Gov’t Renegotiates Power Purchase Agreements To Save Ghana $13.2B

The government of Ghana has said it has reviewed Power Purchase Agreements (PPAs) with six Independent Power Producers (IPP) to save the country a sum of US$13 billion.

The six IPPs include Karpower, Cenpower, Early Power, Twin City Energy (formerly Amandi), AKSA Energy and Cenit.

Delivering the Mid-Year Budget Statement, the Minister for Finance, Ken Ofori Atta said “these renegotiated agreements are expected to have savings estimated at US$13.2 billion over the life of the PPAs through a combination of reduced capacity and energy charges…from power contracts signed by the previous administration”.

The vice president, Dr Mahamudu Bawumia while delivering his remarks at the Accra Business School on July 14, 2022, said Excess Capacity Payments agreements by the previous government accounted for a part of Ghana’s debt stock by the end of 2021.

He statistically indicated that from 2018 to 2021, Ghana paid an excess capacity charge of GHC17 billion.

Bawumia said “the excess capacity payments of GHC 17 billion relate to a legacy of take or pay contracts that saddled our economy with annual excess capacity charges of close to $1 billion. These were basically contracts to supply energy to Ghana way in excess of our requirements, but we were obligated to pay for the power whether we use it or not.

“The excess capacity payments includes GHC 7 billion of payments for gas resulting from the previous government signing an offtake agreement for a fixed quantity of gas with ENI Sankofa on a take or pay basis which was way in excess of what was needed at the time. Not keeping up with the excess capacity payments would have meant throwing the country back into a new bout of dumsor”.

Source: opemsuo.com/Hajar Fuseini