money for investment purposes
  • Ghana Venture Capital Fund
  • International development finance institutions based in Ghana, such as the International Finance Corporation (IFC) and the African Development Bank (AfDB)
A number of foreign financial institutions also provide off-shore financing directly to companies in Ghana.
The importance to investors of the cost of doing business in Ghana is fully grasped by the Government of Ghana. Appropriate legislation and structural frameworks have been put in place to make the low cost of doing business in Ghana an incentive. Some attractions to foreign investors and companies to locate in Ghana are as follows:
  • Stable macro-economy: The economy of Ghana has in recent years made positive progress, as a result of policy reforms which have improved macro-economic performance and created a business environment conducive to the reduction of costs. These reforms have also brought about a stabilised national currency, consistent reduction of the rate of inflation, steady decline in bank and lending rates, an improved Gross Domestic Product (GDP), growing at a rate of 6.2 per cent per annum, and a reduction in the time for establishing new business.
  • Major infrastructural projects: internal road network, electricity and water supplies, internal and external telecommunications as well as sea and airport facilities.
  • Democracy (multi-party system): Ghana was the first country south of the Sahara to be independent and it has a stable multi-party democracy.
  • Good governance: Ghana is the first country to be reviewed under the Africa Peer Review Mechanism of NEPAD.
  • The Rule of Law is being increasingly improved.
  • Peaceful economic and political atmosphere.
  • Ongoing vast and encouraging oil exploration: e.g. development of the West Africa gas pipeline to feed industry with cheap energy Oil - proved reserves: 8.255 million bbl (1 January 2002), new oil finds at Cape Three Points, off coast of Western Region, Ghana (June 2007 and February 2008).
  • Availability of Export free zone enclaves.
  • Access to the Africa Growth and Opportunity Act (AGOA) of the USA for tariff-free exports from Ghana to the US market.
  • A high degree of hospitality and personal safety: The people of many ethnic traditions and origins have forged one hallmark trait of national significance – Hospitality.
  • Excellent sea and air connections, with daily flights to Europe and USA: Ghana is accessible by international airline routes served by world-class airlines from and to other African countries, European, American and Asian destinations.
  • Several tax incentives for businesses
  • Ghana is regarded as the ‘Gateway to Africa’: Ghana is strategically located within West Africa, with easy access to one of Africa’s biggest markets (over 250 million people in the ECOWAS region). Ghana’s location as well as its relative stability makes her a natural gateway for regional trade and investment.
  • Ghana is endowed with natural resources: Ghana is abundantly endowed with natural and human resources. The natural resources include mineral wealth, a good supply of arable land suitable for crop and livestock production, forest resources, marine and freshwater fish stocks and a good potential for hydro-electricity generation.
  • Good educational system and a relatively high literacy rate.
  • The thrust of government’s economic policy is to energize the private sector, making it truly the engine of growth. The Ministry of Private Sector Development has, therefore, been established and is designed to be the advocate of business, working with all other Ministries to remove bottle necks and frustration that business entrepreneurs encounter.
  • Abundant, adaptable and easily trainable labour force.
We look forward to discussing Ghana’s potential with you.
For further information please contact:
The Chief Executive Officer
Ghana Investment Promotion Centre
Public Services Commission Building
P. O. Box M 193
Tel: +233 302 665 125 - 9
Fax: +233 302 663 801
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