The Mines and Energy Committee of Parliament has strongly criticized the power purchase agreements signed by the previous John Mahama-led government, describing them as highly unfavorable and detrimental.
According to the committee, the former administration entered into 43 take-or-pay power purchase agreements, resulting in the current government being obligated to pay over 320 million dollars in 2018 for unused power charges.
During a media briefing, Samuel Atta-Akyea, Chairman of the Mines and Energy Committee, expressed concern over the consequences of these agreements on the energy sector.
While the current government has already terminated 11 of the contracts, Mr. Atta-Akyea said the haste with which the previous government made these decisions has had a severe impact on the energy industry.
“In 2018, excess generation capacities contracted under the take or pay cost 320 million in capacity charges and are estimated to increase to 620 million annually with the addition of new plants in 2019.
“These unused supply charges are one of the significant sources of financial strain on the sector. Cumulative net sector debt was 2.7 billion in 2018 with 30 percent payable to the private sector, this sum is equivalent to 33 percent of the 2018 government’s tax revenue highlighting the scale of the financial burden.”
The remarks made by Atta-Akyea echo the concerns raised by Pierre Frank Laporte, the World Bank Country Director for Ghana.
Laporte attributed the rising debt in Ghana to the deficiencies in the energy sector, particularly the unfavorable power purchase agreements signed during the Mahama administration.