The World Bank has said the Power Purchasing Agreements signed by former President John Mahama, which the Akufo-Addo Government had no choice but to pay, has contributed significantly to the economic woes of the country.
The former President’s administration signed take-or-pay agreements, committing Ghana to pay for billions of cedis for excess energy it does not need.
For a government that had failed to raise enough money to pay for the country’s power needs, thereby plunging the country into nearly five years of dumsor, the Mahama administration signing such an expensive take-or-pay deal at the twilight of the regime raised eyebrows in Ghana and abroad.
Since inheriting the take or pay agreement by the Mahama administration, the Akufo-Addo government has so far committed over 12 billion Cedis to service the debt for power Ghana does not need, and the agreement is still suffocating the nation.
In the midst of Ghana’s return to the IMF for a balance of payment support, the World Bank has emphatically faulted the Mahama agreement as a major cause of Ghana’s economic difficulties and has called for an urgent review of what it described as “wrong and expensive’ agreements.
“In the aspect of Ghana, those contracts you signed with the PPA are too expensive’, World Bank Country Director Mr. Pierre Frank Laporte told Joy News of the contract signed by the Mahama administration.
“The kind of PPA you signed, it means Ghana is paying for electricity not in use through doubling of capacity.”
“The fact is, in the last few years, Ghana entered into some PPAs that were wrong. These types, in our view, were at the wrong rate and at the wrong prices and today you’re paying duly for it. And today the country is being billed for many of these wrong PPAs.”
So far, the government has paid a whopping 12 billion to service this automatic debt as a result of the inescapable nature of the agreement, and with the country having to continue paying, the World Bank Director called for an urgent review and backed steps the government has taken for a review of the deal.
“I know that the government has started some talks with the IPPs to renegotiate some of these PPAs,” he said.
The Akufo-Addo government has been hailed for its ability to pay for power generation for over six years – thus ending the over four-year-dumsor Ghana faced due to the erstwhile Mahama Government’s inability to pay for power generation.
The erstwhile Mahama Government committed Ghana to a number of Power Purchasing Agreements before it lost power in 2016.
The agreements, numbering over 40, committed Ghana to over $1 billion dollars of take or pay contracts for excess power Ghana didn’t need, which meant the newly installed NPP Government was saddled with finding money to pay for debts bequeathed to it at a time the country was unable to pay for power generation.
In his first State of the Nation Address, President Akufo-Addo announced his Government would renegotiate a number of the agreements in order to free the government of mountain debts, an exercise which was carried out with the renegotiation of about 11 of the power deals.
Nonetheless, Ghana was still left with other debt commitments of the remaining agreements, which has, so far, cost the government over 12 billion Dollars.