Ghana Power Purchase Agreements

However, these clauses are not always economically viable if the buyer`s position is taken into account, since the buyer must pay for gas or electricity that it does not intend to use without an option to store the additional electricity. They also have an impact on the consumer price of gas or electricity and the corresponding subsidies. Under a take-or-pay model, electricity suppliers are required to supply electricity to the buyer for off-grid disposal, but they are paid according to the agreed rate, whether or not the buyer ships the relevant facility. This offers developers the comfort of not financing and building a less used facility during their lifetime than is expected by the decreasing. This is particularly relevant when IPPs are linked to long-term PPAs, where they must supply their electricity to the acquirer before seeking a concessionaire solution. The “take or pay” model aims to compensate PPIs for these opportunity costs and thus maintain the private sector`s appetite for investment. Accra, Friday, September 25, 2020. On Wednesday, September 23, 2020, the government and CENIT Energy Limited (CEL) successfully secured the terms of an amended Electricity Acceptance Agreement (ECA). CEL is a Ghanaian independent power producer (IPP) that ceased trading in 2012.

CEL has agreed to convert its plant into a toll structure and to transfer all the resulting savings to ECG. Under the agreement, CEL will convert its existing plant into a toll structure, transfer all savings to the Electricity Company of Ghana (ECG) and reduce the capital recovery tariff by 38.9%. In Africa, countries such as Kenya and Ghana are in the process of transforming take or pay clauses into PPAs into take and pay clauses. The main reason for this postponement is financial, as it means that buyers, which are usually state-owned enterprises, are not forced to pay for gas or electricity that is not used or delivered. As part of this deferral, buyers are encouraged to perform more careful due diligence on how much gas or electricity they actually need. These clauses are intended to effectively protect the producer by offering a guaranteed income, even if the buyer does not use gas or electricity; give them the certainty that the product is sold and that the energy production project becomes economically profitable. These clauses are a kind of commercial guarantee without which investors and financial institutions would be reluctant to finance energy infrastructure projects. Ghana`s Ministry of Finance and CENIT Energy Limited (CEL) have agreed to amend their Power Purchase Agreement (ECA) to turn the page on the country`s electrification path. “We are committed to building a competitive and dynamic energy sector, in which private investment can thrive and where the interests of Ghanaian people and businesses continue to thrive,” said H.E.

Ken Ofori-Atta. As part of the ESRP consultation process, the MESRP Steering Committee, established by the Energy Recovery Task Force, actively collaborates with IPPs and gas suppliers to negotiate agreements that benefit all parties. The Government requests ipPs to cooperate with the Committee. . . .

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