The Finance Minister Ken Ofori-Atta has indicated that government will from August 1, 2019, cancel all existing power purchasing agreements which require the government to pay for power even if it is not consumed.
According to the Finance Minister, such arrangements largely signed under the previous government costs the government more US$500 million in power which is not actually consumed but must be paid for.
“On average, less than 40 percent of the contracted take-or-pay capacity is actually used, meaning that we are basically throwing away money by paying for the remaining 60 percent of excess capacity which we do not actually consume. In monetary terms, what this means is that we are paying over half a billion U.S. dollars or over GH¢2.5 billion annually for power generation capacity that we do not need,” the Minister said.
According to the Energy Commission, the country currently has an installed power generation capacity of 5,083 MW, the dependable capacity of 4,593 MW and peak demand of around 2,700 MW.
“So, our installed capacity is almost double our peak demand. Notably, 2,300 MW of the installed capacity has been contracted on a take-or-pay basis,” he stated.
Delivering the mid-year budget in Parliament today, Mr. Ofori-Atta said the government will convert all such take-or-pay contracts to take-and-pay contracts.
“Accordingly, starting August 1st 2019, the government is to pay for energy and gas that we actually consume. All take-or-pay contracts will be renegotiated to convert to take-and-pay for both power purchasing agreements and Gas Supply Agreements (GSAs). The government will seek Parliamentary ratification where appropriate,” he noted.