Please see the attached evidence: a copy of the Energy Ministry’s leaked letter from last year advising the President of the foreseeable consequences of the reckless actions of the NAWEC Managing Director, Gallo Saidy, and the NAWEC board of directors.
Why did the president take a decision contrary to his ministerial advisor? The letter clearly stated the inefficiency of NAWEC’s generation capacity and why the hasty decision to approve an O&M contract that bears the hallmark of temporary solutions and failure.
Please read the leaked letter verbatim, reproduced in the text, and the screenshot copy attached as evidence.
REPUBLIC OF THE GAMBIA
MINISTRY OF PETROLEUM, ENERGY AND MINES
Petroleum House, Brusubi Roundabout
West Coast Region
BCR225/244/xxxx) 7th April, 2025
H.E Adama Barrow
President of the Republic of The Gambia
State House
BANJUL
Your Excellency
Serious Concerns Regarding Transition from KARPOWERSHIP PPA to NAWEC Operations
I wish to bring to your kind attention the decision of the Board of Directors and Management to allow the KARPOWERSHIP PPA contract to lapse on May 1, 2025, as communicated to me via a MEMO from my permanent secretary. The plan is to bring NAWEC generators back into operation over three months. This has raised several concerns regarding the reliability and operational capacity of NAWEC as we transition from a reliance on KARPOWERSHIP.
The Ministry has serious concerns about the decision by NAWEC, despite advising that any decision not to continue with the KARPOWERSHIP contract be subject to government review and endorsement. The key concerns are provided below.
Key Concerns:
1. Reliability and Availability of NAWEC Generators:
– There is scepticism regarding the performance and reliability of NAWEC’s generators in comparison to Karpowership, especially in the coming hot season.
– Historical records show that while NAWEC has operated generators, their management and maintenance have not been consistently strong, raising concerns about their operational readiness.
2. O&M Contract and Spare Parts Availability:
– The approved Operations and Maintenance (O&M) contract may provide a short-term solution, but it has yet to be tested; however, its effectiveness is contingent on NAWEC’s ability to procure spare parts promptly.
– There is uncertainty about whether NAWEC has the logistical framework to efficiently manage supply chains for spare parts needed for generator operations.
3. Risks of Reduced Energy Importation:
– Transitioning away from Karpowership increases the risk of energy supply disruptions, particularly if the capacity of NAWEC is insufficient during this period.
– Relying more heavily on one’s own generation without adequate backup or capacity could lead to widespread energy shortages and load shedding.
4. Political and Social Implications:
– The current energy landscape must be viewed within the broader social and political context, especially as we approach the 2026 election year.
– Any disruption in energy supply can lead to public discontent and loss of confidence in NAWEC, affecting political stability. Let’s not forget the “Occupy Westfield.”
5. Commercial Viability of Karpowership:
– While the Karpowership arrangement may not be commercially viable in the long term, the potential social ramifications of transitioning away must be carefully considered.
– The decision should incorporate a balance of economic, social, and political factors, ensuring any shifts in energy policy align with the public’s expectations and needs.
Your Excellency,
It is important to note that the decision not to renew the KARPOWERSHIP PPA and to reactivate the NAWEC generators carries inherent risks that must be carefully managed. By addressing the concerns outlined, we can work towards a smoother transition that ensures energy reliability for our stakeholders and mitigates potential social and political fallout.
The Board and Management are concerned about the financial health of NAWEC, which is largely attributed to the high energy costs from Karpowership. However, it’s important to recognise that similar risks exist with power imports from SENELEC and EDG. Their supplies are not contractually guaranteed, especially EDG’s, which are seasonal.
Terminating the Power Purchase Agreement (PPA) doesn’t guarantee immediate cash flow savings. In fact, engine inefficiencies can increase fuel consumption and costs. On the positive side, the ITFC facility is available to assist with fuel purchases.
State-Owned Enterprises (SOEs) are typically established to facilitate strategic interventions in public service delivery, focusing on societal needs rather than profit maximisation, though profitability is a goal when feasible. Electricity service delivery is no exception to this mandate. The unprecedented growth and increased access to electricity have led to a substantial demand that must be addressed. Additionally, the public has come to expect a consistent and reliable electricity supply; any disruption will not be tolerated.
Many countries are providing subsidies for their utilities, and our government has initiated similar support this year to help cover Karpowership bills, among others. This is done in line with the Revenue Compensation Mechanism (RCM) approved by Cabinet. NAWEC enhancing its cash flow would also be helpful.
To improve its cash flow, NAWEC needs to enhance its strategies for timely customer payments, strengthen debt collection efforts, and combat electricity theft. Furthermore, the failure to collect water bills for about 1 year caused significant cash-flow challenges. The Board and Management need to remedy this by intensifying arrears collection.
Recommendations:
We could recall that in 2018, we decided to sign the PPA with KARPOWERSHIP, and this was not based solely on commercial considerations but on the objective of securing an available and reliable supply of electricity. Thus, the Ministry’s view is that renewing the Karpowership Power Purchase Agreement (PPA) is a strategic decision that goes beyond mere business or commercial considerations.
It is recommended to maintain the Karpower ship arrangement for two years, until the new 30MW facility in Kotu becomes operational or an efficient replacement becomes available. To this end, we have considered another arrangement to replace KARPOWERSHIP, which did not materialise.
The Government must support NAWEC in renegotiating the final proposal for the renewal of the Karpowership agreement, as this could lead to increased costs for NAWEC, particularly due to interest charges on defaults and Consumer Price Index (CPI) adjustments.
We should consider discounting the capacity charge and limiting Karpowership production to minimise fuel usage, which is the primary cost driver. NAWEC can provide the necessary reduced capacity through its own generation, thereby effectively lowering Karpowership bills while ensuring a reliable power supply.
Sir, we strongly advise against allowing the PPA contract to expire without securing a reliable replacement. Failing to do so may jeopardise the reliability and availability of electricity, especially as we approach an election year and work towards expanding access under the Universal Access Programme. This expansion will necessitate increased capacity, making it essential that we have a dependable contract in place.
While thanking Your Excellency for considering this important matter, please accept the assurances of my highest consideration in the service of our beloved country.
Honourable Nani Juwara
MINISTER
Email: info@mope.gov.gm Website: www.mope.gm
Source: The open Gambia Platform.
