Dr. Ousman Gajigo
The Karpowership ship anchored just off the port in Banjul, which is connected to our electricity grid, is hard to miss. The ship, Karadeniz Powership Koray Bey, belongs to Karpowership, a Turkish company that operates a fleet of floating thermal power plants around the world. The company has been operating in The Gambia since 2018 when it signed a 2-year contract with NAWEC. In 2020, the contract was extended for another 2 years, and extended again for another 3 years.
The major problem with the Karpowership deal is the exorbitantamounts the country is paying the company and the longevity of the contract. Between 2018 and 2020, the government paid the company about D 4.4 billion, which was equivalent to about $88 million, given the prevailing exchange rate at the time. This comes to an annual average of about D1.5 billion or about $ 30million (based on the exchange rate at the time). Given that the contract is now at least 7 years, it means that the government has paid Karpowership over D 10 billion.
This is a significant amount of money spent over a 7-year periodon buying electricity from a ship that has a contracted generation capacity of no more than 30 megawatts (MW). This huge sum of money for that generation capacity makes no financial sense. The management of NAWEC, its board and the senior energy officials have failed the country in signing this contract and allowing it to be extended.
In dollar terms, the amount paid to Karpowership is now over $200 million. Let’s put this amount in perspective. US $200 million can build a thermal power plant (using heavy fuel oil)with a generation capacity of 200 MW. This generation capacity can produce about 1500 gigawatt hours (GWh) of electricity per annum. At the current average electricity consumption in The Gambia, such a power plant can supply well over 300,000 new households with electricity. That is another way of saying that the money we have paid to Karpowership so far can build a power plant that can supply every single home in The Gambia, with thousands of homes to spare. Please note that the 2024 population census indicated that the total number of households in the whole country is about 297,581. This means that had we invested that money in constructing a new power plant, we would not have been in a position to import any power from Senegal or from any floating ship.
Another way of appreciating the costliness of the contract with Karpowership is noting that the $ 30 million per year paymentsto the company between 2018 and 2020 is enough to build a power plant with a generation capacity of 30MW. In other words, the annual payments to Karpowership are enough to build a power plant each year with the same generation capacity as the generator on the company’s ship anchored in Banjul. This is similar to a situation where a family rents a house with annual rent payment that is equivalent to the cost of building that house. It would be evident to anyone that such a rental agreement is not in the interest of the renter.
This expensive contract with Karpowership has many significant adverse macroeconomic effects. In the 2025 budget, over D 1.4 billion was transferred from the general budget so that NAWEC can pay for the electricity it buys from Karpowership. Such a transfer makes no sense since NAWEC’s clients pre-pay for electricity. In other words, the electricity fees paid by NAWEC’sclients should be able to pay for the electricity that NAWEC is buying from the independent power powers such as Karpowership. Yet, there was almost no discussion of why the Ministry of Finance was allocating such a large amount of money to NAWEC and would continue to do so.
Another negative macroeconomic effect of this Karpowershipcontract is the depreciation pressures it puts on our currency. The payments to the company actually count as imports of energy since all the bills must be settled in US dollars. And as the dalasi continues to depreciate, more of our resources are needed to pay the company. In fairness, payments to almost any independent power producer (IPP) would likely be in foreign currency but the price we would have paid to a company that constructed a power plant on the ground would be far more reasonable than what the country currently pays Karpowership.
What is particularly glaring, but perhaps not surprising, is that all these self-evidently bad outcomes are happening in a state-owned enterprise that has produced no audited financial statements from NAWEC since 2020. NAWEC is a fully staffed state-owned enterprise (SOE) with a full complement of amanagement team and a board. It operates under the Department of Energy at the Ministry of Petroleum and Energy and there is also a directorate at the Ministry of Finance that supposedly overseas SOEs. NAWEC is supposedly being regulated by a regulatory body – PURA. Furthermore, the National Assembly has a Finance and Public Accounts Committee (FPAC), which has a responsibility of overseeing all aspects of public finance and accounts. Yet, one of our biggest SOEs does not have an audited financial statement since 2020. This scale of institutional failure is simply unacceptable.
In the interest of the country, I urge the National Assembly to take its responsibilities seriously and make any further allocation to NAWEC conditional on its management and board providing satisfactory answers on the significant missing funds at that institution and why such a contract with Karpowership is still in existence. In an earlier article, I noted that over D 1 billion dalasi remains unaccounted for at NAWEC since 2017. Yet, there has been no special audit despite the findings of private auditors over multiple years.
The continued contract with Karpowership also demonstrates a failure of energy policy and strategy at the national level. This long-term contract with Karpowership is inconsistent with the energy roadmap that this very government of Adama Barrow approved at the cabinet level. That energy strategy, drafted with assistance from the World Bank, provided for some sensible approaches to the energy sector. Yet, the major existing activities of NAWEC are inconsistent with it.
It is high time that NAWEC and the government reveal the details of the agreement with Karpowership. This is necessary for transparency. We need to know whether the country is getting value for money. We also need to know whether the company has followed the necessary environmental requirements since it started operations. The National Assembly must do its part to compel NAWEC to release all agreements with Karpowership so that it can be subjected to requiredscrutiny. After all, the resource of NAWEC are public funds.
Ultimately, having a long-term agreement with Karpowership is bad for public finance and bad for the country’s infrastructure development. It prevents and delays necessary investments in electricity generation in the country. Energy security and resilience requires the installation of local generation capacity in the country. Just as it would make sense to buy your own house if you can afford it rather than continuing to pay exorbitant rent, it is also better for the country to build local power plants rather than buying unreasonably expensive electricity from a floating ship. The views expressed in this article are the author’s own and do not necessarily reflect The Voice’s editorial stance.
