body-container-line-1

Controversy looms as 400MW power deal for $953M goes to Parliament

By MyJoyOnline
Business & Finance Controversy looms as 400MW power deal for 953M goes to Parliament
JUL 26, 2016 LISTEN

Cabinet has okayed a 400 mega watts power deal to prop up the country’s power production shortfall, but estimated cost of the deal is likely to be in contention.

The deal, which is currently before the Mines and Energy Committee of Parliament, is earmarked to cost $953 million, however, analysts say a 400 megawatt plant should on average cost around $600 million.

The possible contention for this deal will be reminicent of the Karpower and Ameri power deals. The costs for these two deals were also criticised for being significantly higher than the average costs.

Joy News sources say the agreement for the 400MW combined cycle gas turbine power plant will be situated in Tema, in the Greater Accra Region.

The power deal will be executed by Early Power Limited, a company incorporated in Ghana.

Early Power Limited, the main sponsor, is said to have 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 transfers to a nominated entity by the Government of Ghana at a purchase price of US$1.00.

To expedite delivery of power to the grid, the project will be developed in two stages. Stage one has an installed capacity of 194MW of which 142.5MW, shall be installed in eight months after contract signing, and the remaining 51.5MW, commissioned 26 months after the signing. Hence the total capacity of 400MW is expected to be available within 26 months after contract signing.

A breakdown of the project cost is as follows:
Total Power Infrastructure Costs (EPC) – $636.8 million

Construction Insurance Costs – $3.7 million
Financing Costs – $178.7 million
Development Costs – $39.8 million
Operation & Maintenance Costs – $23.5 million

Construction Management Costs – $13.5 million

Working Capital – $10.5 million
Other Costs (Including Miscellaneous & contingency – $ 46.9million

Total Project Costs – $953.4 million
The project will be financed with equity from GE, Endeavor and Sage Petroleum, and later refinanced using the capital structure 70:30, being 70% debt and 30% equity from the open market.

Story by Ghana | Myjoyonline.com | GN

body-container-line