$750m AKSA Power Plant extension sparks controversy and raises transparency concerns
The Africa Centre for Energy Policy (ACEP) has expressed strong reservations regarding the Ghanaian government’s decision to extend the contract with AKSA Plant by 15 years, igniting a wave of criticism and calls for greater transparency. ACEP contends that the AKSA power plant, which it deems outdated, has already generated an estimated $700 million for capital recovery and fixed operation and maintenance, despite operating at an average utilization rate of a mere 16 percent between 2017 and 2022. Astonishingly, the plant has now been assigned a capital recovery charge of approximately $750 million for the extended period.
Constructed in 2015 during the challenging “Dumsor” period, the AKSA plants comprise aged Wartsila engines assembled by a private developer, with units sourced from multiple countries such as Cyprus and Sri Lanka at a cost ranging between $1.2 million and $2 million per unit. ACEP’s analysis reveals that the total investment cost for these projects should not have exceeded $60 million, a fact acknowledged by regulatory bodies overseeing the sector.
The influential think tank has raised pertinent questions regarding the approvals granted by both the Energy Commission and the Public Utility Regulatory Commission (PURC) for the contract extension, given the potential adverse ramifications on the power sector. ACEP emphasizes that Ghana’s long-term sustainability and cost-efficiency in the energy domain depend on deploying highly efficient power plants.
Moreover, ACEP asserts that Ghanaians have effectively overpaid for the facility, with the current arrangement viewed as both incompetent and detrimental to the engineering foundations of new power generation systems. The organization contends that strategic planning should involve the deployment of cutting-edge equipment, particularly when the state serves as the fuel supplier. ACEP also underscores that aged plants are inherently less reliable, making the government’s inclination to operate them for another 15 years a matter of concern.
ACEP’s latest report casts doubt on the transparency and accountability of the decision-making process, particularly as the AKSA project is currently under scrutiny by US government authorities for alleged bribery payments to Ghanaian officials. The organization urges a comprehensive examination of the inconsistencies surrounding the justification for extending the AKSA power plants. These concerns have arisen against the backdrop of conflicting statements from the Ministry of Energy, which simultaneously claims the need for additional capacity while asserting an existing excess capacity.
As attention is drawn to the AKSA contract extension, ACEP also highlights the neglect of the AMERI plant, which Ghanaians have already paid a substantial sum of $510 million. The AMERI plant has been left to deteriorate under the pretext of relocation to Kumasi, exhibiting signs of neglect such as leaky roofs, damaged air-conditioners, and non-operational computers in some units. Moreover, the gas pipeline required to supply the AMERI plant has been completed, necessitating the public to bear the associated costs through tariffs.
In this context, ACEP criticizes the continued waste of critical assets such as the single-cycle plants operated by the Volta River Authority (VRA), which could be converted into combined-cycle plants to achieve greater efficiency than AKSA. The organization concludes that ECG and the Ministry of Energy’s extension of other power plants on a take-or-pay basis while neglecting such critical assets is a matter of concern and calls for greater accountability. The AKSA project’s various ambiguities and contradictions, according to ACEP, would merit criminal investigation in more serious jurisdictions.
