Karpowership Deal Now Costs 37% Less

The country will pay 37 per cent less after the renegotiation of the Karpower deal from 10 to 20 years, Nana Oppong-Damoah, a Communications Specialist at the Ministry of Energy has said.

Mr Oppong-Damoah explained that the first deal brokered under the Mahama administration, was not cost-effective, hence a renegotiation for cheaper rates for the remainder of the period agreed by the past administration; and a further reduction for the period of extension which the governing New Patriotic Party (NPP) has executed.

Mr Oppong-Damoah said there were clauses in the existing agreement which made it difficult to abrogate. The NPP while in opposition, criticised the Mahama administration for signing the deal and resolved to re-engage the suppliers should it win power in the 2016 elections.

He told Moro Awudu on Class91.3FM’s Executive Breakfast Show on Thursday, 29 March 2018 that the Energy Ministry “had to find a way to take away the heavy burden of tariffs that Karpowership was imposing on us”.

“If you look at the new figures, over the first 10 years, what we have done is that the original tariffs that were agreed upon have been beaten down by at least 25 percent. Moving on to the next 10 years you will find that we have reduced it further to about 37 percent,” he said.

He continued: “In a way through this change of the process from an emergency power plant to an independent power plant”.

He indicated that the renegotiation of the contract is a contributing factor to the reduction in electricity tariffs announced by the PURC which took effect 1 April 2018.

He explained that in the price build-up “there was something known as the fuel handling surcharges which is calculated on million metric tonnes. It was US $40 under the original deal but we have negotiated it down to US $32…the capacity charge whether they produce electricity or not…under the old deal it was 6.275 cents, under the new one which they had already signed we have negotiated it downwards to 5.095 which is a reduction of over 20 percent and then the subsequent 10 years that we have given them I goes down to 4.0”.

The Karpowership from Turkey has the capacity to supply 470 megawatts (MW) of power to Ghana.

However, former Deputy Power Minister, John Jinapor, has slammed government for taking what he said was a U-turn after condemning Mr Mahama over the same deal.

For him, the extension is proof that the past government did not err as claimed by the NPP in opposition.

Source: ClassFMonline