Review of PPAs saves Ghana $7.2 billion

The government says its review of all public-private agreements (PPAs) signed by the Electricity Company of Ghana (ECG) for conventional thermal power projects has saved the country from losing $7.217 billion.

Answering questions in Parliament yesterday, the Minister of Energy, Mr Boakye Agyarko, said a committee led by the Energy Commission reviewed 26 out of 30 PPAs the ECG had initiated.

He said the review noted that the projected capacity additions from the PPAs were far in excess of the required additions needed from 2018 to 2030.

Mr Agyarko said the excess would result in the payment of capacity charges for the undispatched plants.

He said the combined generation capacity of the 26 PPAs reviewed amounted to 7,298 megawatts (MW).

The Member of Parliament (MP) for Damongo, Mr Mutawakilu Adam, asked the minister whether the Ministry of Energy had reviewed any power purchase agreements, and if so whether there were any pay cost saving elements pursuant to the review.

Terminations and deferments

Mr Agyarko said the review recommended that four PPAs with a combined capacity of 1,810MW be deferred, while three PPAs with a combined capacity of 1,150MW be deferred beyond 2025.

Again, the review recommended that 11 PPAs with a combined capacity of 2,808 MW be terminated.

The minister said pursuant to the review exercise, the government would make significant savings from the deferment and termination.

"The estimated cost of the terminations is $402.39 million, compared to an average annual capacity of $586 million each year or a cumulative cost of $7.619 billion from 2018 to 2030. This yields an estimated saving of $7.217 billion over the 13-year period,” he said.

Mr Agyarko said the other four PPAs were not reviewed by the committee, which was tasked by the ministry, because they were already operational.

Oil and gas supply

Mr Agyarko said oil and gas supply would be interrupted in 2018 with two shutdowns of three weeks each on January 18, 2018 and March 7, 2018 for repair works to be carried out on the Floating Production Storage and Offloading (FPSO) Kwame Nkrumah.

Besides, he said, interruptions in gas supply during temporary shutdowns would be compensated by gas from the newly commissioned TEN Field.

"Offloading will continue to be by means of a shuttle tanker until 2019 when the offshore offloading system will be in place," he said.

Reverse flow project

Mr Agyarko said the West African Gas Pipeline (WAGP) reverse flow project was on course to be completed before the expected first gas from the Sankofa-Gye Nyame Field by the end of the second quarter of 2018.

He said all the parties involved (with the support of the World Bank) had shown maximum cooperation and commitment towards the execution of the project.

"The regulator of the pipeline, West African Gas Pipeline Authority (WAGPA), has also indicated its support for the project," he said.

Writer's email: mjafaru@yahoo.com