A former Chairman of Ghana’s Energy Commission, Dr Kwame Ampofo, has cautioned the Akufo-Addo-led administration to be mindful of the repercussions attempt to cancel power purchasing agreement signed with independent power producers might bring.
The energy expert and former Managing Director of the West African nation’s only refinery, TOR, intimated that Ghana requires a quantum of energy to spur industrialisation and economic growth, warning that “the move can send wrong signals to would-be investors.
“We need to be friendly with the IPPs. When an IPP comes into a country, the way we cancel or abrogate contract can send wrong signals to would-be investors and it can delay or prevent others from coming in,” he stated.
His comment follows announcement by the Finance Minister, Ken Ofori-Atta that government would, from August, pay IPPs for power the country consumes and bring an end to the ‘Take or Pay’ policy contracts entered by the previous administration.
Speaking to energynewsafrica.com, Dr Kwame Ampofo said, even though he is not against any decision by government to cancel any power purchasing agreement, he argued that government would have to make sure that it is a necessary evil before doing so in order not create an unfriendly environment for the IPPs.
Presenting the recent mid-year budget in Parliament, Ghana’s Finance Minister Ken Ofori-Atta noted that the country’s current installed capacity of 5,083 MW is almost double the country’s peak demand of around 2,700 MW.
He said 2,300 MW of the installed capacity has been contracted on a take-or-pay basis, explaining that “this means that we are contractually obliged to throw away money for this excess capacity which we do not consume.”
Net power exporter
While government is taking steps to ensure that some of the contracts are terminated or reviewed because of excess, Dr Kwame Ampofo believes government should also take bold steps to ensure that the excess power is exported for foreign exchange.
Making an argument about why Ghana should consider itself as fortunate by having excess power, Dr Ampofo said there is an existing policy since 1980, which states categorically that Ghana must become a net exporter of power.
“One policy is that Ghana must become a net exporter of power. And how can you export power if you don’t have it in excess?
“If we have been able to achieve that, then it is a good thing. All we need to do is to look at how that excess power can be used to satisfy the national policy of export.
“When we export power, we can earn foreign exchange. It is precisely because of this that we invested in the West Africa Power Pool,” he explained.