INFRASTRUCTURE INTEGRATION IN THE WAPP REGION CEEUT Workshop

►INFRASTRUCTURE INTEGRATION IN THE ►WAPP REGION CEE-UT Workshop ► Abuja, May 1 st & 2 nd 2008 ► 1

Presentation Outline ► Present situation ► WAPP organisation ► WAPP Master Plan ► WAPP Transmission Priority Projects ► WAPP Generation Priority Projects ► The way forward 2

► THE PRESENT SITUATION 3

Africa, The Dark Continent 4

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Current Power Supply Situation in the West African Sub-Region ► Inadequate/Non Existent Transmission Interconnections in ECOWAS Member States and also between ECOWAS Member States; ► Inadequate Generation Capacity in ECOWAS Member States resulting in Power Shortages; ► Inability of ECOWAS Member States to raise the necessary financing to implement the projects required to alleviate the situation. 6

ECOWAS Demand-Supply Balance 7

► THE WEST AFRICAN POWER POOL 8

ECOWAS ADDRESSES THE NEEDS ► To address this situation of need, the Economic Community of Western African States (ECOWAS) created a new organization: the West African Power Pool (WAPP) 9

WAPP VISION ► The vision of the West African Power Pool (WAPP) Organization is to integrate the operations of the national power systems into a unified, sustainable regional electricity market, with the ultimate goal of providing the ECOWAS Member States with stable and reliable electricity supply at affordable cost 10

WAPP ORGANIZATION ► Formed January 2006 by decision of the Heads of State and of Government § § § Articles of Agreement approved WAPP = Specialised Institution of ECOWAS Headquarters Agreement with the Republic of Benin ► Articles § § § of Agreement Utility association Defines governance/operation structure and roles Operation funded by Members’ contributions 11

WAPP MISSION ► Improve supply of reliable, stable, sustainable, affordable electricity ► Develop integrated regional electricity market § § § Least cost development Economies of scale Access to primary energy resources Increased coverage Maximum benefits through trade 12

WAPP OBJECTIVES ► Facilitate Infrastructure development § Transmission interconnections § Exploit primary energy resources (Natural Gas; Hydro) ► Capacity-Building for Secretariat and Member Utilities ► Develop harmonised Codes & standards to facilitate operation, trade and development, e. g. § Operation Manual (OSMP) § Planning & design criteria ► Develop § § § and improve energy Trading System monitoring & coordination Standard agreements (trading, wheeling, power purchase) Electricity market (rules, governance, metering, settlement) 13

THE CHALLENGE: Integrating Fragmented National Power Systems MALI SENEGAL GAMBIA NIGER GUINEA BURKINA FASO GUINEA BISSAU BENIN SIERRA LEONE LIBERIA NIGERIA TOGO CÔTE D’IVOIRE GHANA 14

► WAPP MASTER PLAN 15

Master Plan for Infrastructure Development In line with WAPP Mission and Objectives, the ECOWAS Council of Ministers adopted in 1999 a Master Plan to develop electricity generation and transmission infrastructure, and to interconnect the national electrical power systems 16

Master Plan for Infrastructure Development Revised in 2004, the Master Plan § Defines the long-term vision and implementation strategy for the regional transmission system § Identifies the capital costs of the regional transmission investment program over the next 17 years (2020 horizon) § Identifies requirements for the stability, reliability and operability of the regional systems 17

Investment Requirements 18

WAPP IMPLEMENTATION STRATEGY § Coastal Transmission Backbone Subprogram (Cote d’Ivoire, Ghana, Benin/Togo, Nigeria). § Inter-zonal Transmission Hub Sub-program (Burkina Faso, OMVS via Mali, LSG via Cote d’Ivoire). § North-core Transmission Sub-program (Nigeria, Niger, Burkina Faso, Benin). § OMVG/OMVS Power System Development Subprogram (The Gambia, Guinea Bissau, Mali, Senegal) § Cote d’Ivoire-Liberia-Sierra Leone-Guinea Power System Re-development Subprogram (Cote d’Ivoire, Liberia, Sierra Leone, Guinea). 19

Coastal Trans Backbone Sub-program Inter-Zonal Trans Sub-program North-core Trans Sub-program OMVG/OMVS Development Sub-program LSG System Redevelopment Sub-program MALI NIGER SENEGAL GAMBIA GUINEA BISSAU BURKINA FASO NIGERIA GUINEA BENIN SIERRA LEONE CÔTE D’IVOIRE TOGO GHANA LIBERIA Implementation Road Map 20

Interconnected Countries 2006 MALI SENEGAL NIGER GAMBIA GUINEA BISSAU SIERRA LEONE LIBERIA BURKINA FASO BENIN NIGERIA TOGO CÔTE D’IVOIRE GHANA 21

Interconnected Countries 2007 MALI NIGER SENEGAL GAMBIA GUINEA NIGERIA WAPP 330 k. V Coastal Transmission Backbone a Lom é Co ton ou Lag os LIBERIA Tem SIERRA LEONE ora di TOGO CÔTE D’IVOIRE GHANA Tak GUINEA BISSAU BURKINA FASO BENIN West Africa Gas Pipeline (WAGP) Project 22

Interconnected Countries 2010 WAPP 225 k. V WAPP Zone A/B “Hub” MALI NIGER SENEGAL LIBERIA TOGO CÔTE D’IVOIRE GHANA a Lom é Co ton ou Lag os SIERRA LEONE NIGERIA Tem GUINEA ora di GUINEA BISSAU BURKINA FASO BENIN Tak GAMBIA 23

Interconnected Countries 2011 -12 WAPP 225 k. V OMVG Ph. I MALI NIGER SENEGAL GAMBIA GUINEA WAPP 225 k. V LSG Interconnection Tem a Lom é Co ton ou Lag os TOGO CÔTE D’IVOIRE GHANA ora di SIERRA LEONE LIBERIA NIGERIA Tak GUINEA BISSAU BURKINA FASO BENIN 24

► WAPP PRIORITY PROJECTS 25

Transmission Projects to 2011 Ikeja West-Sakété (Nigeria-Benin) ► Bobo Dioulasso-Ouagadougou (Burkina Faso) ► Aboadze-Volta (Ghana) ► Volta-Momé Hagou-Sakété (Ghana-Togo-Benin) ► Aboadze-Prestea-Kumasi (Ghana) ► Bolgatanga-Ouagadougou (Ghana- Burkina Faso) ► Han-Bobo Dioulasso-Sikasso-Bamako (Ghana-Burkina Faso-Mali) ► OMVG (Guinea-Bissau-The Gambia-Senegal) ► 2007 2008 2009 2010 2011 26

Transmission Projects 2011 -20 Côte d’Ivoire-Liberia/Guinée Forestière-Sierra Leone-Guinée Maritime ► OMVG Phase II (loop via Sambangalou, Tambacounda) ► OMVS Kayes-Tambacounda Line (Mali-Senegal) ► Nigeria-Niger-Benin, Burkina Faso (North Core) ► Côte d’Ivoire-Mali ► Côte d’Ivoire-Guinea-Mali ► 27

WAPP Zone A Priority Projects GHANA TOGO Momé Hagou Hague Kumasi Obuasi Akosombo Obuasi 2009 CÔTE Prestea D’IVOIRE BENIN 2008 2009 Aboadze 2009 Sakété NIGERIA 2006 Cotonou Lomé Volta Accra Existing 161 k. Vk. V line Committed 330/161 k. V line Committed 161 k. Vunder line construction Proposed Under dev’t 330 k. V 330 operated k. V at 161 k. V 330 k. V WAPP Coastal Transmission Backbone 28

WAPP Zone A Priority Projects Interconnection in service Committed interconnection Under development NIGER MALI BURKINA FASO Niamey 2008 Ouagadougou B. Kebbi BENIN GUINEA Bembèrèkè CÔTE D’IVOIRE TOGO NIGERIA GHANA LIBERIA 330 k. V WAPP Northern Transmission Corridor (North Core) 29

West Africa Gas Pipeline (WAGP) 30

WAPP Zone B Priority Projects OMV S MAURITANIA SENEGAL Dakar Kaye s Felou Kaolack Brikama Gouina MALI Tambacoun da THE GAMBIA Bamako Sambangal ou GUINEABISSAU Bissa u GUINEA Kaléta “OMVS Power System” - 2 nd Generation Projects Linsan Canakry Proposed Hydro Substation Transmission Existing 225 Line Under dev’t 225 k. V 31

WAPP Zone B Priority Projects OMV S MAURITANIA SENEGAL Dakar Felou Kaolack Gouina Tambacoun THE GAMBIA da Brikama MALI Soma Bamako Tanaf Sambangalou GUINEABISSAU Bissa u Labe Boke “OMVG Power System” Mali Kaléta Pita GUINEA Linsan Proposed Hydro Substation Transmission Existing 225 Line Under dev’t 225 k. V 32

WAPP Zone B Priority Projects MAURITANIA OMVS MALI SENEGAL Manantali Ségou BURKINA FASO Bamako GUINEA BISSAU BURKINA 2008 FASO GUINEA CÔTE D’IVOIRE Bumbuna Laboa n Bobo Dioulasso. Ha Bolgatan ga n Ferkéssedougou CÔTE D’IVOIRE Nzérékoré Man Sanniquellie LIBERIA Monrovi a Buchan an Ouagadougou Sikasso Kindia GUINEA SIERRA Freetow LEONE NIGER GHANA Existing 225 k. V LIBERIA Abidjan 225 k. V WAPP Zone A/B “Hub” 225 k. V under construction Under dev’t 225 k. V 33

Generation Projects ► Hydro § § § § § : OMVS - Félou OMVG - Kaléta OMVS - Gouina OMVG - Sambangalou OMVG - Souapiti Liberia - St. Paul River, Mt. Coffee Sierra Leone – Bumbuna, Benkongor, Yben Guinea – Kassa Nigeria - Zungeru, Mambila, Lokoja, Onitsha, Ikom, Gurara, Makurdi, Dyondyonga, Gambou, Kandadji 2012 ► Thermal: § Nigeria –Okitipupa, Papalanto, Ibom Power, Alaoji, Geregu, Afam VI § Ghana - Takoradi steam turbine, Tema CCGT § Senegal – Kahone 34

Regional energy development – generation projects MALI NIGER SENEGAL Under construction or financing closed Under development TOGO CÔTE D’IVOIRE GHANA a Lom é Co ton ou Lag os SIERRA LEONE LIBERIA NIGERIA Tem GUINEA ora di GUINEA BISSAU BURKINA FASO BENIN Tak GAMBIA 35

THE WAY FORWARD ► Realizing WAPP vision - the integration of the presently fragmented national power systems into a unified, sustainable regional electricity market – requires a long and complex process which cannot be fully predicted at this stage. We may, however, attempt to anticipate the series of steps which need to be taken for the creation of a regional electricity market 36

WHAT IS A “REGIONAL ELECTRICITY MARKET” ► Today, there are cross-border exchanges of electricity without competition among sellers, or among buyers § A market would require some kind of competition § A regional market is different from a national market recommend the following definition: a regional electricity market exists, when ► We ü Producers are able to export energy on a competitive basis, or sell to a regional power exchange, and ü Distribution companies and large end users are able to import energy on a competitive basis, or buy from a regional power exchange 37

CREATION OF WAPP ELECTRICITY MARKET MEDIUM TERM OBJECTIVE (2011) Genco-transco Production Transmission Power producer Transmission System operator Distribution All customers 38

SUGGESTED PHASES FOR MEDIUM TERM OBJECTIVE (2011) ► Phase 1: Bilateral trading Measurement of Net Transfer Capacity (NTC) § Unbundling of accounts for the regional network § ► Phase 2: Bilateral trading, with a few transit flows Allocation of NTC on the basis of contract priority § Calculation of transmission tariffs for regional network § 39

SUGGESTED STEPS FOR MEDIUM TERM OBJECTIVE (2011) ► WAPP member utilities should § Establish clear rules on who has the right to use crossborder interconnection capacity ► Should the importing country claim 100 percent for its own national power company, or genco-transco? ► How much capacity is available for transit? When? § Separate the regional network from the national network ► Best solution: separate ownership ► Next best solution: separate accounts § Agree on who will pay a transmission tariff for use of the new 330 k. V and 225 k. V lines ► How much capacity will be “reserved” for IPP deals? § Develop a standard transmission service contract 40

LONG TERM OBJECTIVE: TRANSITION FROM REGULATED PRICES TO WHOLESALE MARKET PRICES Power producer Power exchange, or trading system managed by a Market Operator Distribution Market operator System operator Eligible customers Non-eligible customers 41

SUGGESTED PHASES FOR LONG TERM OBJECTIVE (2020) 3: Merging of selected zones in the regional network ► Phase § In each zone there is a regional transmission company or the network is operated as one transmission company ► Phase 4: Start of the regional electricity market § Competition among buyers and sellers § Each market participant gets access to the whole WAPP regional network by paying only one transmission tariff § Transit tariffs and export tariffs are eliminated ► Phase 5: Start of a regional power exchange § Congestion management approach 42

LONG TERM OBJECTIVE: TRANSITION FROM REGULATED PRICES TO WHOLESALE MARKET PRICES ► Given a political choice between: § Low electricity prices set by the government, resulting in blackouts and shortages of generating capacity § High electricity prices set by a well-designed market, with no blackouts and no generating capacity shortages … many governments would opt for the 1 st alternative ► Electricity prices must not be too low, or power shortages will follow, nor too high, or social unrest will follow. Finding a balance absorbs most political attention, causing to loose sight of the longer-term objective of creating a regional electricity market which, with help from Adam Smith’s invisible hand, will automatically find the correct price levels. 43

► THE FINAL OBJECTIVE 44

Lighting Up West Africa 45

THANK YOU 46