Former Energy Minister Boakye Agyarko is livid over a comment made by former Power Minister under the Mahama administration Dr Kwabena Donkor regarding the circumstances that led to the cancellation of the Ghana Power Generating Company (GPGC) contract, leading to a judgment debt of $140 million.
Dr Kwabena Donkor had said the termination of the contract “made no sense commercially and legally” at the time.
A court in the United Kingdom in 2021 awarded a $140 million arbitral against Ghana for the termination of the power deal with GPGC.
The government was accordingly ordered by the court to make full payment of the value of the Early Termination Payment of $134,348,661 together with the “Mobilisation, Demobilization and preservation and maintenance costs” of the value. The court also ordered Ghana to pay all the interest that has accrued from it.
In addition, the government was asked to pay the cost of the arbitration and the legal fees of GPGC, which amounted to over $3 million.
Trafigura, an oil trader is in the position now to sell Ghana’s assets in the UK in other to raise the amount of money the government of Ghana owes it.
Reacting to this, Dr Donkor who is also lawmaker for Pru East said “It was very avoidable as I have always said. Let me quickly say this. This was the cheapest of all the emergency power plants in terms of cost.
“It was also the shortest because it was for four years. There was no requirement for the government of Ghana to put down a guarantee, and then again the total capacity charge made of capital recovery, fixed ONM, and non-fuel variable ONM came to 4 cents per kilowatt hour.”
“It was the cheapest at the time of all the emergency power plants we brought in, and so it couldn’t have been on the basis of cost,” he told Joy FM.
But responding to him in a statement, Boakye Agyarko described his comments as “very unfortunate and ill-informed statements.”
He added “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.
“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. 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. 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 Agreement (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.
“The report was subsequently put before Cabinet for consideration and action. Cabinet directed that the report be further reviewed by the Attorney-General. This was done. Cabinet subsequently gave its approval for the recommendation of the report to be implemented.
“In respect of the GPGC PPA, the report recommended the termination of the PPA with a capacity of 107 MW (executed between Government and GPGC) at an estimated lost of USD 18 million or else pay excess capacity charge of USD 24.90 million per annum over the contract period of 4 years.
This is an Emergency Plant with a 5-year PPA, used plant (not new) and high tariff. Major equipment has arrived at the Tema port awaiting tax exemption to clear.
Remarks from the report follows; ‘Based on the 2018-2030 demand supply capacity balance and the tariff rank of this project, the full capacity of this project will be excess (idle) resulting in estimated total cost of USD 115.48 million within the duration of the PPA. 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. There is therefore a high probability of the Plant remaining idle even if allowed to proceed’.
“Based on the decision of Cabinet, I as 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.These are the facts which I know are available to the Honourable Minister.”