The government extended the Karpower deal for the supply of electrical power in a move that seems different from what was expected from the current administration after it criticized the deal in opposition.

In an interview with Citi News, Acting Executive Director of ACEP, Benjamin Boakye said even though the renegotiation is a good step, the government must reveal the full facts of the terms.

“The Karpower agreement was too expensive for Ghana and we have always called on the government to renegotiate the contract. We are happy about re-negotiating the agreement but what we are not sure of is what the specific terms of the renegotiated agreement are. If you are extending this period, we need to get the facts so we can do a proper analysis of the decision taken.”

We’ll save $60 m yearly from renegotiated

Though the exact savings from the renegotiation of the Karpower deal from 10 to 20 years are yet to emerge, the Deputy Minister for Energy, William Owuraku Aidoo has said Ghana will be saving at least $60 million per year.

These savings will come from the utilization of gas from the Sankofa fields.

Mr Aidoo justified the government’s extension of the deal it once criticized and said the previous deal was not cost-effective because of the 10-year duration.

It is unclear what the new terms are, but the company recently announced it will move from using Heavy Fuel Oil [HFO] to natural gas when it moves the vessel from Tema to Takoradi.

The Karpowership from Turkey has the capacity to supply 470 megawatts (MW) of power to Ghana.

“The basic structure of the deal then was totally wrong. It was nothing to write home about… We’ve renegotiated the Karpower deal and stretched it over 20 years to ensure value for money,” Mr Aidoo said on Eyewitness News.

“If you sign a power purchase agreement over a short period of time; that was 10 years, what it meant was that the good people of Ghana would virtually have to pay through the nose over a 10-year period which necessarily means they would have to pay higher tariffs. To stretch over a longer period will [see tariffs] come down to somewhere in the region of 10 cents per [kilowatt hour].”

Retort from Minority

The Member of Parliament for Damongo Constituency, Adam Mutawakilu, however, said the renegotiation was nothing exciting.

He also said the reduced tariffs as a result of the extension was no surprise.

“We know Karpower is a ship. The moment you extend the period, the tariff will come down so it is not magic that they have done. But what they have done is that, by going that way, they will not be able to build an asset for the country. That means after 20 years, the ship goes back.”

‘Karpower barge deal makes no sense’ – Bawumia

In December 2015, Dr Mahamudu Bawumia, then running mate to Nana Addo Dankwa Akufo-Addo, said it “made no sense” for government to secure the power barge as an emergency solution to the power crisis, explaining that the deal did not give the country value for money.

The 225 megawatts power barge docked at the Tema Port in December 2015, to augment the shortfall in power supply at the time.

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By: Marian Ansah/citifmonline.com/Ghana

The post Publish details of renegotiated Karpower deal – ACEP appeared first on Citi 97.3 FM - Relevant Radio. Always.

The deal with the independent power producer which was contracted by the then Mahama government to address the nation’s power crisis at the time, was criticized by the New Patriotic Party (NPP), who were in opposition at the time.

[contextly_sidebar id=”pHldw0c9GZNyBqUYcxCOidF3glPf6Z3U”]They had argued that the arrangement was highly priced, and was not value for money.

The African Center for Energy Policy (ACEP), also recently called on government to renegotiate the deal.

However, Citi News sources at the Energy Ministry suggests that the deal has been renegotiated to ensure value for money, and extended to twenty years.

It is unclear what the new terms are, but the company recently announced it will move from using Heavy Fuel Oil [HFO] to natural gas when it moves the vessel from Tema to Takoradi.

The Karpowership from Turkey has the capacity to supply 470 megawatts (MW) of power to Ghana.

‘Karpower barge deal makes no sense’ – Bawumia

In December 2015, Dr. Mahamudu Bawumia, then running mate to Nana Addo Dankwa Akufo-Addo, said it “made no sense” for government to secure the power barge as an emergency solution to the power crisis, explaining that the deal did not give the country value for money.

The 225 megawatts power barge docked at the Tema Port in December 2015, to augment the shortfall in power supply at the time.

Per Dr. Bawumia’s analysis, “A 225 megawatts plant like the Karpower Plant that we are renting, will cost some 225 million dollars if we wanted to purchase it; and we will own it. Under the Karpower deal, we will pay for the power from the barge for the next ten years whether we use it or not. The African Center for Energy Policy (ACEP) estimates that based on the capacity charge alone which is 5.6 percent per kilowatt hour, it will cost Ghana close to one billion dollars over the next ten years for the energy from the barge. This, however, excludes the cost of fuel which will require about 35,000 tones every month. After ten years, the barge will sail away and with this one billion dollar, we could have built a 1,000-megawatt plant for ourselves. Power from the barge will also cost at least twice what it cost to supply power from Takoradi. This really does not make sense.” he concluded.

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By: Godwin Akweiteh Allotey/citifmonline.com/Ghana

The post Gov’t extends Karpower deal by 10 years appeared first on Citi 97.3 FM - Relevant Radio. Always.