US$170mn savings from Karpower relocation is fabricated – Energy expert
Adnan Adams Mohammed
An Energy and Financial
expert has downplayed the GHC170 million savings as claimed by President Nana
Akuffo Addo for the change of fuel from HFO to natural gas from Ghana’s Eni
operated Sankofa Gye Nyame (SGN) oilfield are fabricated.
The energy expert,
who was part of the initial arrangement for the Karpowership Purchase Agreement
and the fixing of the pricing of the gas from the SGN field explained that,
the initial HFO fuel which was being used by Karpower ship is almost as cheap
as the Eni Ghana Gas, it is using now from Aboadzi Ghana Gas station.
President Akufo-Addo, last week turned on
the valves of the Karpowership for the use of natural gas from the country’s
gas fields by the 450-megawatt plant which was brought in to augment power
generation for the nation by Former President Mahama. This follows the
relocation of the Karpower barge from Tema to its original location in Sekondi
Naval Base, in the Western Region as envisioned by the Mahama-led government
and the subsequent conversion of 90% of its engines from being initially
dependent on HFO to natural gas, albeit a deviation from the original roadmap
due to unnecessary delays, an act which has resulted in losses running into
millions of dollars.
According to the Ministry of Energy, this will save a
whopping monthly take-or-pay cost of US$40million and projected annual savings
of US$480million. It added that, the switch of the Karpowership to natural gas
would save electricity users an amount of US$170.5 million per year, and a
projected amount of US$1.2 billion over the remaining term of the contract, by
way of reduced electricity charges to consumers.
“The savings numbers are fabricated, US$170m saving’s a year
for Karpower who’s HFO is almost as cheap as the eniGhana Gas” Alex Mould, former
GNPC CEO and Executive Director of Standard Chartered Bank has posited. Adding
that, “The movement of the barge in the first place was not an economic
decision but a practical one.”
Mr Mould had expatiated to the Economy Times how the
prolonged delay in relocating the power barge to the Senkondi power enclave as
against the initial arrangement the former administration handed-over to the
present President Akuffo Addo government had cost financial losses to the
state.
“The whole issue is that GNPC/GNGC have not been able to
resolve the reverse flow in a timely manner to be able to pump compressed gas
to Tema enclave from Aboadzi.
“We currently are pumping less than 60mmSCF to Tema and as
such the offtake from the gas fields falls below the 220-280mmSCF we should be
lifting: 80 to 110 mmSCF from Atuabo
(Jubilee and TEN) and 140 to 170 mmSCF from SGN.
“As such Ghana has been saddled with a take or pay bill
which could only be resolved by an expedited offtake, hence the necessity for
Karpowership relocation.”
There were two 225MW barges that ECG agreed to bring into
the country for emergency purposes in the initial agreement with the Karpower
owners.
GNPC supported ECG in 2014 because we wanted the barges to
use Gas from the Eni Ghana SGN field to satisfy one of the World Bank’s
conditions of providing the financial guarantee for the development and
production of the SGN field.
This was captured in Parliamentary discussions as reasons
for approving GNPC in 2015 to provide guarantees to Karpower on behalf of ECG
The first barge arrived in December 2015 and the second was
to arrive in 2017 and was to be taken to Takoradi for the use of Eni gas.
However, the Mahama government realized that, it would not
be economical to have two barges - one in Tema and one in Takoradi using Gas so
it agreed to rather have one barge a 450MW barge and this would be sent to
Takoradi.
This was agreed with the World Bank in 2016.
This was agreed in 2015 with Alex Mould, then GNPC CEO going
to inspect the construction site in 2016.
When the barge arrived, the gas logistics (pipeline and grid
connection) was not ready so it was agreed that the barge would be situated in
Tema till GRRIDCo and Ghana Gas got their act together - they needed funding
which GNPC was prepared to offer assistance since it was the gas aggregator and
for that matter the biggest benefactor if the Karpower ship is to use the
natural gas.
Unfortunately, some challenges occurred between GNPC and
Ghana Gas in 2017 and 2018 which delayed funding of the relocation project.
GNPC diverted funds to bail out BOST rather than to fund two
pipeline projects - WAPCO reverse glow and the Karpower Aboadzi - Sekondi
pipeline connectivity.
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