Vice President of IMANI-Africa, Bright Simons, has called for a more thorough investigation into the reasons behind Ghana’s $134 million judgment debt related to the power purchase agreement with Trafigura’s Ghana Power Generation Company (GPGC).

Recalling the historical context for signing the agreement, Mr Simons disputed the government's rationale for terminating the contract.

He argued that GPGC offered one of the most cost-effective rates in the power purchase deal, even compared to contracts signed by the New Patriotic Party (NPP) administration.

“I remember that our shortfall in power was ranging from 300 megawatts to 1000 megawatts on a very bad day. So 107 megawatts wouldn’t solve all the problems but will solve some problems." 

• Read also: Trafigura ‘seizes’ Ghana’s Regina House in London over $134m judgment debt default

He explained that because the project was a fast-track solution, the GPGC did not want to bear all the risks but wanted the government to hire them to produce the power and pay them as they did so.

“So essentially, the government provides the fuel, the land, and everything else. And with the established power plants in Ghana, sometimes the situation is such that still is responsible for the fuel and other inputs and the company or the power producer then charges us what is often called the capacity charge.

“In this case, it was called the capital recovery charge because it also included the cost of financing the power plant and the fact that they were not going to charge a separate variable charge. So essentially, it was a single charge, the government provided them with fuel, the land and facilitates the licensing.

“When all that is done, they produce the power and for every unit of power they produce often measured in kilowatt hour or megawatt hour, the government pays 3.7 cents,” he said.

The IMANI-Africa Vice President noted that the power plant was not excessively expensive, stressing that on a per-unit basis, the capacity charge or capital recovery charge of 3.7 cents per kilowatt-hour was lower than what the country was paying as a capacity charge to other plants.

Mr Simons also questioned the notion that Ghana has excess power, noting that the government is still signing new power deals.

He argued that the judgment debt resulted from flawed and poorly conducted analyses on which decisions were based.

“The Energy Commission Executive Secretary for instance suggested that terminating the plant will cost the country about $18 million but he hadn’t done his due diligence.

He hadn’t actually looked at the full range of costs that were being incurred 

“He had also decided that based on the analysis that he conducted, this was an expensive plant. Secondly, the Attorney-General’s decisions - the advice that he had given to the government was extremely flawed.

"He suggested for instance that the licensing was not done and because the licensing was not done, the company had not given up the power to enter into a contract in the first place and that the plant was a second-hand plant,” he added.