NDC Legacy: Govt To Pay $14.7m For Unused Plant

Another instance of mismanagement of the economy under the NDC government has emerged with revelations to the effect that Government has been sued at an Accra Fast Track Court for the payment of a whooping US$14.795,775 for a non-performing 32 MW Power generation plant.

When the country experienced power crisis in 1998 as a result of low water level at the Akosombo Dam, the NDC government pursued a Plan of Action comprising short and medium term measures to save the situation.

Consequently, it invited emergency private power generation companies to bring into the country and operate a number of mobile power generation plants.

According to THE INDEPENDENT , one of such arrangements, was a Power Purchase Agreement (PPA) entered into on April 22, 1999 between then Energy and Mines Ministry with a foreign company called Cummins Wartsila, which was assigned to a local company, SIIF-Ghana to provide 32MW firm power for a period of two years on “take or pay” basis. Subsequently, at the request of the Finance Ministry, the BoG issued a Payment Guarantee dated October 1, 1999 to secure the payment of Government’s financial obligations under the PPA, which became effective in October 1, 1999 after all conditions had been met with SIIF-Ghana bringing into the country and installing a 38MW plant at Takoradi.

THE INDEPENDENT found out that in 2000, changes in economic circumstances by way of rising fuel prices and the rapid deterioration of the cedi made the project uneconomical.

Consequently, SIIF-Ghana however notified the Mines and Energy Ministry of the commencement of “commercial operation on 16th July, 2000 as stipulated in the PPA, submitted to the Ministry monthly invoices totaling US $14.48m between July 2000 and August 2001 for capacity charges. The Mines and Energy Ministry however failed to honour payments to SIIF-Ghana.