New $953M power deal not an emergency solution – Jinapor
The Deputy Minister of Power, John Jinapor, has defended the proposed 25-years power deal with two-year old company, Early Power Limited, that will see the construction, fueling and maintenance of a 400 megawatts power plant.
Speaking on Eyewitness News, Mr. Jinapor also stressed that, the deal, estimated to cost US$ 953 million, should not be seen as an emergency plant as it was the result of a planned assessment.
He explained that “following Seth Terkper’s supervisory role of the power Ministry, we set out to do a proper assessment of one, our generation capacity, our current power needs, and a projection, a five year projection in order to determine what we will require in terms of generation.”
“…by the time this project is complete, it ties into our demand projections so I think that it makes a lot of sense and it is a prudent decision we have taken,” Mr. Jinapor added.
The Deputy Minister further argued that “you don’t do an emergency plant for over 20 months.”
Deal was initially an emergency option
Mr. Jinapor however admitted that, this deal was initially conceived as an emergency solution to the country’s power troubles.
He however noted that, it was eventually restructured in a move that increased the capacity of the proposed plant but also the cost.
“It was conceptualized to be an emergency plant. Following the work we did, we decided that we stretch and so yes, the title which went to cabinet was titled an emergency plant but when it went to cabinet again, we reduced the price, increased the capacity and added on a combine cycle which increased the cost.”
Deal reduces risk and end user cost
Despite the restructuring, Mr. Jinapor maintained that, the deal would be in the interest of end users and also government, because the risk will be reduced.
“The PPA, which is the end user tariff of about 12 dollars, is far lower than most of the plants in the system,” he noted, explaining further that, it is an “improvement of the GCSE. Simply put, we are reducing risk… we want to reduce the risk and exposure that the government gives in terms of a cover for the investment.”
Mr. Jinapor, who was initially tight-lipped on who would ultimately foot the bill for this deal, eventually admitted that the end user will ultimately be footing the bill but according to him, “if you stretch it over a long period of time, it means that you will be paying lower because of the principle of the value for money.”
About the power deal
Documents available to Citi News show that, the agreement for the 400MW combined cycle gas turbine power plant to be situated in Tema, will be executed by Early Power Limited, a company incorporated in Ghana only in October 27, 2014.
Early Power Limited entered into the agreement with the Government of Ghana, together with the Electricity Company of Ghana (ECG), Sage Petroleum Limited, Endeavor and EPL Holdings Cooperatie, UA, General Energy Investments (GE) IBV, and Quantum Gas Terminals.
The project involves the development, ownership, operation and management of the 400MW Combined Cycle Plant to be fueled by either Liquefied Petroleum Gas (LPG) or Natural Gas (NG) for a 25-year period by Early Power Limited in Tema, strategically close to the Tema Oil Refinery (TOR).
Beyond the 25-year period, the power plant will transfer to a nominated entity by the Government of Ghana at a purchase price of US$1.00.