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Renegotiate $953m power deal- ACEP to gov’t

acep

The African Centre for Energy Policy (ACEP) has urged government to review the power purchase agreement between Early Power Limited and the Electricity Company of Ghana to reduce the initial cost of the project.

The  $953.4 million project,which is currently before Parliament and expected to provide 400MW of power was originally designed as an emergency project but changed to a regular long-term IPP.

Some Members of Parliament have criticized government’s decision to sign onto the project, saying it will not ensure value for money.

But analyzing the agreement, ACEP has pointed out that government still has an opportunity to cut down the total cost before financial closure of the agreement.

“It is our understanding that the $953.4 million is the maximum negotiable cost of the project and the actual EPC and financing costs will be what is agreed at financial close,” it said.

According to the document before parliament the cost of the project was increased from $647.7 million to $ $953.4 million as a result of an upgrade of a simple cycle plant to a combined cycle Plant, as well as an addition of LPG infrastructure.

ACEP , in a statement explained that it was unable to estimate the additional EPC cost of the revised project design since the document provided no breakdown of the original project cost of $647.7 million.

“However, estimating non-EPC cost at 30% (industry standards) of the original project cost, the EPC cost could have been put at $453 million. Therefore, with a revised EPC cost of $636.8 million, the additional EPC cost of the steam installation could be put in a range of $150 – $190 million, which is on the high side for an additional 50MW,” it explained.

The statement added that the cost of TICO expansion, estimated at $330 million for 110MW steam installation including offshore work for Sea Water cooling system cannot be a one-to-one comparison due to design differences.

Positive impact of the project

The report, however pointed out some  positive impact for Ghana in both the short and long term.

It cited for example that the project aims to rapidly deploy an initial power of 144MW in six months from contract signing which is a good move.

“This will help meet near term shortages. Also it offers ECG certain flexibility – its first stage includes 5 gas turbine units of 28.5 MW each that can operate independently and which can be started, stopped and then restarted all within one hour,” it said.

It added that it  will also allow ECG to efficiently dispatch to match actual power demand.

Source: http://citifmonline.com/2016/08/01/renegotiate-953m-power-deal-acep-to-govt/#sthash.M72LhH9q.dpuf

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Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
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