The claim by NPP that gov’t pays more for excess capacity charges is mischievous – Sammy Gyamfi

The National Communications Officer of the opposition National Democratic Congress has denied claims by the ruling New Patriotic Party on the basis of excess capacity charges.

In a Press Conference held on Monday, June 28, Mr Sammy Gyamfi described the claim as mischievous.

Kindly read the full statement below

Finally, ladies and gentlemen, we cannot end this press conference without responding to the false narrative about excess capacity charges that the NPP and its surrogates have been regurgitating for sometime now.

The claim by the NPP that the Akufo-Addo government is paying a lot of money for
power we don’t need or as excess capacity charges because the erstwhile NDC Mahama government signed many needless take-or- pay PPAs such as the GPGC EPA is mischievous to say the least.

First and foremost, let me make the point that take-or-pay arrangements are normal insurance or financial viability provisions in Power Purchase Agreements. In fact, it is not a new phenomenon in Ghana at all. For the records, the Osono/CENIT PPA entered
into by the NPP/Kufour administration was a take- or-pay agreement. Also, the Trans Tema plant that was brought into the country during the Kuffuor era was on a take-orpay basis.

Again and more instructively, the Tema LNG project recently entered into by Akufo-Addo government is a take-or-pay agreement. There is therefore nothing wrong with take-or- pay agreements per se.

Also, the NPP’s claim that the country currently pays USD$1 billion as excess capacity charges as a result of PPAs executed by the erstwhile NDC regime has been proven to be false. When the minister of Finance, Ken Ofori Atta, appeared before Parliament few
days ago to answer a question filed by Hon. Alhassan Suhuyini on the amount of money
government has paid in excess capacity charges so far, he said in his answer that the
country has paid a total of $937 million to only three (3) companies, which are Karpower, Aksa and Cenpower from the year 2017-2020. This figure comes to an annual average
payment of USD$234 million when it is divided by four (4) years.

It is worthy of note that about USD$200 million of this amount constitutes the 20%
standard reserve margin of ECG which is a necessity and not excess capacity. The
remaining USD$34 million worth of power would have been totally wiped off if VALCO had been revived by the Akufo-Addo government or even if the AFD-funded 330KV transmission line project from Ghana to Burkina Faso which was commenced by the erstwhile NDC/Mahama administration and which would have ensured an increase in the exportation of power from 100MW to 200MW to Burkina Faso alone, had been
completed by this government.

The question we want to ask those who keep disturbing our ears with this propaganda
about excess capacity charges is; why has the Akufo-Addo/Bawumia government
extended the duration of the Karpower PPA executed by the NDC/Mahama government
from 10-20 years and that of Cenpower from 5-10 years if the claim about excess capacity charges is true?

Only recently, the Minister for Energy, Mathew Opoku Prempeh, asked for Ghana to increase its generational capacity. As we speak, a steel manufacturing company in Ghana,
B5 Limited, which is currently the biggest in Africa, is operating at 30% capacity due to lack of power. Where then lies the claim that Ghana is paying for power we don’t need?

Friends from the media, even if the Akufo-Addo/Bawumia government thought that the country didn’t need the 107MW of installed capacity the GPGC EPA was supposed to provide or that the country could not export same for revenue as the Mahama administration had planned, the wisest thing for them to have done was to have negotiated and deferred the implementation of the Agreement, just as they claim to have done in the case of four (4) other PPAs. Terminating the Agreement on the basis of contrived reasons which they knew could not be sustained and could potentially occasion a judgement debt and financial loss to the state was not an option. After all, the maintenance and
performance of the Agreement would have caused the nation only USD$99.6 million, with the possibility of the State exporting same for revenue.