A claim by the chairman of the mines and energy committee of parliament, Mr Samuel Atta Akyea, that some power purchase agreements signed by former President John Mahama in the heady days of the erratic power supply period, caused the state to pay $320 million for unused power in 2018 alone, is false and lacks basis, the ranking member of that committee, Mr John Jinapor, has said.
Mr Atta Akyea had said the take-or-pay power purchase agreements have cost the state $968 million so far, in terms of payments for idle capacity and reserve margins.
At a press conference in parliament, last week, Mr Atta Akyea referred to the Ghana Integrated Power Sector Master Plan (IPSMP) and the Energy Commission’s work, which, according to him, showed significant overcapacity in the country’s energy sector.
“Under Generation and Demand of the 2019 IPSMP, the modelling results confirm that there is significant overcapacity in Ghana, that this overcapacity was expected to continue for 5 to 7 years when the power plants under construction are commissioned”, he said.
- The report further noted, he added, that “the reserve margin in 2018 and 2019 were significantly higher than the planned reserve margin of 20%”.
Furthermore, he said “the overcapacity challenge is expected to continue into the mid-2020s”.
The Abuakwa North MP noted that “between 2017 and 2020, the annual cost of idle capacity ranged between US$ 105.4 million and US$ 373.7million per year”.
Over the period, he said “a total amount of US$ 368 million had been paid for idle capacities and a further US$ 600 million had been paid for the cost of reserve margins totalling US$968million”.
Mr Akyea, however, mentioned that some of the terms of the PPAs have been renegotiated.
For instance, he said: “We note that the AKSA Emergency Power Agreement (EPA), after expiration on 31 July 2022, was renegotiated by ECG with better terms for 15 years, with a dispatch guarantee of 40%. This is far better than the full take-or-pay arrangement under the expired EPA”.
With the 205MW AKSA PPA, Mr Akyea said the introduction of a dispatch guarantee has helped to beat down the cost incurred by the state, as far as the payment for excess capacity is concerned.
He explained that it is meant to provide “system reliability in the middle and the northern belts of the country based on a system reliability study by the Ghana Grid Company (GRIDCo)”.
“To achieve the objective of reliability, there is the need to have a level of guaranteed dispatch of the plant”, he noted.
He said the dispatch guarantee provided for in the new terms for contracting PPAs “is also a gradual means of reducing the cost of excess capacity payment that has plagued the sector from the numerous take or pay agreements”.
“The non-dispatch of this plant will save the country 60% of the cost compared to the original contract”, Mr Atta Akyea added.
In a rebuttal statement, however, Mr Jinapor said the minority caucus has noted “with disappointment”, Mr Atta Akyea’s “very wild” and “baseless” claims.
He said: “The surprising thing is that Mr Atta Akyea was reported to have been speaking on behalf of the Mines and Energy Committee”.
“For the avoidance of doubt, the Mines and Energy Committee has never taken such a position”, the opposition MP noted.
He said “neither has the committee mandated Mr Atta Kyea to speak on its behalf in respect of the Power Purchase Agreements (PPAs) signed under President Mahama which, with all intents and purposes, have proven to be the reason for Ghana’s current stable electricity supply”.
The statement said the “reported claim that the former administration entered into 43 take-or-pay Power Purchase Agreements resultng in the current government being obligated to pay over 320 million dollars in 2018 for unused power charges is not only false but a clear lack of appreciation of Ghana’s power sector”.
The records from the Energy Commission’s 2018 Energy Statistics are available for verification, Mr Jinapor added.
He said from these records, “a total of 13 thermal plants operated in 2018, with only three (3) signed under President Mahama”. “How the New Patriotic Party and its communicators are able to concoct and embellish such unfounded payments for 43 take-or-pay power agreements in 2018 alone is shocking and mind-boggling”.
“The minority wishes to caution in the strongest terms that it will not allow the name of the Mines and Energy Committee to be used for self-seeking and propaganda-laden political communication”.
