Company cedes €300m for local content participation in Ketu power project
The Promoters and Consultants of the 2000 MW Ketu Power Project, have ceded 300 Million Euros for Local Content Participation (LCP) in the project.
The LCP, which comes in the form of investments, goods, works and services, is available to everyone- public or private, institution or individual.
This was made known in Accra, where the Promoters and Consultants discussed modalities to package the LCP offered by the KPP partners for government, investors and the public.
Outlining the financial structure of the project, the Promoters indicated that the €2 bllion project would have a 30 per cent equity and 70 per cent debt structure.
Speaking on behalf of the partners, Mr Mayor Agbleze, lead consultant to the project indicated that, “half of the 30 per cent equity has already been taken by foreign partners of the project and we have had to negotiate strongly to cede the other half to the Government of Ghana and all other investors”.
“The opportunity of the LCP is time bound and whatever is left of the equity would go back to the foreign participants who are knocking hard on our doors,” he noted.
The 2000 MW Combined Cycle Power Plant comes in five modules, fuelled by an on-shore 250mmscf/day LNG re-gasification train, using Overhead Rack Vaporizers.
Finite Earth Consult, the Consultants for KPP, expressed optimism that Government would be willing to participate and positively assist KPP to put a permanent end to the apprehensions and agitations regarding ‘dum sor, dum sor’, a local parlance for energy insecurity and irregularity, which is threatening to undermine the serious gains Ghana has made recently in economic development.
Mr Agbleze said: “The Government of Ghana (GoG) must vote confidently, boldly and visibly in the €300 Million ceded for the LCP by demonstrating the political will to leverage support for the development of the project and further embracing the ownership and risk associated with the dominance of KPP on the National Grid for a long time to come when completed.”
This, Mr Agbleze said: “Would demonstrate Government’s participation and pragmatic faith in the KPP to the international investor community, signalling Ghana’s readiness to promote mega investments in sectors of the economy other than the extractive industries alone.
”The success of KPP would depend on proven technology, efficient management, reliable service and the traditional Ghanaian hospitality and hard work rather than tariff margins.
“The strength and commitment of the Power Purchase Agreement will enable the investors meet their long term debt obligations over the scheduled payback period.
“It happened in Akosombo under a very difficult world economic and political order, and it will happen even better in Ketu, given the more fluid economy and freer world situation that we have today.
“In this regard, our partners require some assurance of stability from GoG, similar to what pertains in the extractive industry with typical investment values and commitment.”
The €300 Million LCP would be off-loaded through a brokerage firm or firms with opportunities for a competitive programme, which would see the LCP through the best, innovative and cost effective brokerage mechanism.
The launch process would take off shortly and efforts made for every Ghanaian to have a clear and transparent opportunity to contribute to putting a permanent end to the power crisis by buying into the project.
The consultants described the KPP as “a classical demonstration of Foreign Direct Investment (FDI) in which the investor desires to maintain a permanent interest in an enterprise in another country.”
They said FDI “involves the transfer of both financial and non-financial assets, including technology, human resources and intellectual capital thus committing project partners to managing our investments and making KPP less likely to pull out at the first sign of trouble”.
The FDIs are less volatile but more efficiently manageable by the investors and thus difficult to sell off or pull out of, which helps stabilize emerging economies such as Ghana’s.
“Compared to FDIs, Foreign Portfolio Investment (FPIs) were much more volatile and, unlike FDIs, were very easy to sell off or pull out of.”
Finite Earth Consult noted that “sometimes just by failing to meet the expectations of international investors, the large flow of money into the country can turn into a stampede away from it, ruining the economy in the process.”
The relative technological superiority of FDIs over FPIs makes it possible to have a direct or indirect influence on technological advancement for domestic firms in the host countries – attributes KPP hopes to bring on board to permanently end the power crisis.
The consultants challenged brokerage firms “to take up the challenge when the project is launched and demonstrate their maturity, innovation and skills, through the mobilisation for the LCP even in this relatively broad but shallow financial market”.
Source: GNA