Information Directorate, Youyi Building, Sierra Leone, Monday 11th June 2018 - Today marked another mile stone in the energy sector as the Ministers of Energy (Alhaji Kanja Sesay) and the Minister of Finance (Mr. Jacob Jusu Saffa) signed a two year utility grid Infrastructure of electricity supply of the long awaited Karpower Ship agreement at the Ministry of Energy Conference Hall in Freetown.
According to the Minister of Energy, Alhaji Kanja Sesay, late last year, the previous Government entered into an arrangement with Karpower International to supply 30MW for a period of 5 years at 19.596 USc/KWh. He continued that, in excess of the average tariff paid by EDSA’s customers of 18.76 USc/KWh, would have resulted in high deficits for the Authority, a situation that has made EDSA heavily reliant on Government’s subsidies for the cost of daily operations. The Minister furthered that general, subsidies negatively affect Government’s spending on required social sector services, particularly in education and health.
In adherence to the Energy Sector Policy between Government and the Development Partners, (2016), Government consulted the World Bank Group on the renegotiated terms and conditions of the contract.
On 25th May 2018 the World Bank issued its No Objection to Government to conclude the Power Purchase Agreement with Karpower International. The Bank also recognized and commended the efforts of Government in reducing tariff and making significant savings estimated at US$ 18.0 million over the contract period of 2 years.
The gains include - Reduced the tariff to 16.4 USc/KWh from the original tariff of US$19.596 USc/KWh negotiated by the former Government. This represents an annual savings of approximately US$9 million and is competitive in comparison to similar Karpower projects in Ghana and the Gambia, which have either longer durations and/or larger contracted capacity.
Reduced the contracted available capacity for which EDSA is obligated to pay whether or not the power is distributed, particularly for the rainy season when Bumbuna Hydro, the least cost option, is at full capacity of 50MW. This has the effect of reducing the cash flow burden of EDSA.
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