Deputy Executive Director of the African Centre for Energy Policy (ACEP), Benjamin Boakye has noted that, the power purchase agreements signed under the former National Democratic Congress (NDC) government and cancelled under the current administration may save the country money.
According to him, the new administration may have reviewed the deals and concluded to cancel the deals based on what they have reviewed and seen.
He was however quick to add that, the cancellation is a step in the right direction but we do not know the immediate impact it will have on us. They do not put in public details of the agreement and so if there are loopholes, and you cancel, they may seek legal redress and that may create a judgment debt.
There were number of agreements signed but not working and so it was prudent to review the agreement and cancel the ones that could be cancelled.
The Vice President Dr. Mahamudu Bawumia at the Townhall meeting held on Monday revealed that, government has abrogated about 20 power purchase agreements signed by the erstwhile Mahama government.
According to him, this has saved the country a whopping $300 million.
“We have saved the country $300 million by reviewing and prioritizing the existing power purchasing agreements. We’ve essentially cancelled about 20 of them, we’ve asked four of them to go ahead and the rest to delay by two or three years and in so doing, we have managed to reduce government’s liabilities,’’ the Vice President said.
The NPP had argued that some of the power deals signed by the former government were bloated, and were not value for money.
Mr. Boakye stressed that in ensuring value for money, it will be proper for government to review the deals and select those that will serve our best interest.
‘’You have to sign the contract to assure the company that they will have value for their services but after signing the agreement and for some time they have not started offering their services, you can cancel it or review it before signing with a new company. Because if you fail to do that, and they still generate power for you together with the new one, you will have to pay them and that will mean excess power which you do not need but paying for it…The World Bank had estimated that we will be paying an amount of $2.5 billion for excess power.’’
He added: ‘’We have to work with a plan to prevent corruption in the sector. We don’t usually work with a plan and that is why people use that to corrupt the system. We do not plan and so when we are faced with crisis, we rush to go for emergency procurement and that is where people corrupt the system, ’’ he said.