PPA renegotiation deals with IPPs to benefit state significantly -Atta Akyea

The Chairman of the Mines and Energy Committee of Parliament, Samuel Atta Akyea has disclosed that Power Purchase Agreements (PPA) renegotiation exercise are ongoing, with Cenpower, Amandi,

Karpower and Sunon Asogli deals expected to close soon.

According to him, the PPA renegotiation exercise which is underway is aimed at downsizing invoices raised for payment by ECG. His comment follows the NDC minority’s earlier statement on the State of Ghana’s Energy Sector, where they responded to comments made by the World Bank Country Director Mr

By Eugene Davis

Laporte, who indicated that the country’s energy sector debt was a major contributor to its debt woes.

The minority in a subsequent news conference in Parliament on Tuesday (6 June), its spokesperson on

Energy and Mines, John Abu Jinapor, challenged Laporte to provide evidence to substantiate his claim.

“President Mahama’s record in the energy sector is unmatched, before leaving o ce, Mahama ensured that we had a comprehen- sive foothold on generation, fuel and the nancial sector,” he said.

They further stated that former President John Mahama did no wrong in signing those arrangements and was in the country’s best interest.

The minority also maintained that the Nana Akufo-Addo-led government is very much aware of the critical role the Energy Sector plays in the economy of the country and is focused on addressing the challenges, and will not yield to distractions from the NDC.

However, addressing journalists at parliament house on Wednesday, June 14, 2023, Mr. Atta Akyea stated “Currently, the renegotiation has led to signicant reduction in invoices from AKSA, and the CENIT plants. Renegotiation with Cenpower, Amandi, Karpower and Sunon Asogli will soon close with signi cant bene ts to the people of Ghana.”

He also touched on the issue of idle capacity, between 2017 and 2020, where he pointed out that the annual cost of idle capacity ranged between US$ 105.4 million and US$ 373.7million per year, “Over the period, a total amount of US$ 368 million had been paid for idle capacities and a further US$ 600 million had been paid for the cost of reserve margins totalling US$968million.”

Gas related issues

According to him, the claim regarding gas pricing especially the Tema LNG pricing is devoid of facts, misleading and demonstrates lack of knowledge and understanding of the gas sector. First and foremost, the Tema LNG contract is for 17 years, not 20 years. Indexing LNG price to crude oil price is the normal business practice in the industry. Because LNG is globally traded, it is normally indexed to Brent Crude for supplies coming from outside of North American or Henry Hub gas price for supplies from North America.

It is therefore no surprise that, all the previous LNG contracts including those signed under the NDC government were also linked to crude oil price, he noted.

Further, Mr. Atta Akyea who is also the Member of Parliament for Abuakwa South, noted that government has outlined some interventions to address the energy situation since 2019 to signi cantly minimise the impact of the idle capacities and e ects of emergency power agreements on the energy sector.

The Energy Sector Recovery Programme (ESP) was instituted and an inter-ministerial task force put in place to address and oversee the implementation of the proposed initiatives. Key among them are:

The establishment of the Cash Waterfall Mechanism (CWM) where there is a transparent sharing of Energy Sector revenues and more specically ECC's weekly collected revenues to all players in the electricity value chain such that entities that supply ECG with electricity and related services will always receive some streams of income to keep them liquid.

Within the CWM, the Natural Gas Clearing House has also evolved to ensure that all Natural Gas (NG) resources are being monitored and payments made to ensure the gas providers are also liquid.

One challenge encountered was the limited security of supply due to unavailability of alternative fuels. The NPP Government in this regard has provided alternative fuel sources to address shortages in Natural Gas (NG) supply. Currently there are stocks of LCO, HFO and DFO for use in the event that NG supply is interrupted. Power Plants with capability to use alternative fuels are therefore available to support national energy needs.

The reverse ow of natural gas from the western corridor to the eastern corridor project is completed. This brings signi cant volumes of natural gas for use by thermal power plants in Tema, and Kpone.

The relocation of the Karpowership from Tema to Takoradi also resulted in a major drop in tari for the power plant when it switched from the use of HFO to natural gas. This also brought signi cant savings to GNPC under the NDC signed Sankofa contract.

370mw Aksa Epa

On the AKSA Emergency Power Agreement (EPA) after expiration on 31" July, 2022, Mr.Atta Akyea said it was renegotiated by ECG with better terms for 15 years, with a dispatch guarantee of 40%. This is far better than the full take-or-pay arrangement under the expired EPA.

These better terms are:No payment guarantee,A tari of USD0.093478/kWh for the rst 10 years, A Tari of USD0.085978/kWh for the last 5 years.

“Compared to the expired EPA tari of USD0.127662k Wh, the new terms are clearly cheaper, as means of reducing the cost of generation, using natural gas. In addition, the deployment of this plant, taking into consideration the replacement cost of a new plant to meet the demand is optimal.”

205MW AKSA PPA

With regard to the 205MW new AKSA PPA, he stated that it is a take and pay agreement with a 40% dispatch guarantee to cover the day-to-day operation and maintenance expenses of the plant. It also comes with no payment and government guarantees. Furthermore, it is meant to provide system reliability in the middle and the northern belts of the country based on a system reliability study by the Ghana Grid Company (GRIDCo). To achieve the objective of reliability, there is the need to have a level of guaranteed dispatch of the plant.

The dispatch guarantee provided for in the new terms for contracting PPAs is also a gradual means of reducing the cost of excess capacity payment that has plagued the sector from the numerous take or pay agreements. The non-dispatch of this plant will save the country 60% of the cost compared to the original contract.

On a similar issue raised by Dr. Kwabena Donkor concerning

Asogli and Karpower PPAs, “we wish to state that there is no 3rd PPA for Asogli. Neither has the Kar- power PPA been extended to a regular PA of 20-25 years. Negotiations for these PPAs are still underway.”