GhanaNewsOil & Gas/Mining

Government signs gas agreement with Cenpower to save US$3 billion

The gas supply agreement between Ghana National Petroleum Corporation (GNPC) is among efforts to regenerate Ghana’s energy sector

Cenpower Generation Company Ltd (Cenpower) has committed to switching its primary fuel from light crude oil (LCO) to natural gas as the company signed a gas supply agreement (GSA) with Ghana National Petroleum Corporation (GNPC).

The GSA is a critical part of the proposal made by the government during negotiations with Cenpower and will deliver substantial cost savings, estimated at US$3 billion over the remaining term of the power purchase agreement (PPA) with Cenpower.

The conversion to natural gas will also have significant environmental benefits, as emissions will drop and Ghana’s abundant natural gas resources will be used effectively for the benefit of Ghanaians and business owners.

Significant step

The move to natural gas will also alleviate the considerable pressure on the government from its take-or-pay commitments with fuel suppliers and allow for substitution of imported fuels with locally available natural gas. This will have a positive impact on the capital account.

Ken Ofori-Atta, the Minister for Finance, 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 [Energy Sector Recovery Programme] consultation process towards resolving some extremely challenging legacy issues inherited from the previous administration.”

He added: “We encourage all other IPPs to engage constructively with the government’s negotiating team to conclude negotiations without delay. 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,” Ofori-Atta said.

“The 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,” the Finance Minister said.

About Cenpower

Cenpower is a major power producer in Ghana, providing approximately 10% of Ghana’s total electricity generation. The project is an excellent example of the public and private sectors working together in Ghana to attract private investment while ensuring sustainable development.

Currently, Ghana pays over US$500 million a year for unused electricityMost of the power PPAs are legacy agreements entered into under the immediate past government.

In collaboration with the World Bank, the current government established the ESRP, identifying the policies and actions needed for financial recovery in the energy sector over a five-year horizon from 2019 to 2023. 

As part of these reforms, the government is taking steps to introduce competitive bidding for future additional capacity, to ensure that future tariffs are fair and in line with expected pricing benchmarks.

Fred Dzakpata

Asaase Radio 99.5 – tune in or log on to broadcasts online.
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