NDC’s IPP contracts ‘atrociously bad' – Kofi Bentil

The contracts signed with the Independent Power Producers (IPPs) by the previous National Democratic Congress (NDC) administration were unspeakably bad and should be cancelled, Vice President of Policy think tank, IMANI-Africa, Kofi Bentil has said.

He has, therefore, supported plans by the governing New Patriotic Party (NPP) administration to cancel those deals.

In a tweet, Mr Bentil, also a private legal practitioner said: “I totally agree with the government’s decision to cancel the senseless NDC IPPs and only do take and pay!! Those contracts were atrociously bad and cost us way too much.”

The Finance Minister, Ken Ofori-Atta on Monday, 29 July 2019 told Parliament during the presentation of the mid-year budget review that the government will review some of the contracts signed by the previous administration.

He said: “These wasteful expenditures in the energy sector are one of the main causes of increases in end-user electricity tariffs, imposing hardships on Ghanaians. Similarly, this makes Ghana uncompetitive for manufacturing, thus holding back our industrialisation and job-creation agenda. What’s more, these wasteful payments are putting pressure on our foreign currency reserves and on the exchange rate.

“In Investment Banking parlance, the NDC government’s parting shot was an energy sector poison pill. But, Mr Speaker, we are determined that the good people of Ghana will not drink this hemlock.”

He added: “We cannot allow this situation to continue. There is no doubt that the situation in the energy sector is shocking the economy and creating a state of emergency. And indeed, as in the case of what we have done in the financial sector, we must respond with the urgency and boldness dictated by the situation.

Government has resolved as follows:

• to convert all Take-or-pay contracts to Take-and-pay contracts. Accordingly, starting August 1st 2019, Government is to pay for energy and gas that we actually consume. All Take-or-pay contracts will be renegotiated to convert to Take-and-pay for both PPAs and Gas Supply Agreements (GSAs). Government will seek Parliamentary ratification where appropriate;”

• to suspend indefinitely or terminate all PPAs currently under negotiation;

• to immediately place a complete moratorium on signing new PPAs and Put-Call Option Agreements (PCOAs);

• to subject all future PPAs competitive and transparent procurement procedures. Government will therefore no longer entertain any unsolicited proposals.

• to implement the economic merit order dispatch which means that the most efficient power plants will be dispatched first;

• to improving the performance of the distribution utility and has agreed with the concessionaire a plan to reduce electricity losses and increase collections based on an agreed investment plan to significantly shift in the medium-term, the energy mix to gas and renewables.

• to implement the recommendations of the Energy Sector Recovery Programme (ESRP) as approved by Cabinet; and

• to mandate the Energy Sector Task Force, as constituted by Cabinet based on the recommendations in the ESRP, to ensure and oversee the implementation of the sector recovery programme.

I totally agree with governments decision to cancel the senseless NDC IPPs and only do take and pay!!
Those contract were atrociously bad and cost us way too much.

— kofi bentil (@kbentil) July 29, 2019