Power generation company, the Volta River Authority (VRA) has been tasked by Government to find markets and export the country’s excess power capacity.
Ghana’s total installed power capacity is 5,083 MW with a peak demand of 2,700 MW. The remaining 2,383 excess capacity has been contracted on a take or pay basis, costing Government approximately $500 million annually.
The pay or take agreement between Government and Independent Power Producers (IPPs) signed during the peak of the country’s power crisis – dumsor – between 2014 and 2015 means that whether Government uses the power or not, it still pays for it.
Government, in a desperate attempt to cut down its losses, has been exploring foreign markets – mainly Ghana’s neighbours – to sell the excess power; but has so far been unsuccessful in doing so.
Speaking at the of VRA’s 60th anniversary in Accra, Senior Minister Yaw Osafo-Maafo, implored the VRA to help Government find buyers for the excess power, given its experience in power exports to countries within the sub-region.
“It is my hope that the VRA with its rich experience will explore the export market to reduce the burden of over-capacity on Government, because Government at the end of every year has to pay $500 million for the power it does not need,” he noted.
The incumbent Government has consistently spoken of the need to renegotiate the pay or take agreements with IPPs in order to cut down the huge costs it brings to the State.
Finance Minister Ken Ofori-Atta, stated in his presentation of the Mid-Year 2019 Budget Statement and Economic Policy & Supplementary Estimates in Parliament that, there was a need to renegotiate the contracts to avert the impending huge costs it will bring the country in the coming years.
“All take-or-pay contracts will be renegotiated to convert to take-and-pay for both Power Purchase Agreements (PPAs) and Gas Supply Agreements (GSAs),” he said.
Similarly, in August last year, Government announced that it had begun collaborative consultations with IPPs to resolve the take or pay obligations hampering the country’s energy sector.
The three-month engagement, instituted by both the Energy and Finance Ministries, was to help Government find a permanent solution to the excess power conundrum, but nothing seems to have changed since the Finance Minister made the disclosure more than a year ago.
