Energy sector analyst and Executive Director of the Kumasi Institute of Technology, Energy and Environment (KITE) Ishmael Edjekumhene says it is critical that the newly established Energy Sector Recovery Programme Steering Committee negotiates a change of the existing take or pay contracts in the energy sector.
According to him, when this is done, it will bring to an end the phenomenon of government having to pay for excess power it doesn’t need, simply because of the existing take or pay contracts that require that government either takes power produced or pays for them.
“If there is anything I would be happy the committee is able to achieve would be to make sure that some of these contracts are renegotiated, otherwise the sustainability of the energy sector and also Ghana’s own economic stability will be seriously endangered.”
Also commenting on the work of the newly constituted Committee, which takes over the consultation process with the independent power producers and gas suppliers in the coming months, Ishmael Edjekumhene said priority must also be given to the collection of revenue from consumers of power.
“If you have cash available to pay for services then you don’t need the steering committee. So we need to ensure that the utilities are collecting the monies that they are supposed to collect so that the committees’ work will be simple,” he added.
Ofori-Atta unveils Committee to review take or pay agreements et al
The Minister for Finance recently unveiled a committee to take over the consultation process with the independent power producers and gas suppliers as part of efforts to reduce the burden placed on government by several ‘take or pay’ power purchase agreements among other issues in the energy sector.
Mr. Ofori-Atta inaugurating the government-led Energy Sector Recovery Programme Steering Committee made up of members across various sectors and ministries, said the move is part of efforts to resolve energy issues in a manner that is sustainable for both Ghana and its partners.
Mr. Ofori-Atta presenting the 2019 mid-year budget review to Parliament in July this year, announced the government’s intention to renegotiate several agreements in Ghana’s energy sector, including all take or pay power purchasing agreements; imposing a moratorium on the signing of new power purchase agreements in the energy sector.
“The Steering Committee is of key importance for the future of Ghana’s energy sector and Ghana’s long-term sustainable development government has been working hard to establish a long-term sustainable strategy for a competitive and dynamic energy sector where private investments can thrive, and the interests of the Ghanaian people and businesses continue to flourish,” the Finance Minister said.
The inauguration is part of a decision made by the Energy Sector Recovery Task Force, as mandated by Cabinet to ensure and oversee the implementation of the Energy Sector Recovery Programme (ESRP). The Steering Committee is expected to help implement the ESRP, which identifies key issues in the energy sector and proposes solutions.
Since August 2019, the Ministry of Finance and the Ministry of Energy have been engaging with IPP and GS representatives to find solutions that result in a fair outcome for all stakeholders – both the Ghanaian people and investors. And the inclusive composition of the steering committee is expected to help comprehensively address the issues at hand.
Currently, Ghana has an installed power generation capacity of 5,083 MW, a dependable capacity of 4,593 MW and a peak demand of around 2,700 MW.