[ad_1]
Cenpower Generation Company Limited (Cenpower) has committed to changing its primary fuel from light crude oil (LCO) to natural gas and has entered into a gas supply agreement (GSA) with Ghana National Petroleum Corporation (GNPC).
Gas operations are expected to begin later this week.
A statement issued by the Finance Ministry’s Public Relations Unit said the government welcomed Cenpower’s important milestone and commitment.
The GSA is a key part of the proposal presented by the government during the negotiations with Cenpower and will generate substantial cost savings, estimated at $ 3 billion over the remaining period of the Cenpower PPA.
In addition, converting to natural gas will have significant environmental benefits, as emissions will be reduced and Ghana’s abundant natural gas resources will be used effectively for the benefit of Ghanaians and the business community.
In addition, the move to natural gas will alleviate the considerable pressure on the Government of its purchase or purchase commitments with fuel suppliers and will allow the substitution of imported fuels with locally available natural gas, which will have a positive impact on the capital account, according to the notice.
The statement quoted Finance Minister Ken Ofori-Atta as saying: “We welcome Cenpower’s commitment to Ghana and recognize Cenpower’s conversion to gas as a significant step to help regenerate Ghana’s energy sector.”
In recent weeks, there has been increased momentum in the ESRP consultation process to resolve some challenging legacy issues inherited from the previous administration, he said.
“We encourage all other IPPs to constructively engage with the government negotiating team to conclude negotiations as soon as possible. IPPs have a vested interest and an important role to play in providing a stable energy supply and ensuring a fair, balanced and sustainable energy sector for the people of Ghana.
As always, this Government is committed to building a dynamic and competitive energy sector, where private investment can flourish and the interests of Ghana’s people and businesses continue to flourish. ”
Cenpower is a major energy producer in Ghana, providing approximately 10% of Ghana’s total electricity generation. This project is an excellent example of the joint work of the public and private sectors in Ghana to attract private investment and ensure sustainable development.
Currently, Ghana pays more than $ 500 million a year for unused electricity. Most energy PPAs are legacy agreements, entered into under the previous administration.
The Government, in collaboration with the World Bank, established the Energy Sector Recovery Program (ESRP), identifying the policies and actions necessary for the financial recovery of the energy sector in a five-year horizon (2019-2023).
As part of these reforms, the Government is taking steps to institute competitive tenders for future additional capacity to ensure that future rates are fair and in line with expected reference prices.
The statement said the government has demonstrated its commitment to the ESRP through the active development of sector-wide initiatives and reforms, including the implementation of the Cash Cascade Mechanism (CWM) in April 2020, which enables fee revenue from the Ghana Electricity Company (ECG). ) to be distributed more transparently.
In addition, the Government is managing the payment of arrears in the energy sector, despite the difficult fiscal situation, which has been aggravated by the Covid-19 pandemic.
The statement said that the Government’s negotiating team, established within the framework of the Energy Sector Recovery Working Group (ESRTF), which is led by the Chief Minister, is working bilaterally with independent power producers (IPP) and suppliers of gas (GS) within the framework of the ESRP Consultation Process to ensure more favorable agreements for both parties and achieve a balanced energy sector capable of offering alliances and just and lasting energy solutions.
He said the government had undertaken the discussions in good faith and urged all IPPs to work closely with the negotiating team to conclude the negotiations as soon as possible.
In September, the government successfully secured the terms of a modified PPA with CENIT Power Limited.
As part of the ESRP Consultation Process, the Government has also directly involved IPP lenders in the negotiations, offering to refinance outstanding facilities at a discount through a designated Energy Fund.
Clearly, lenders have a crucial role to play in alleviating the debilitating financial strain on the government, arising from onerous and unbalanced legacy power sector contracts, by renegotiating terms that provide significant rate reductions.
Globally, financial institutions have to reconsider their positions in light of the impact of the Covid-19 pandemic and its devastating impact on national economies, including the triggering of defaults and credit downgrades.
The government urges lenders to take a sensible and pragmatic approach and urgently consider refinancing proposals in order to conclude negotiations as quickly as possible, the statement added.
