Samuel Atta Akyea
Members of the Majority Caucus on the Mines and Energy Committee described the National Democratic Congress (NDC) government’s Power Purchase Agreements (PPAs) signed in the run-up to the 2016 elections as unconscionable and cruel.
According to them, poor leadership and lack of foresight by the previous administration contributed to the signing of overcapacity electricity generation, weakened sector planning, and mounting debt, putting immense financial strain on the economy.
The Chairman of the Committee, Samuel Atta Akyea, who addressed the media in Parliament yesterday, said the Mahama administration went to sleep, enabling Ghana to endure the ‘dumsor’ disaster.
“When a government does not project into the future to see the dwindling fortunes of our energy, we will baptize into a crisis. And that is what we found ourselves in the Mahama era.
“We couldn’t see that we were going to have a situation like that. Were we sleeping on the job?
“This got the government into an ambulance situation (emergency), and this is when those who say they are coming to help us decided to foist on us some levels of contract that we are suffering the consequences today,” he asserted.
Between 2011 and 2016, the country’s power sector experienced an acute problem of frequent power outages, forcing the government to enter into several Power Purchase Agreements (PPAs) for the provision of electricity generation.
Mr. Atta Akyea, who was flanked by other members, said, “It takes a few strong people who can think straight into the future and say no, although I am in an emergency situation, I do not believe ‘Take or Pay’ is the way to go.
“These were unconscionable bargains. The bargain is so oppressive to the one in an emergency situation. Even in hell, I believe, you don’t have to pay for what you don’t consume. But when your back is to the wall, they could joke with your brain concerning some of these things,” he noted.
He said the ‘Pay-or-Take’ contracts were also cruel in nature as the trade or case clauses involved are one-sided, oppressive and unfair to Ghana.
Quoting a research done by the IEA in collaboration with a USA-based think-tank, Energy for Growth Hub, Mr. Atta Akyea stated, “In 2018, excess capacity contracted under take-or-pay PPAs costed the government $320 million, estimated to increase to $620 million annually with addition of new plants in 2019.”
“These unused supply charges are one of the most significant sources of financial strain on the sector.
“Cumulative net-sector debt was GH¢2.7 billion with 30% payable to the private sector. This sum is equivalent to 33% of the government’s 2018 tax revenue, highlighting the scale of the financial burden,” he pointed out.
He said the NPP government was forced to issue two series of bonds totaling GH¢ 1.6 billion in 2017 and 2018 to pay 50% of the legacy debt owed to several energy sector actors, including banks, VRA, ECG, and Northern Distribution Company.
“The sector’s total shortfalls were projected to accumulate $12.5 billion by 2023. These are serious monies and as a result of this fetish called Take-or-Pay power arrangements,” the MP for Abuakwa South intimated.
He noted that these are cold facts that were not manufactured by the NPP government, adding, “The dollar is not generated by the NPP. So when you have a dollar debt that you are paying, it is referable to a contract and anybody who is interested, can look at the contract and the consequential arithmetic about the contract and what you have to pay.”
By Ernest Kofi Adu, Parliament House