The former NDC government has been rebuked for contracting “obnoxious” “self-serving” energy agreements that have seen the country cough up ¢2.5bn annually to pay for the power it does not need.

Doing the rebuking in front of 106 opposition MPs as the Finance Minister read government’s mid-year budget review, Ken Ofori-Atta said, this amount is to pay for some 2,300MW in installed capacity which the country does not consume.

At peak demand, Ghana uses 2,700MW out of more than 5,000MW in installed capacity.

Ghana experienced a crippling energy crisis that plagued much of the John Mahama government between 2013 and 2016 due to a 400 to 600MW deficit in generation.

Promising to fix it, the Mahama government-contracted several independent power production companies, prominent ones being KARPOWER and AMERI.

By 2016 when the NDC had lost power, power distribution company, ECG now Power Distribution Service (PDS), had signed 14 agreements to produce 1,104 MW more, the governing NPP claimed.

Another 18 agreements were also signed while 8 were yet to be signed, the party has said. If the agreements were not reviewed, Ghana would be generating more than 11,000MW, the NPP has said.

The Akufo-Addo government has said it has since reviewed 24 power purchase agreements, terminating 11 and rescheduling 8 others. The government has claimed it saved the taxpayer, $7bn in payments for un-needed power deals.

These figures and contract cancellation claims have not gone unchallenged with the Minority demanding evidence of the cancelled contracts.

Finance Minister referred to the cancellation of the contracts again in his mid-year budget statement and noted: “serious challenges” persists despite “significant progress” the government has made since 2017.

The challenges pose “grave financial risks” to the country, he said before revealing there are several other contracts on a “take-or-pay” basis in which “we are contractually obliged to throw away money” at excess power.

This expensive waste of monies is not only confined to petroleum-powered plants but also gas.

Despite the demand for 250 mmscf per day, Ghana is supplied 640mmscf which is even more than the projected demand of 550mmscf by 2023, Ken Ofori-Atta said.

Government is therefore contractually paying for about 390mmscf which it does not need.

“From 2020, if nothing is done, we will be facing annual excess gas capacity charges of between US$550 and US$850 million every year.”

The minister announced at least 15 new measures to address the energy sector challenges which includes increasing the Energy Sector Levy (ESLA) from 17% to 21%. The NPP while in opposition described the levy introduced in 2015 as ‘nuisance tax’.

That levy was introduced to pay off huge debts in the enegry sector known as legacy debts as it dates back to 20 years. The minister revealed almost 6billion cedis has been raised to pay off approximately 60% of the energy sector legacy debts. 

The increase in the levy is expected to result in a 90p increase per gallon of petrol and disel, the mid-year budget revealed.

”Government proposes to increase the Energy Sector Levies by GHp 20 per litre for petrol and diesel and GHp 8 per kg for LPG” Ken Ofori-Atta said.