Excess Capacity: Don’t give any excuse with power sector – Sammy Gyamfi to government

The National Communication Officer for NDC, Sammy Gyamfi has said with the investment in the power sector so far President Akufo-Addo’s administration has no excuse than to keep the lights on.

In a statement, Mr. Gyamfi catalogued a number reasons why President Akufo-Addo must allow power outages in the country.

“It must be noted that every country requires some quantity of excess power, what is called reserve margin or spinning reserve of 12% of demand to cater for unanticipated disruptions in power generation and other contingencies.

“Also, best practice demands that every country maintains some quantity of excess power known as development margin, to attract investments particularly in the area of industrialization. Ironically, it is a government that claims to be championing an economic transformational agenda anchored on 1D1F which is perpetually complaining about excess power which is the most essential requirement for the industrialization of any country,” the National Communication Officer stated.

ON THE MATTER OF THE EXCESS CAPACITY EXCUSE OF THE AKUFO-ADDO/BAWUMIA/NPP GOVERNMENT.

1. The Finance Minister, in an answer to a question asked by Honorable Suhuyini on the floor of Parliament on 17th June, 2021 indicated that so-called excess capacity payments from 2017-2020 stands at US$937.50 million and not GHS17 billion as claimed by Bawumia and other leading NPP figures.

2. Our checks show that even the US$937.50 million this government claims to have paid for excess capacity charges was not in truth, paid for excess power but for power consumed and tariff shortfalls due to unpaid subsidies by government to ECG which was occasioned by the populist reduction of utility tariffs in the year 2018, as well as technical and commercial losses incurred by ECG, VRA, GRIDCO and NEDCO, among other things.

3. Currently, Ghana has an installed capacity of about 5000MW and an average available capacity of about 3,600MW, with average demand of about 3,500MW. Clearly, the claim of excess capacity charges is highly exaggerated.

4. Bawumia and the NPP have not been able to tell us the total Megawatts of power that they claim to be excess capacity (i.e power that the country doesn’t need or consume, yet pays for?) and which IPPs are currently producing this excess power. Ghanaians deserve to know the breakdown of this so-called excess power.

5. It must be noted that every country requires some quantity of excess power, what is called reserve margin or spinning reserve of 12% of demand to cater for unanticipated disruptions in power generation and other contingencies.

6. Also, best practice demands that every country maintains some quantity of excess power known as development margin, to attract investments particularly in the area of industrialization. Ironically, it is a government that claims to be championing an economic transformational agenda anchored on 1D1F which is perpetually complaining about excess power which is the most essential requirement for the industrialization of any country.

7. It is worthy of note, that currently VALCO and B5 limited- the largest steel manufacturing company in West Africa located in Prampram, are operating far below optimum capacity due to inadequate power. Also, the current minister of Energy, Mathew Opoku Prempeh is on record to have called for more investments in the area of power generation as recent as 2021. In fact, the Akufo-Addo/Bawumia government has signed new power generation agreements. This completely government’s claims about excess capacity. See https://mobile.ghanaweb.com/GhanaHomePage/NewsArchive/Ghana-signs-new-Power-Purchase-Agreement-1745537

8. The claim that the power agreements that were signed by the NDC/Mahama regime were on take- or -pay basis and that this has occasioned huge financial losses to the state is false. 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. 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-or-pay 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.

* It is important to note that Karpower is on take-or-pay basis, yet the Akufo-Addo/Bawumia government has extended its duration from 10-20 years. Also, the duration of the CenPower agreement which is another take-or-pay power agreement has been extended by this government from 5-10 years. This clearly begs the question as to why government will continue lamenting about excess power or take-or-pay agreements signed by the erstwhile Mahama regime when they have extended the duration of these agreements. If these agreement were bad for the country, why extend their duration?

* Interestingly, most of the six (6) power agreements signed by the erstwhile NDC/Mahama government (AMERI, Karpower, Aksa, Amandi, Early Power and GPGC) received bi-partisan support on the floor of Parliament. In fact, they were seconded by Leading NPP MPs such as KT Hammond and others. How then can the NPP turn around to accuse us of corruption in the signing of these agreements when they supported most of these power agreements and have not been able to adduce any such evidence of corruption in the said agreements or prosecute any former appointee for any such offense?

9. Finally, the erstwhile NDC/Mahama administration before leaving office secured funding from AFD and commenced the construction of a 330KV transmission line project from Ghana to Burkina Faso. This project which was supposed to be completed in the year 2018 was intended to increase Ghana’s exportation of power from 100MW to 200MW to Burkina Faso alone, and to other Sahelian countries for foreign exchange. What has this government done about this project and what is its status currently?

10. In any case, this government secured approval from parliament in the year 2018 to use proceeds ($1 billion) of the Eurobond we issued that year to renegotiate power agreements that claim were leading to excess capacity charges. What have they done with this money?

Enough of frivolous excuses by the inept, wasteful, corrupt and reckless Akufo-Addo/Bawumia/NPP government.

NCB-HQ