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Opinions of Saturday, 3 August 2019

Columnist: Kwaku Badu

Incompetence, recklessness, or both: Who signed the superfluous $600M Power Purchasing Agreements?

We cannot deny or hide the fact that for well over five years, dumsor regrettably crippled Ghanaian businesses under the erstwhile Mahama administration.

Given the harsh socio-economic standards of living back then, it was prudent for any serious, committed and forward-thinking leader to take the necessary steps to rectify the situation at hand.

Therefore, the way forward back then, was for the Mahama administration to sign Power Purchasing Agreements to augment the existing power capacity.

The crucial question every discerning Ghanaian should be asking then is: do we really have to pay for extra power we do not need?

We have been told by the experts that at present, Ghana needs around 2700 Mega Watts of power.

Thus, some of us, as a matter of fact, were extremely dumbfounded when the erstwhile Mahama administration somehow deemed it fit to sign Power Purchasing Agreements in excess of 5080 Mega Watts.

It was, indeed, unfortunate for the Mahama administration to sign supernumerary Power Purchasing Agreements (PPAs) in which Ghana is needlessly paying over $600 million per year for extra power we do not need.

Somewhere last year, the Akufo-Addo’s government pragmatically terminated eleven out of the thirty Power Purchasing Agreements (PPAs) signed during the erstwhile Mahama administration (see: ‘Gov't terminates 11 Power Purchasing Agreements signed under Mahama’; Michael Creg Afful/ghanaweb.com, 21/09/2019)

The decision to cancel the superfluous agreements was as a result of the recommendation by a review committee put together by the Ministry of Energy to review all the Power Purchasing Agreements signed by the Mahama government.

The Committee, however, recommended that eight Power Purchasing Agreements with a combined capacity of 2070 Mega Watts were to proceed without modification, whereas four of them with a combined capacity of 1,810 MW were to be deferred to 2025.

The Committee also propounded that three Power Purchasing Agreements with a combined capacity of 1,150MW be deferred beyond 2020.

Apparently, the Minister for Energy, John-Peter Amewu revealed that it would have cost Ghana some US$402.39million if the eleven Power Purchasing Agreements had been kept.

John-Peter Amewu could not help but to pour his heart out: "Pursuant to the review exercise, Government stands to make significant savings from the deferment and /or termination of the reviewed PPAs. The estimated cost of the termination is US$402.39 million, compared to an average annual capacity cost of US$586million each year or a commutative cost of $7.217 billion from 2018 to 2030. This yields an estimated savings of $6.8billion over the 13 year period."

Let us face it, Mr Amewu was absolutely right to lambast the Mahama administration for recklessly signing Power Purchasing Agreements without taking into consideration the financial implications on Ghanaians.

Bizarrely, John-Peter Amewu disclosed that if the 26 Power Purchasing Agreements with a combined capacity of 8116 MW were to be deployed in addition to the existing generation capacity from hydro, the VRA plants at Aboadze and Tema, and the TICO, it would have resulted in a total installed capacity of about 11,000 MW.

Mr Amewu thus lamented plangently: "This will by far be more than the current peak demand of 2400MW. Even an annual growth in demand of 10%, our country will not be able to utilize this capacity in two decades (source: Michael Creg Afful/ghanaweb.com, 2018).”

The overarching question some of us will continue to pose is: was the decision by the Mahama government to sign the excess Power Purchasing Agreements borne out of negligence, recklessness or what?