Mr James Avedzi, Chairman, Parliament’s Public Accounts Committee (PAC)

At 2:20 pm on July 23, 2015, then Chairman of Parliament’s Mines and Energy Committee, Alhaji Amadu Sorogho moved a motion for approval of an Energy Power purchase agreement between Ghana and GPGC.

Addressing the House, he said, “Mr. Speaker, I beg to move, that notwithstanding the provisions of Standing Order 80 (1) which require that no Motion shall be debated until at least, forty-eight hours have elapsed between the date on which notice of the Motion is given and the date on which the Motion is moved, the Motion for the adoption of the Report of the Committee on Mines and Energy on the Emergency Power Purchase Agreement between the Government of the Republic of Ghana and GPGC Limited for the provision on a Fast-track Basis, up to 107MW (ISO) Installed Capacity of Power Delivery Services may be moved today.”

The Motion was seconded by his colleague, Adam Mutawakilu who was MP for Damongo at the time. Mr. Sorogho then took the House through the report of the Mines and Energy Committee.

It was to essentially tell the MPs about the key obligations of government and that of the power company. It also had a piece of important advice for government.

Highlights of the Committee’s report

The report indicated that the agreement was an Emergency Power Purchase Agreement between the Government of Ghana and the GPGC (TEI) Limited for the provision of a fast-track 107 MW (ISO) Installed Capacity of Power. The committee indicated that it met with the then Minister for Power, Dr. Kwabena Donkor and officials of the Ministry.

The Committee said in arriving at a conclusion that the agreement ought to be approved, it considered the following documents;

The 1992 Constitution, Standing Orders of Parliament, Public Utilities Regulatory Commission Act, 1997 (Act 538) and the Environmental Protection Agency Act, 1994 (Act 490).

The Committee noted that GPGC’s key obligations under the agreement are to “mobilize, bring into Ghana, install and commission the two GE aero-derivative Gas Turbines, Thermodyn GE steam section and related accessories;

(ii). operate and maintain the plant; provide compressors to increase gas pressure from the guaranteed 38 bar to 45 bar required for the gas turbines, provide appropriate step-up transformers upon executing a Grid Connection Agreement with GRIDCo;

(iii). inaugurate the open cycle not later than one hundred and eighty (180) days from the date all conditions subsequent are fulfilled; and

(iv). inaugurate the combined cycle not later than ninety (90) days from date of the inauguration of the open cycle.”

Government on the other hand was to “assist GPGC in procuring utilities, site for the power plant and temporary accommodation facilities for GPGC’s operations team required for the installations, pre-inauguration, and inauguration;

(ii). assist GPGC to secure a Grid Connection Agreement with GRIDCo on acceptable terms;

(iii). ensure that National Interconnection Transmission System (NITS) is ready and able to accept, utilise and evacuate power from the plant;

(iv). provide fuel in adequate quantity and acceptable quality and pressure for testing and operations of the power plant; and

(v). supply gas to the power plant and take delivery of the power at the Electricity Delivery Point.”

The Committee assured the House that the equipment to be provide by GPGC were in good condition.

It further stated that the fiscal terms achieved under the Agreement were favorable. It made reference to the capacity charge of 4.000 US cents/kWh agreed which it noted is lower than the capacity charge obtained under other Power Agreements including the Karpower (5.6076 US cents/kWh) and the AKSA (4.5000US cents/kWh).

Additionally, the Committee noted that the EPA does not require the Government of Ghana to procure a Standby Letter of Credit (LC) as a condition precedent for the execution of the project.

Warning

The Committee, however, issued a serious warning. It noted that the duration of the agreement is four years commencing on the date the agreement is executed.

It warned that “this is a guaranteed period and therefore any prior termination will attract sanctions.”

The Committee concluded that, “Having scrutinized the Emergency Power Agreement in the light of the current power supply challenges confronting the country, the Committee is satisfied with the terms of the Agreement.

The Committee, therefore, recommends to the House to adopt its Report and to ratify the Emergency Power Purchase Agreement between the Government of Ghana and the GPGC Limited for the provision of fast-track 107 MW (ISO) Installed Capacity of Power in accordance with article 181 (5) of the Constitution”.

Contract Terminated

Currently, Government is to cough up an amount of $170 million to the company. This was after an arbitrator had found that government’s basis for terminating the power agreement is not a true reflection of the state of affairs.

Ghana in 2015 entered into a power agreement with GPGC to have the company relocate its power plant from Italy to Ghana.

The Volta River Authority is said to have agreed to make available its land located at Kpone to the company.

But following a change of government in January 2017, the Volta River Authority informed GPGC that it had decided not to proceed with the leasing of the land at Kpone to the company.

In April 2017, a Ministry of Energy Committee asked that government considers termination of the agreement at an estimated cost of $18 million rather than the payment of an excess capacity charge of $24.9 million per annum over the contract period of 4 years.

A subsequent termination of the agreement resulted in government being dragged to an Arbitrator.

The Arbitrator ruled against government saying the basis for its termination was not reflective of the state of affairs.