Gov’t Abrogates 11 Power Purchase Contracts At $400m

Government has cancelled 11 Power Purchase Agreements (PPAs) with a combined capacity of 2,808 megawatts of power at a cost of at $402.39 million.

The cancellation of the agreements which were entered into with some power producing firms in the country through the Electricity Company of Ghana (ECG) Limited was as a result of recommendation by a Committee set up by the Energy Commission to review all PPAs signed by the power distributor for conventional thermal power projects.

Mr. Boakye Agyarko gave the disclosure on the floor of Parliament where he answered energy related questions from the lawmakers.

The Minister’s revelation was in particular response to a question posed by Ranking Member of the Mines & Energy Committee and MP for Damongo, Adam Mutawakilu on whether the Ministry has reviewed any power purchase agreements in force and if so, whether there is any cost saving elements pursuant to the review.

The Energy Minister who justified the cancellations based on a Committee’s recommendations said “The review noted that the projected capacity additions from the PPAs were far in excess of the required additions inclusive of a 20% system reserve margin from 2018 to 2030 and would result in the payment of capacity charges for the undispatched plants.”

The review Committee the Minister asserted also recommended to government that four (4) PPAs with a combined capacity of 1,810MW of power be deferred to 2018 – 2025 whiles three (3) others with a combined capacity of 1,150MW be deferred beyond 2025.

“11 PPAs with a combined capacity of 2,808 MW, be terminated” he said.

Cost Saving

On whether there is a actually a cost saving element over the termination, Mr. Agyarko stated categorically that if the agreement were allowed to stay, Ghana would have incurred an annual average capacity cost of $586million or a cumulative cost of $7.619billion over twelve (12) years (2018 – 2030) hence the country has saved a lot.

“This yields an estimated saving of $7.217billion over the 13-year period”, he concluded.

Source: Christian Kpesese/ thePublisher