Government and Cenpower Generation Company Limited (Cenpower), a major power producer in Ghana have successfully secured terms for a gas supply agreement, GSA.
According to the agreement, Cenpower Generation Company Limited (Cenpower) has committed to switching its primary fuel from light crude oil (LCO) to natural gas and signed a gas supply agreement (GSA) with the Ghana National Petroleum Corporation (GNPC).
A statement issued by the Ministry of Finance said the gas operations are expected to begin by the end of this week.
It also states that, the GSA is a key part of the proposal put forward by government during negotiations with Cenpower and will deliver substantial cost savings, estimated at $3 billion over the remaining term of the Cenpower PPA.
Furthermore, the conversion to natural gas will have important environmental benefits, as emissions will be lowered and Ghana’s abundant natural gas resources effectively utilized for the benefit of the Ghanaians and the business community.
Minister for Finance, Ken Ofori-Atta in the statement also said: “We welcome Cenpower’s commitment to Ghana and recognise Cenpower’s conversion to gas as a significant step in helping regenerate Ghana’s energy sector. In recent weeks, there has been increased momentum under the ESRP Consultation Process towards resolving some extremely challenging legacy issues inherited from the previous administration.”
He further encouraged all other IPPs to engage constructively with the Government negotiating team to conclude negotiations as soon as possible.
“IPPs have a vested interest and a significant role to play in providing a stable energy supply as well as ensuring a fair, balanced and sustainable energy sector for the people of Ghana. As ever, this Government is committed to building a competitive and dynamic energy sector, where private investments can thrive and the interests of the Ghanaian people and businesses continue to flourish,” he added.
Cenpower is a major power producer in Ghana, providing approximately 10% of Ghana’s total electricity generation. This project is an excellent example of the public and private sectors working together in Ghana to attract private investment while ensuring sustainable development.
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Government secures amended power purchase agreement with CENIT Energy
Government’s agreement with Cenpower comes weeks after it successfully secured terms for an amended Power Purchase Agreement (PPA) with CENIT Energy Limited (CEL), a Ghanaian independent power producer.
Presently, Ghana pays over US$500 million a year for unused electricity. Most of the power PPAs are legacy agreements, entered into under the previous administration.
This Government, in collaboration with the World Bank, established the Energy Sector Recovery Programme (ESRP), identifying the policies and actions needed for financial recovery in the energy sector over a five-year horizon (2019-2023).
As part of these reforms, Government is taking steps to institute competitive bidding for future additional capacity, so as to ensure that future tariffs are fair and in line with expected pricing benchmarks.