Ghana has reached an amended deal with Cenit Energy, which should save the country more than $200 million.
Ghana and Cenit agreed to amended terms for a power purchase agreement (PPA). The company has agreed to move to a tolling structure, with savings going to the Electricity Company of Ghana (ECG). It also agred to reduce its capital recovery tariff by 38.9%.
Cenit began operating as an independent power producer (IPP) in 2012. The company has a 126 MW power plant, which can run on oil or gas.
Where Cenit has gone, the Ghanaian government hopes others will follow.
Ghanaian Minister for Finance Ken Ofori-Atta welcomed the deal, describing Cenit as “an important partner and a significant energy producer in Ghana. 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.”
Ofori-Atta went on to say the country was committed to a “competitive and dynamic energy sector where private investments can thrive, and the interests of the Ghanaian people and businesses continue to flourish”.
Ghana has a problem with overcapacity, which has led to it paying more than $500 million per year for unused electricity. PPAs signed during the “dumsor” period of blackouts led to debts piling up and power wasted.
The country and World Bank created the Energy Sector Recovery Programme (ESRP) to overhaul the sector between 2019 and 2023. Ghana has talked up the importance of shifting to competitive bidding for future capacity.
The government’s other reforms include the cash waterfall mechanism (CWM). This mechanism allows Ghana to distribute revenues transparently and manage arrears.
Cenit is a member of the Chamber of Independent Power Producers and Bulk consumers (CIPDIB).