Coronavirus: Ghana's Power Sector Growth to Slow Down – Fitch

09-04-2020

Coronavirus: Ghana's Power Sector Growth to Slow Down – Fitch

The power sectors of many markets in Sub Saharan African countries including Ghana are at risk of a slowdown in expansion following the COVID-19 global pandemic.

This is due to the global slowdown in economic activity, leading to lower export revenues in the region as well as weakening local currencies.

According to Fitch, “As economic growth in the region slows or even contracts, this will negatively impact on the scope for investment in new power projects, and holds the risk of stalling governments' drive to increase electrification rates.”

The international ratings agency said the simultaneous collapse in oil prices, resulting from both the global economic slowdown as well as the price war between Saudi Arabia and Russia, will exacerbate this effect in markets reliant on oil exports for revenues, adding “especially as our Oil & Gas team expects little chance of the power sectors of many markets in Sub Saharan African countries including Ghana are at risk of a slowdown in expansion following the COVID-19 global pandemic.

This is due to the global slowdown in economic activity, leading to lower export revenues in the region as well as weakening local currencies.

According to Fitch, “As economic growth in the region slows or even contracts, this will negatively impact on the scope for investment in new power projects, and holds the risk of stalling governments' drive to increase electrification rates.”

The international ratings agency said the simultaneous collapse in oil prices, resulting from both the global economic slowdown as well as the price war between Saudi Arabia and Russia, will exacerbate this effect in markets reliant on oil exports for revenues, adding “especially as our Oil & Gas team expects little chance of an agreement being reached between Saudi Arabia and Russia.”

“We also expect that non-hydropower renewable projects across the region will face an increased risk of delays, as they rely heavily on imported components whose supply chains have slowed down or even stopped completely”, it said.

However, it noted that depending on how long the pandemic lasts, and on the further global response to it, the short turnaround times associated with non-hydropower renewable projects will likely result in shorter delays than other generation types.

“We highlight that South Africa and Nigeria are particularly vulnerable to the detrimental economic effects of COVID-19, creating a more pronounced risk for their power sectors and plans for expansion.”n agreement being reached between Saudi Arabia and Russia.”

“We also expect that non-hydropower renewable projects across the region will face an increased risk of delays, as they rely heavily on imported components whose supply chains have slowed down or even stopped completely”, it said.

However, it noted that depending on how long the pandemic lasts, and on the further global response to it, the short turnaround times associated with non-hydropower renewable projects will likely result in shorter delays than other generation types.

“We highlight that South Africa and Nigeria are particularly vulnerable to the detrimental economic effects of COVID-19, creating a more pronounced risk for their power sectors and plans for expansion.”

 

Source: https://www.ghanaweb.com/GhanaHomePage/business/Coronavirus-Ghana-s-power-sector-growth-to-slow-down-Fitch-919375

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