The agreement, led by Early Power Limited (EPL), local subsidiary of EPL Holdings Cooperative of the USA, is seen as outrageously priced, which could overburden Ghanaians if approved.
A statement issued here on Monday by Energy think tank, Africa Center for Energy Policy (ACEP), urged the government of Ghana to review the power purchase agreement between Early Power Limited and the Electricity Company of Ghana (ECG).
The project involves the development, ownership, operation and management of the 400 MW Combined Cycle Plant to be fueled by either Liquefied Petroleum Gas (LPG) or Natural Gas (NG) for a 25-year period.
It was originally designed as an emergency project but has since been changed to a regular long-term Independent Power Producer (IPP) to be run by Early Power Limited in Tema strategically close to the Tema Oil Refinery (TOR).
It will then be transferred to a nominated entity by the government of Ghana at a purchase price of one U.S. dollar after a 25-year period.
The original project consisted of a 20-year Power Purchase Agreement (PPA) with the ECG covering 344 MW plant, with 142.5MW being a simple cycle plant.
The new project awaiting parliamentary approval consists of a 400 MW plant involving a conversion of the 142.5MW simple cycle to a combined cycle that will add 50MW steam turbine.
Since the new document provided no breakdown of the new cost structure, ACEP conceded it could not estimate the additional cost.
ACEP explained that it was unable to estimate the additional Engineering Procurement and Construction (EPC) cost of the revised project design since the document provided no breakdown of the original project cost of 647.7 million dollars.
“It is our understanding that the 953.4 million dollars is the maximum negotiable cost of the project and the actual EPC and financing costs will be what is agreed at financial close,” the think tank pointed out.
It added: “However, estimating non-EPC cost at 30 percent (industry standards) of the original project cost, the EPC cost could have been put at 453 million dollars.
“Therefore, with a revised EPC cost of 636.8 million dollars, the additional EPC cost of the steam installation could be put in a range of 150million dollars to 190 million dollars, which is on the high side for an additional 50MW.”
The think tank noted that the revised project cost of 953.4 million dollars due to the upgrading, made up of EPC costs of 636.8 million dollars and non-EPC costs of 317million dollars, gave the impression that the bulk of the costs were not related to the EPC component but to the financing cost, development and other auxiliary costs.
It therefore urged government to review the cost of the project to save some of the costs in the interest of the country.
On the other hand, ACEP is of the view that the project, if completed, would make a great impact on the power sector in both the short term and the long term.
“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,” ACEP stated.
The project, sponsored mainly by EPL, also has the Electricity Company of Ghana (ECG), Sage Petroleum Limited, Endeavor and EPL Holdings Cooperatie, USA, General Energy Investments (GE) IBV, and Quantum Gas Terminal as partners.
The minority in parliament have also raised an objection to the agreement in its current form. Enditem.
Source: Xinhua/News Ghana