A member of pressure group, OcccupyGhana, Sydney Casely-Hayford feels the energy sector deserves more attention from the Special Prosecutor, Martin Amidu because of the deals massively costing the state.
Mr. Casely-Hayford’s remarks on The Big Issue on Citi TV were in relation to the take-or-pay deals in the sector said to be costing Ghana over $500 million yearly.
“If you really want to get to it, the contracts around the energy sector are probably what Amidu should be paying attention to because that for me is where the fraud is.”
During the mid-year budget review, the Finance Minister said the country was in a “state of emergency” and called the take-or-pay contracts a critical risk to the economy by the Minister.
The Finance Minister said the government intended to renegotiate all take-or-pay contracts to take-and-pay contracts and Mr. Casely-Hayford is in support of this.
He stressed that the deals must be addressed “whether they produce judgement debts or not.”
“Reviewing your costs in any business as you go forward is imperative if you are to survive. You are always looking for a way to increase your profit as you go forward… it is better we look at them now and make a decision as to whether it will be better to break those contracts and suffer the judgement debts. It is prudent financial management to sit down and look at so as for that one we have to do it.”
However, some observers have cited Ghana’s excess power capacity as the main problem with the sector.
The Africa Center for Energy Policy (ACEP) had advised the government to focus on addressing excess power generated by the Independent Power Producers and not renegotiating the take or pay agreements.
“The problem the energy sector has is not because we have take-or-pays. It is because we have excess [capacity]. The problem is the reckless signing of more than we need,” The Executive Director of ACEP, Ben Boakye, said to Citi News earlier.
Ghana’s installed capacity of 5,083 MW is almost double the peak demand of around 2,700 MW.
Of the installed capacity, 2,300 MW has been contracted on a take-or-pay basis meaning Ghana is contractually obliged to pay for the excess capacity though it does not consume it.