'A struggling economy cannot agree to 'take-or-pay' power contracts' – Bright Simons on GNPC-Genser deal

The Vice President of Policy think-tank, IMANI-Africa, Bright Simons, has vehemently shot against the acceptance of “take-or-pay” contracts in the country’s power sector.

According to him, in a struggling economy, those contracts only pile up debts as they do not usefully serve the country in the long run.

He made the comment when he spoke about the Parliamentary Select Committee on Mines and Energy's approval of the GNPC/Genser deal.

He noted that approval of the deal will mean that the Ghana National Petroleum Commission is being made to pay for gas-pipeline infrastructure which it either uses or not.

“What we found out in our preliminary investigations is that there’s now an attempt to create two contracts. One of the contracts is an attempt to get GNPC to commit to 'Take or Pay' arrangements for the gas pipeline infrastructure.”

“In a country where the Government is already struggling with “Take or Pay” contracts in the power sector, you cannot watch your national oil company also enter into another contract, where it will pay for gas pipelines regardless of whether it uses the pipelines or not,” he was quoted by norvanreports.com.

Bright Simons said it is unacceptable for the GNPC to enter into the deal.

“We refuse to accept a contract in which the country will have to pay capacity charges regardless of whether the GNPC passes gas through the pipelines or not.

“We propose that any agreement that is reached must be one that allows GNPC to pay for the gas it actually passes through the pipelines, and that is the position of IMANI and ACEP,” he added.

Issues surrounding the GNPC-Genser deal have come up in recent times after policy think tanks, ACEP and IMANI raised concerns over a Gas Sales Agreement (GSA) between GNPC and Genser Energy Ghana Limited (GEGL), asserting that Ghana stood to lose the “whopping and galactic sum of US$1.5billion” due to this arrangement.

The allegations raised by ACEP and IMANI claimed GNPC sold gas to Genser at significantly reduced rates compared to its purchase price, resulting in a perceived subsidy.

Following an 11-month-long investigation, the Parliamentary Committee has refuted the claims made by ACEP and IMANI, stating that the GSA is not a “sweetheart contract”.

The committee in response noted that it found the computation methods used by ACEP and IMANI faulty.

It said the CSOs calculated a hypothetical loss based on the contractual sum of US$2.79/MMBtu. But that price reflects offsets from a capacity charge of US$3.29/MMBtu.

SSD/NOQ

Ghana’s leading digital news platform, GhanaWeb, in conjunction with the Korle-Bu Teaching Hospital, is embarking on an aggressive campaign which is geared towards ensuring that parliament passes comprehensive legislation to guide organ harvesting, organ donation, and organ transplantation in the country.

Watch the latest edition of BizTech and BizHeadlines below: