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

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

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

3. THE PRESENT SITUATION

4. Africa, The Dark Continent

6. 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.

7. ECOWAS Demand-Supply Balance

8. THE WEST AFRICAN POWER POOL

9. 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)

10. 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

11. 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

12. 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

13. 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)

14. THE CHALLENGE: Integrating Fragmented National Power Systems MALI SENEGAL GAMBIA NIGER BURKINA FASO GUINEA GUINEABISSAU BENIN • NIGERIA SIERRALEONE TOGO CÔTED’IVOIRE GHANA LIBERIA

15. WAPP MASTER PLAN

16. 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

17. 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

18. Investment Requirements

19. 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, Guinea Bissau, Mali, Senegal) • Cote d’Ivoire-Liberia-Sierra Leone-Guinea Power System Re-development Subprogram(Cote d’Ivoire, Liberia, Sierra Leone, Guinea).

20. MALI SENEGAL NIGER GAMBIA GUINEABISSAU GUINEA • NIGERIA BURKINA FASO BENIN SIERRALEONE CÔTED’IVOIRE TOGO GHANA LIBERIA 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 Implementation Road Map

21. Interconnected Countries 2006 MALI SENEGAL NIGER GAMBIA GUINEA BURKINA FASO GUINEABISSAU BENIN NIGERIA SIERRALEONE TOGO CÔTED’IVOIRE GHANA LIBERIA

22. NIGER NIGERIA Lagos Cotonou Lomé Tema Takoradi Interconnected Countries 2007 MALI SENEGAL GAMBIA BURKINA FASO GUINEABISSAU GUINEA BENIN TOGO CÔTED’IVOIRE SIERRALEONE GHANA LIBERIA West Africa Gas Pipeline (WAGP) Project WAPP 330 kV Coastal Transmission Backbone

23. MALI SENEGAL NIGER BURKINA FASO BENIN TOGO NIGERIA CÔTED’IVOIRE GHANA Lagos Cotonou Lomé Tema Takoradi Interconnected Countries 2010 WAPP 225 kV WAPP Zone A/B “Hub” GAMBIA GUINEABISSAU GUINEA SIERRALEONE LIBERIA

24. NIGER BURKINA FASO GUINEABISSAU GUINEA BENIN TOGO NIGERIA CÔTED’IVOIRE GHANA Lagos Cotonou Lomé Tema Takoradi Interconnected Countries 2011-12 WAPP 225 kV OMVG Ph.I MALI SENEGAL GAMBIA SIERRALEONE LIBERIA WAPP 225 kV LSG Interconnection

25. WAPP PRIORITY PROJECTS

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

27. 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

28. Existing 161 kV 330/161 kV line under construction Under dev’t 330 kV WAPP Zone APriority Projects GHANA GHANA TOGO TOGO BENIN BENIN NIGERIA NIGERIA 2006 2009 Momé Hagou Sakété Sakété Momé Kumasi Kumasi Hague Akosombo Akosombo Obuasi Obuasi Cotonou Cotonou 2009 Lomé Lomé 2008 Volta Volta C C Ô Ô TE TE Prestea Prestea 2009 D’IVOIRE D’IVOIRE Existing 161 kV Accra Accra Committed 330 kV line Committed 161 kV line Proposed 330 kV operated at 161 kV Aboadze Aboadze 330kV WAPP Coastal Transmission Backbone

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

30. West Africa Gas Pipeline (WAGP)

31. WAPP Zone B Priority Projects OMVS MAURITANIA SENEGAL Dakar Kayes Kaolack Felou Gouina MALI Tambacounda Brikama THE GAMBIA Bamako Sambangalou GUINEA-BISSAU Bissau GUINEA Proposed Hydro Substation Kaléta Transmission Line “OMVS Power System” - 2nd Generation Projects Existing 225 kV Linsan Under dev’t 225 kV Canakry

32. WAPP Zone B Priority Projects OMVS MAURITANIA SENEGAL Dakar Felou Kaolack Gouina MALI Tambacounda THE GAMBIA Brikama Soma Bamako Tanaf Sambangalou GUINEA-BISSAU Mali Bissau Labe GUINEA Proposed Hydro Pita Substation Boke Kaléta Transmission Line “OMVG Power System” Existing 225 kV Linsan Under dev’t 225 kV

33. Existing 225kV 225kV under construction WAPP Zone B Priority Projects MAURITANIA OMVS MALI SENEGAL NIGER Ségou BURKINA FASO Manantali Bamako GUINEABISSAU BURKINA FASO Ouagadougou 2008 Sikasso GUINEA Bobo Dioulasso GUINEA Bolgatanga Kindia Han CÔTED’IVOIRE Bumbuna Ferkéssedougou Laboa CÔTE D’IVOIRE SIERRALEONE Freetown Nzérékoré Man GHANA Sanniquellie LIBERIA Monrovia Buchanan LIBERIA Abidjan Under dev’t 225kV 225kV WAPP Zone A/B “Hub”

34. Generation Projects • Hydro : • OMVS - Félou 2012 • OMVG - Kaléta 2012 • 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 • Thermal: • Nigeria –Okitipupa, Papalanto, Ibom Power, Alaoji, Geregu, Afam VI • Ghana - Takoradi steam turbine, Tema CCGT • Senegal – Kahone

35. NIGER GUINEABISSAU GUINEA NIGERIA Under construction or financing closed Under development Regional energy development – generation projects MALI SENEGAL GAMBIA BURKINA FASO BENIN TOGO CÔTED’IVOIRE SIERRALEONE GHANA LIBERIA Lagos Cotonou Lomé Tema Takoradi

36. 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

37. 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 • We recommend the following definition: a regional electricity market exists, when • Producers are able to export energy on a competitive basis, or sell to a regional power exchange, and • Distribution companies and large end users are able to import energy on a competitive basis, or buy from a regional power exchange

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

39. SUGGESTED PHASES FORMEDIUM 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

40. SUGGESTED STEPS FOR MEDIUM TERM OBJECTIVE (2011) • WAPP member utilities should - • Establish clear rules on who has the right to use cross-border 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 330kV and 225kV lines • How much capacity will be “reserved” for IPP deals? • Develop a standard transmission service contract

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

42. SUGGESTED PHASES FORLONG TERM OBJECTIVE (2020) • Phase 3: Merging of selected zones in the regional network • 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

43. 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 1st 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.

44. THE FINAL OBJECTIVE

45. Lighting Up West Africa

46. THANK YOU