Power deals must not sink our fortunes – Akufo-Addo

The country has “not fared well” in electricity deals it has signed with private sector entities, President Nana Akufo-Addo has said, pledging to reverse the situation and ensure that the country is not shortchanged in such agreements.

It should be possible for the private sector to make “a reasonable profit with a fair agreement that does not sink the fortunes of the country,” the president said at the sod-cutting ceremony for a 400megawatts thermal plant in Tema, funded by Early Power Limited, a consortium involving General Electric, Endeavour Energy and locally-owned Sage Petroleum.

The president’s comments come in the wake of the brouhaha surrounding the Ameri power deal, which an investigative committee said was bloated by as much as US$150million, and so should be renegotiated or abrogated.

The deal was signed under the erstwhile NDC government, which the governing NPP often accused, whilst in opposition, of bloating or badly negotiating various contracts with private sector entities.

Whilst in opposition, the NPP also raised concerns about the negotiated $9.8/MMBtu price for the US$7billion Sankofa gas deal with Italy’s ENI and partners.

“It is even higher than the price of gas sold to Ghana from Nigeria, which stands at $8.3/MMBtu, delivered at Takoradi. It is even more expensive than our own Atuabo Gas price of $8.8/MMBtu delivered at Takoradi. At the negotiated gas price of $9.8/MMBtu, it puts to great risk Ghana’s potential of becoming the Petrochemical hub of the region to Nigeria, due to that country’s lower gas prices,” the NPP said.

Under the Sankofa deal, Ghana will buy the gas from ENI and Vitol and pass it on to power producers, including state-owned Volta River Authority (VRA) and Independent Power Producers.

The Africa Centre for Energy Policy (ACEP), founded by current Deputy Energy Minister, Dr. Amin Adam, has argued that IPPs in particular would not buy the Sankofa gas if it comes at a time gas prices are lower on the global market.

During the most recent storage week, the average natural gas spot price at the Henry Hub was $3.09/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.62/MMBtu.

In the TEN deal, the GNPC managed to beat down to US$0.5/mmbtu for all associated gas and US$3.00/ mmbtu for non-associated gas, from an initial proposed gas price of US$9.50/mmbtu.

According to President Akufo-Addo, “There are no arguments today about the participation of the private sector to meet the growing demand for electricity. What arguments and anxieties there have been have centered around the nature of the agreements that have been made with private producers.”

He said: “It might well be that many of such agreements have been negotiated during emergency periods and times of power shortage. Dare I say, however, that, thus far, it looks like the government of Ghana has not fared very well in these negotiations with Independent Power Producers.”

“The government I lead,” the president went on, “is a natural cheerleader for the private sector, but does so within the framework of protecting the public purse. I see no contradiction in that. I believe it is possible for the power producers to make a reasonable profit with a fair agreement that does not sink the fortunes of the country. That is wholly acceptable. Let me state it again clearly here; we shall do all we can to provide the enabling environment for the private sector to flourish in Ghana. But we shall also protect the public interest every inch of the way.”