ADF Loan Amount -- UA 28.6 m (US$42.90 m)
Grant Amount -- UA 19.86 m (US$29.79)
Interest Rate on ADF Loan -- No interest charge
Service Charge on ADF Loan -- 0.75 per cent per annum on the principal amount of the loan disbursement and
outstanding from time to time
Commitment Charge -- 0.50 per cent per annum on undisbursed portion of the ADF loan
Grace Period -- 10 years
Re-payment Period -- 40 years (exclusive of grace period). Re-payment of the principal commences 10 years from the date of this agreement, at the rate of 1 per cent per annum from the 11th to 20th year inclusive and the rate of 3 per cent per annum thereafter.
Repayment shall be made semi-annually on 1st April and 1st October each year.
Concessionality Rate -- 75.0 per cent.
Components of the Project
The project comprise three main components with each having sub- components. The components are described below:
Component A: Distribution System Reinforcement and Extension
This component involves activities that will improve the performance of ECG's distribution system. This component has five sub-components, to be implemented as follows:
A.1. Construction of Kasoa BSP Substation: this will involve the construction of a new 161/33 kV 4x50/66 MVA Bulk Supply Point (BSP) substation at Kasoa and 33 kV circuits to link the BSP to the existing stations. This subcomponent will relieve the strain on the existing BSPs serving the rapidly growing Kasoa area.
A.2. Construction of Juaboso BSP and Asankragwa Substation: There will be the construction of a new 161/33 kV,
2X25/33 MVA BSP substation at Juabeso and 33kV circuits to link the BSP to existing stations as well as a new 33kV switching station and 33kV circuit to tie into existing network at Asankragwa. This subcomponent will relieve the strain on the existing BSPs serving the rapidly growing Juaboso area and provide redundancy and operational flexibility in the Asankragwa area.
A.3. Distribution Network Reinforcement: This will involve the reinforcement of ECG's distribution network in the Eastern and Western parts of Ashanti Region. This subcomponent will add or replace network equipment (11 kV/400 V distribution transformers, ring mains units, etc) and materials (conductors, cables, poles, etc.) to improve voltage and supply reliability in the region.
A.4. Grid Intensification: This will comprise the reinforcement of the existing power distribution system and extension of the system to cover the un-electrified portions of the peri-urban or rural communities in the Kasoa, Juaboso, Asankragwa and the Volta Region.
A.5. Supervision Consultancy Services: This sub-component will make it possible for the hiring of a consultant who will be in charge of the management and supervision of the works.
Component B: Off-grid Renewable Energy Electrification:
This component involves activities that will deploy off-grid solar PV systems to electr ify 60 lakeside and island communities having more than 1,000 inhabitants and public facilities such as schools and clinics in 10 districts in the Volta and Eastern Regions. The component has two subcomponents:
B.1. Supply and Installation of Solar Systems: Consists of the procurement and installation of one 500Wp solar PV system, three 100Wp solar systems for staff of the public facility, four, 100Wp solar street lighting systems and one 200Wp phone/battery charging services centre for each of the 60 target communities.
B.2. Supervision Consultancy Services: Involves the hiring of a consultant to be in charge of the management and supervision of the works.
Component C: Institutional Development and Capacity Building:
This component will support interventions that would empower key institutions in the sector and enable them to discharge their mandates in accordance with practice performance standards. The component has six subcomponents:
C.1. Renewable Energy Authority: This involves the recruitment of a consultant to define a framework for the establishment and operationalisation of the Renewable Energy Authority (REA) responsible for overseeing the implementation of renewable energy policies as defined by the Renewable Energy Law (Act 832) of the country.
C.2. Geographic Information System: this will entail the implementation of a Geographic Information System (GIS) in ECG's network.
C.3. Mini-micro Hydropower Studies: consist of the development/update of pre- feasibility studies for 10 medium-sized potential mini-hydropower sites.
C.4. ECG Development: This will consist of the various training programmes to enhance the operational capacity of staff in areas of project management, engineering, procurement, SCADA operations, energy efficiency management, tariff designs, et cetera, and improve the institutions operational and financial performance to be agreed upon with the Bank during project implementation.
C.5. Sector Development: This involves institutional development of the main sector stakeholders, including Public Utilities Regulatory Commission (PURC); Energy Commission (EC); Ministry of Power (MoP); and Environmental Protection Agency (EPA).
C.6. Project Implementation Support: Procurement of vehicles, tools and equipment including multimeters, simulation software, power quality analyzers, safety equipment, trumeters, computers, printers, office software, etc required to ensure effective project implementation and management will be taken care of under this sub-component.
Justification for the Request: Justifying the need for the facility, the Deputy Minister for Power indicated that the growing urbanisation and robust economic growth in Ghana has significantly increased the country's
demand for electricity. According to the Deputy Minister, currently, about 620 per cent of households nationwide have access to electricity, but only one- third of households have access to electricity in rural areas.
The growth in electricity demand combined with insufficient investment in the electricity network development in the past, the Deputy Minister added has led to considerable strain on the distribution network.
The Deputy Minister was therefore, hopeful that the project would reinforce and extend ECG's distribution system and help GoG to achieve its objectives of ensuring availability of reliable and universal access to energy services for domestic use and for export by 2020 as stipulated in the ESDP (2010).
The Committee observed that the total project cost, includes a 10 per cent provision for contingencies (5 per cent for price escalation and 5 per cent for physical contingencies), is estimated at (UA56.17) million out of which twenty-eight million, six hundred thousand Units of Account (UA28.6m) (equivalent to forty-two million, nine hundred thousand United States dollars (US$42.9m) is the Loan Facility, and nineteen million eight hundred and sixty thousand Units of Account ( UA19.86m) ( equivalent to twenty- nine million, seven hundred and ninety thousand United State dollars (US$29.79m) is the Grant Amount.
The difference of UA 7.71m (equivalent US$11.6m) which constitutes a counterpart funding, the Committee noted will be financed by Electricity Company of Ghana (ECG).
However, considering the current financial standing of ECG and the fact that disbursement of the Facility will be contingent on the provision of the counterpart funding on the part of ECG, the Committee recommends to the Ministries of Finance and Power to ensure that the difference is timely provided by ECG to avoid non-disbursement on the part of the lender.
The Committee also noted that in line with Government's new debt management strategy and also as part of the efforts to build the capacity of SOEs to borrow on their own balance sheets, the loan component of the facility amounting to UA28.60m (equivalent US$42.90m) is being on-lend to the Electricity Company of Ghana (ECG) on the same terms for the implementation of the project.
The Committee, further noted that to ensure commitment to the repayment of the On-Lend Facility by ECG, ESCROW accounts (Principal Repayment Account and the Interest Payment Account) have been opened with the Bank of Ghana into which ECG shall pay the principal, all commitment charges and service charges.
The Committee, however, observed that all charges incurred in maintaining and withdrawing funds from the Escrow Account shall be paid by the Ministry of Finance.
The Committee having carefully examined the referral is of the view that the successful implementation of the project will help improve access to reliable and quality electr icity services by reinforcing and extending ECG's distribution system and deploying off- grid systems. Further the project will