Energy Sector’s “Excess Capacity Cost Almost Half A Billion Dollars Annually” – Hon. Mohammed Amin Adam

The Deputy Energy Minister and Parliamentary Candidate for Karaga Constituency, Honorable Mohammed Amin Adam, has iterated that the Energy Sector is facing a major challenge caused by the leading opposition National Democratic Congress (NDC). He explained that, during the tenure of the NDC, contracts were taken to store power and as a result have an excess in capacity.

Speaking on the Pm express, Mr. Amin Adam intimated that the country has to make payment for excess capacity charges, though the country is not in demand for excess capacity.

According to him, provided availability has been declared by generators, payment has to be made even if the power will not be utilized. This he stated, is a financial burden that has been placed on the Ghanaian society by the NDC. “Excess capacity cost almost half a billion dollars annually,” he said.

“This is clearly a problem and we have been trying to resolve the excess capacity issue. If we were to add the charges for the excess capacity to tariffs, then tariffs would have increased by more than 300 percent and so because they were not factored in the tariffs, the government of Ghana has to find a way to pay for them. Therefore, they will go to add up to our debt profile. I have heard some of them saying that debts have increased.”

He further explained the difference between installed capacity and available capacity, stating that the excess capacity will not be needed even in 4 years’ time.

“The reality is that, we need just 2400 MW at peak, so even if they are available, you do not need them and so, there is no need to confuse installed capacity verses available capacity. The reality is that, we have capacity in excess of what we need, and this is as a result of the NDC government signing many, many power contracts for a country that didn’t need it. But if you talk about the growth of about 6 percent annually in power demand, what it means is that, we will be able to use excess capacity. Assuming we are growing at 6 percent, for not less than 7 years; that is more than 4 years and that is the time you can even think of adding generation capacity because, you need to be able to add 200 MW annually to be able to meet the annual growth. Then, you have more than 2000 MW and so, you will use this more than 7 years before you will add an additional capacity.”

A Policy Analyst of the African Centre for Energy Policy (ACEP), Charles Gyamfi Ofori, further backed claims by the Deputy Energy Minister that, there will not be any demand to expand power generation even in the next four years. “Unless Government wants to create a market for the excess of capacity in Ghana,” he said.

It can be recalled that, NDC in its 2016 manifesto stated that “Projects will be made to increase generation capacity in excess of 5000 MW. 7 thermal plant projects and 5 renewable energy projects.”

Fast tracking to 2020’s NDC manifesto, it stated that, they will “steadily expand power generation to match growth in demand.”

According to Gyamfi Ofori, 2016 manifesto was necessary because, the power sector needed capacity expansion due to the phasing out of ‘dumsor’ at the time.

He revealed that, making a comparison between 2016’s and 2020’s manifestos on energy capacity, the latter’s promise does not address the current problem of over capacity because the energy sector has more power than needed.