The Board Chairman of Cenpower Generation Company Limited, operators of the Kpone Independent Power Plant, has assured of his outfit’s readiness to receive and use gas from the Ghana National Petroleum Corporation (GNPC) as part of a new agreement with government, which is expected to lead to savings of about $ 3 billion dollars over the next 19 years.
The new agreement with Cenpower, which currently provides approximately 10 percent of Ghana’s total electricity generation, will see the independent power producer switching its primary fuel for its electricity plants, from light crude oil to natural gas.
As part of efforts to beat down the cost of power from Independent power producers (IPPs), Government has for about a year now been engaging the IPPs and gas suppliers (GSs) under the Energy Sector Recovery Programme (ESRP) Consultation Process, to secure more favourable agreements for all parties and achieve a balanced energy sector capable of delivering fair, long-term energy partnerships and solutions.
This new agreement will be the second one with an IPP in the past two weeks, which has resulted in significant savings for government.
The other arrangement with CENIT Energy Limited is expected to result in total savings in excess of US$200 million to government and all Ghanaians over the remaining life of the PPA with CENIT Energy Limited.
Speaking to Citi Business News, the Board Chairman of Cenpower, Samuel Nana Brew-Butler, said the resources need for the agreement to be successful are all in place.
“Any moment from now we are ready. The most important thing is that we are ready to run, we’re available. We have our staff there, very competent staff. The plant is ready. GRIDCo should be ready to dispatch us. Both the pipeline and everything has been constructed. We’ve tested it months ago, so we’re ready.”
Mr. Brew-Butler also spoke about how the 3 billion dollars in savings over the next 19 years was arrived at.
“I have not done the analysis but I can only assume that because we’re not going to buy light crude oil and government is providing the gas which is a cheaper commodity, there’s savings there. Remember if we’re going to buy light crude we also have an exposure to cash. We have to find working capital to buy the fuel. If we are not going to do that, then of course that’s also another savings to government,and therefore it has its impact on tariff. I’m sure this is all that the economists have put together and they came out with that figure.”
Following the latest agreement, government has called on all Independent Power Producers to emulate Cenpower and CENIT in advancing solutions to ensure the long term sustainability of the energy sector.
According to government it currently pays over US$500 million a year for unused electricity, which is as a result of legacy power purchase agreements, entered into under the previous administration in an uncoordinated and short-sighted attempt to end the country’s power crisis at the time.