Parliament approves 500MW power project

Business News of Monday, 15 December 2014

Source: Graphic Online


Power High Tension

Parliament last weekend ratified two power producing agreements between the government and two private entities for the production of at least 500 megawatts (MW) of power.

The first is an agreement between the government and Amandi Energy Ltd for the development, ownership, creation and management of between 190MW and 240MW combined cycle dual power plant to be sited at Aboadze in the Western Region.

The second agreement involves the construction of a 360MW combined cycle dual fuel power plant by Jacobsen Jelco Ghana Ltd, also to be sited at Aboadze.

The Amandi Plant is estimated to cost between $409 million and $528 million and power supply from the plant, when completed, is expected to be for 25 years.

The plant to be established by Jacobsen Jelco is, according to documents made available to the House, likely to cost $637 million.

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Following recent power generation shortages, the government has resolved to increase power generation to about 5,000MW in the next two years, from the current 2,000MW.

The agreements are, therefore, part of efforts to meet the set target.

According to the Generation Master Plan, a document available to the House, peak demand for 2015 was projected at 2,200MW, a pointer to the fact that electricity demand will outstrip generation by 200MW.

Amandi, as part of the agreement, demanded government’s support in a form of guarantee to back up payments from the Electricity Company of Ghana (ECG).

Discussions in the House

The Chairman of the Finance Committee of Parliament, Mr James Klutse Avedzi, presenting the committee’s report on the deal, said the project would be financed on a “limited resource project financial basis, with debt-to-equity ratio of 75 to 25 to be reviewed in three to four years after the date of commercial operation”.

The Minister of Energy and Petroleum, Mr Emmanuel Armah-Kofi Buah, who spoke passionately about the agreements, said Amandi had already acquired the needed licence to operate.

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He said the two agreements would help address the energy needs of the country and urged all Members of Parliament (MPs) to support it.

The MP for Old Tafo, Dr Anthony Akoto Osei, who is the Ranking Member of the Finance Committee, said the initial power purchasing agreement between the government and the two private entities needed to be brought to the House for scrutiny.