Gov’t extends Karpower deal by 10 years

Government has extended the controversial Karpower deal from ten to twenty years, Citi News confirms.

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.

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.

Source: Citi Business News

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