Ghana to Save $3 Billion Under New Energy Accord With Cenpower

(Bloomberg) -- Cenpower Generation Co., an independent power producer in Ghana, will switch to using natural gas instead of light crude oil to fuel its electricity plants under an agreement that will save the government $3 billion over the next two decades.

The deal is among a series of power deals that the government is renegotiating with independent producers to cut costs, the Finance Ministry said in an emailed statement Wednesday. Ghana began renegotiating power deals with IPPs in November.

Accra-based Cenpower, in which Sumitomo Corp., Africa Finance Corp. and The Hague-based FMO own stakes, began commercial generation in June 2019 under a 20-year agreement with the government to supply 325 megawatts of power -- about 12% of peak demand in the West African nation. Cenpower will in future use gas supplied by Ghana National Petroleum Corp., the ministry said.

Last month, Accra-based Cenit Energy Ltd. became the first company to agree with the government to amended terms. Under a new accord, Cenit will convert its power plant into a tolling structure, which will help save the state $200 million over 17 years.

The negotiations have yet to result in a company agreeing to change their take-or-pay terms, which compel the government to pay for energy regardless of whether it consumes it or not, to take-and-pay, in which it would only pay for what it demands. Those obligations currently cost Ghana $500 million a year for power it doesn’t use.

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