Chairman of the Mines and Energy Committee in Parliament, Samuel Atta Akyea, has disclosed government has paid approximately US$1 billion in excess capacity charges between 2017 and 2020.
He stated that the annual cost of idle capacity ranged between US$ 105.4 million and US$ 373.7 million per year.
According to him, over the period a total amount of US$368 million had been paid for idle capacities, and a further US$600 million was paid for the cost of reserve margins totaling US$ 968 million.
Mr. Atta Akyea disclosed these when he addressed the media in Parliament in response to a press conference by the National Democratic Congress (NDC) minority on the state of Ghana’s energy sector.
The Chairman, also the Member of Parliament for Abuakwa South, argued the current state of the Ghanaian economy is the direct result of the take-or-pay agreements that the erstwhile Mahama administration signed with Independent Power Producers (IPPs).
He expressed surprise the NDC will assert all the agreements were approved by consensus by both sides of the House without objection from the then NPP minority.
“This is especially so when the rule is that “the minority will have its say and the majority will have its way.”
“If today the NDC claims that the agreements were approved by both sides then, would they have the right to blame the Akufo-Addo government for contracting loans that were equally approved by both sides of the house,” he quizzed.
According to Mr. Atta Akyea, the report of the Ghana Integrated Power Sector Master Plan (IPSMP) under Generation and Demand of 2019 confirm significant overcapacity in Ghana’s energy sector.
And that the overcapacity was expected to continue for 5-7 years when the power plants under construction are commissioned.
“The report further noted that the reserve margin in 2018 and 2019 was significantly higher than the planned reserve margin of 20%.”
“Furthermore, the overcapacity challenge is expected to continue into the mid-2020s. The issue therefore about excess capacity is not in doubt, as established by the 370MW AKSA EPA,” he said.
He indicated, however, that the Akufo-Addo government since 2019 has programmed and carefully made major interventions to significantly minimize the impact of the idle capacities and effects of emergency power agreements on the energy sector.
These, he said, include the relocation of the Karpower Ship from Tema to Takoradi and switching the plant from the use of HFO to natural gas, provision of alternative fuel sources to address shortages of natural gas, and reverse flow of natural gas from the western corridor to the eastern corridor among others.
