Former Energy Minister, Boakye Agyarko, has criticized statements made by former Minister of Power, Dr. Kwabena Donkor, on the termination of the Ghana Power Generating Company (GPGC) Power Purchase Agreement.
According to him the comment by Mr Donkor which seems to suggest that all officials from the New Patriotic Party (NPP) administration, who were involved in the decision to terminate the power purchase agreement with the GPGC, leading to a $140 million judgement debt, should face a probe is irresponsible.
“My attention has been drawn to some very unfortunate and ill-informed statements by honorable Kwabena Donkor on the termination of the GPGC Power Purchase Agreement.
“I deem the utterances most unfortunate and irresponsible coming from a former Minister who ought to know that it is not within my power or province, or that of any Minister to unilaterally cancel or terminate a contract of this nature.”
Boakye Agyarko
Contained in a statement dated October 26, 2023, Mr Agyarko explained that upon assumption of office, the newly elected NPP government decided to take all the necessary actions to contain the cost of power generation and distribution in Ghana.
He revealed that it became necessary to review the implementation of the many Power Purchase Agreements (PPAs) because should all of them be implemented as originally scheduled, it would result in the production of excess energy with its attendant cost, which would worsen the financial situation of the power sector.
To this end, he noted that the review was therefore to help cut back on losses that would be incurred.
“An Inter-Ministerial Committee was set up under the chair of the Energy Commission to review the fiscal and legal implications of Power Purchase Agreements (PPAs) executed by the Electricity Company of Ghana (ECG). The eighteen (18) member committee was chaired by Dr. Alfred Ofosu Ahenkora, Executive Secretary of the Energy Commission. Its report was submitted on 5th April, 2019 under ref EC/MOE/17.”
Boakye Agyarko
Furthermore, Mr Agyarko stated that the report on the PPA was subsequently put before Cabinet for consideration and action. Cabinet, he noted, directed that the report be further reviewed by the Attorney-General, which was done.
“Cabinet subsequently gave its approval for the recommendation of the report to be implemented.”
Boakye Agyarko
GPGC Power Purchase Agreement report
Moreover, Mr Agyarko indicated that with respect to the GPGC PPA, the report recommended termination of the PPA with a capacity of 107MW at an estimated cost of USD18 million or else pay excess capacity charge of USD24.90 million per annum over the contract period of 4 years.
With this, he revealed that this is an emergency plant with a 5-year PPA, with a used plant, “not new” and high tariff. In light of this, he stated that major equipment has arrived at the Tema port awaiting tax exemption to clear.
“The judgment debt of $140 million, awarded to Singaporean firm Trafigura, has put various Ghanaian assets at risk, including the Ghana High Commission building in the UK, the commissioner’s residence, the Ghana International Bank building, and other properties.”
Boakye Agyarko
Elaborating on the report, the former energy minister highlighted that the report indicated that based on the 2018-2030 demand supply capacity balance and the traffic of the project, the full capacity of the project will be in excess resulting in estimated total cost of USD115.48 million within the duration of the PPA.
Additionally, he explained that the “likelihood of the plant being idle is further heightening by the fact that it is a pure natural gas fired turbine to be located in Tema where there is inadequate gas to feed it”.
As such, Mr Agyarko underscored that there is therefore a high probability of the plant remaining idle even if allowed to proceed.
“Based on the decision of Cabinet, I as a minister initiated the process by informing all interested parties of this decision and requested that the decision be implemented. At the time I left office, the government of Ghana and GCGP consequently begun negotiation to give effect to the decision to terminate.
Boakye Agyarko
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