GPGC Judgement Debt: Kwabena Donkor's Utterances Most 'Unfortunate and Irresponsible' - Boakye Agyarko 'Fires'
Former Energy Minister Boakye Agyarko has responded to what he describes as some very unfortunate and ill-informed statements by Hon. Kwabena Donkor on the termination of the GPGC Power Purchase Agreement.
"I deem the utterances most unfortunate and irresponsible coming from a former Minister who ought to know that it is not within my power or province, or that of any Minister to unilaterally cancel or terminate a contract of this nature," Boakye Agyarko said in a statement.
According to him upon assumption of office, the newly elected NPP government decided to take all the necessary actions to contain the cost of power generation and distribution in Ghana.
Hence, it became necessary to review the implementation of the many Power Purchase Agreements (PPAs) because should all of them be implemented as originally scheduled, it would result in the production of excess energy with its attendant cost, which would worsen the financial situation of the power sector.
The review was therefore to help cut back on losses that would be incurred.
A former Power Minister under the John Mahama administration, Dr. Kwabena Donkor has stated that the decision by government to terminate the Ghana Power Generating Company (GPGC) contract, leading to a judgement debt of $140 million “made no sense commercially and legally” at the time.
The Pru East MP, wants parliament to probe the former Energy Minister, Boakye Agyarko and other officials of the current government who took the decision, insisting the reasons given for the termination are untenable.
Read below his full statement
My attention has been drawn to some very unfortunate and ill-informed statements by Hon. Kwabena Donkor on the termination of the GPGC Power Purchase Agreement.
I deem the utterances most unfortunate and irresponsible coming from a former Minister who ought to know that it is not within my power or province, or that of any Minister to unilaterally cancel or terminate a contract of this nature.
Upon assumption of office, the newly elected NPP government decided to take all the necessary actions to contain the cost of power generation and distribution in Ghana. It became necessary to review the implementation of the many Power Purchase Agreements (PPAs) because should all of them be implemented as originally scheduled, it would result in the production of excess energy with its attendant cost, which would worsen the financial situation of the power sector. The review was therefore to help cut back on losses that would be incurred.
An Inter-Ministerial Committee was set up under the chair of the Energy Commission to review the fiscal and legal implications of Power Purchase Agreement (PPAs) executed by the Electricity Company of Ghana (ECG). The eighteen (18) member committee was chaired by Dr. Alfred Ofosu Ahenkora, Executive Secretary of the Energy Commission. Its report was submitted on 5th April, 2019 under ref EC/MOE/17.
The report was subsequently put before Cabinet for consideration and action. Cabinet directed that the report be further reviewed by the Attorney-General. This was done.
Cabinet subsequently gave its approval for the recommendation of the report to be implemented.
In respect of the GPGC PA, the report recommended the termination of the PPA with a capacitv of 107 MW (executed between Government and GPGC) at an estimated lost of USC
18 million or else pay excess capacity charge of USD 24.90 million per annum over the contract period of 4 years.
This is an Emergency Plant with a 5-year PPA, used plant (not new) and high tariff. Major equipment has arrived at the Tema port awaiting tax exemption to clear.
Remarks from the report follows;
"Based on the 2018-2030 demand supply capacity balance and the tariff rank of this project, the full capacity of this project will be excess (idle) resulting in estimated total cost of USD 115.48 million within the duration of the PPA.
The likelihood of the Plant being idle, is further heightening by the fact that, it is a pure natural gas fired turbine to be located in Tema where there is inadequate gas to feed it.
There is therefore a high probability of the Plant remaining idle even if allowed to proceed".
Based on the decision of Cabinet, I as minister initiated the process by informing all interested parties of this decision and requested that the decision be implemented. At the time I left office, the Government of Ghana and GCGP, consequently begun negotiation to give effect to the decision to terminate.
These are the facts which I know are available to the Honourable Minister.
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