Ghana is expected to save $7.217 billion from the termination of 11 Power Purchase Agreements (PPA) over a 13 year period, the Energy Minister, Boakye Agyarko has said.
These terminations, following a recent review, will come at cost of $402.39 million, Mr. Agyarko told Parliament on Friday.
As indicated by the government earlier in 2017, it was reviewing PPAs initiated by the Electricity Company of Ghana, mostly under the Mahama administration.
The committee reviewing the agreements assessed 26 out of 30 power purchase agreements ECG initiated, and the remaining four were not touched because they were already operational.
The combined generation capacity of the 26 reviews amounted to 7298 MW of power.
Mr. Agyarko said Ghana “stands to make significant savings” from the deferment and termination of the agreements.
“The estimated cost for termination is $402.39 million compared to the average annual capacity cost of $586 million each year; a cumulative of $7.6 billion from 2018 to 2013. This yields an estimated savings of $7.217 billion over a 13 year period.”
Redundant plants
Mr. Agyarko, who has described some of the agreements as knee-jerk reactions to the dumsor crisis, explained that the agreements would be providing excess power.
He said the review of the agreements revealed that, “the projected capacity additions from the PPAs were far in excess of the required additions inclusive of the 20 percent system reserve margin from 2018 to 2030, and would result in the payment of capacity charges for undispatched plants.”
The review recommended that; four PPAs with the combined capacity of 1810 MW be deferred from 2018 to 2025.
Three PPAs with the combined capacity of 1150 MW, are to be deferred beyond 2025 along with the 11 PPAs, with the combined capacity of 2808 megawatts set to be terminated.
President Nana Akufo-Addo, during his 2017 State of the Nation address, said the Mahama government had signed 43 PPAs.
The government has indicated that, it may be unable to cancel at least eight PPAs deemed excess capacity because the financial implications range between $400 million and $500 million.
With all the power projects signed by Ghana, the total capacity is estimated to be 10,800 megawatts, even though the country needs 5,000 megawatts.
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By: Duke Mensah Opoku & Delali Adogla-Bessa/citifmonline.com/Ghana
