Ghana has configured and signed terms for a revised power purchase agreement (PPA) with independent power producer (IPP) CENIT Energy Limited (CEL). The agreement ensures that government will benefit from a total savings of approximately $200 million.
Per the agreement, CEL will transform its existing power plant into a tolling structure, transferring all cost savings to the Electricity Company of Ghana (ECG) as well as reduce the capital recovery tariff of 38.9%.
The amended terms will mutually benefit both parties, reduce electricity costs overall and essentially contribute to government’s initiatives to reform the energy sector.
“We welcome CENIT Energy’s commitment to Ghana and its role in regenerating the energy sector. CENIT is an important partner and a significant energy producer in Ghana,” stated H.E. Ken Ofori-Atta, Minister of Finance. “We encourage other IPPs to join CENIT in collaborating to help reduce onerous debts and to provide a stable energy supply for the people of Ghana.
Government is actively taking steps to transform the energy sector through initiatives such as the Energy Sector Recovery Program (ESRP) and the implementation of the Cash Waterfall Mechanism (CWM). The ESRP, created in collaboration with the World Bank, oversees a five-year commitment to identify the policies and actions required for financial recovery within the energy sector.
Furthermore, the CWM, created in April 2020, ensures transparency in the distribution of ECGs revenues and the effective management of payments of arrears, despite the arduous fiscal climate.
“We are committed to building a competitive and dynamic energy sector where private investments can thrive, and the interests of the Ghanaian people and businesses continue to flourish,” H.E Ken Ofori-Atta stipulated. Within the ESRP Consultation Process, the ESRP Steering Committee – established by the Energy Sector Recovery Task Force – is actively working with IPPs and gas suppliers to negotiate agreements beneficial to all parties. Government is urging IPPs to work with the committee.