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NPP government extends Karpower deal by 10 years

The new terms of the extended deal are not public knowledge yet. However, it is said that the deal has been renegotiated to ensure that there is value for money.

According to Accra-based Citi FM, the deal has been renegotiated to ensure that there is value for money.

The new terms of the extended deal are not public knowledge yet. However, the company announced that it will move from using Heavy Fuel Oil [HFO] to natural gas when it moves the vessel from Tema to Takoradi.

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The Karpower deal with the independent power producer was contracted by the then erstwhile Mahama government. This was to help address the nation’s power crisis at the time.

When the Mahama administration signed the deal, the New Patriotic Party (NPP), who were in opposition at the time criticised the party in power.

They argued that the deal was too expensive and there was no value for money.

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

Before they won election 2016, Dr Mahamudu Bawumia, then running mate to Nana Addo Dankwa Akufo-Addo, said the deal “made no sense” for government to secure the power barge as an emergency solution to the power crisis, explaining that the deal did not give the country value for money.

Per Dr Bawumia’s analysis, “A 225 megawatts plant like the Karpower Plant that we are renting, will cost some 225 million dollars if we wanted to purchase it; and we will own it. Under the Karpower deal, we will pay for the power from the barge for the next ten years whether we use it or not. The African Center for Energy Policy (ACEP) estimates that based on the capacity charge alone which is 5.6 percent per kilowatt hour, it will cost Ghana close to one billion dollars over the next ten years for the energy from the barge. This, however, excludes the cost of fuel which will require about 35,000 tones every month. After ten years, the barge will sail away and with this one billion dollar, we could have built a 1,000-megawatt plant for ourselves. Power from the barge will also cost at least twice what it cost to supply power from Takoradi. This really does not make sense,” he concluded.

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