These terminations, following a recent review, will come at cost of $402.39 million, Mr. Agyarko told Parliament on Friday.

[contextly_sidebar id=”MUhKStcAbKQQ4FrSHzbnaSKwYbQotppm”]As indicated by the government earlier in 2017, it was reviewing PPAs initiated by the Electricity Company of Ghana, mostly under the Mahama administration.

The committee reviewing the agreements assessed 26 out of 30 power purchase agreements ECG initiated, and the remaining four were not touched because they were already operational.

The combined generation capacity of the 26 reviews amounted to 7298 MW of power.

Mr. Agyarko said Ghana “stands to make significant savings” from the deferment and termination of the agreements.

“The estimated cost for termination is $402.39 million compared to the average annual capacity cost of $586 million each year; a cumulative of $7.6 billion from 2018 to 2013. This yields an estimated savings of $7.217 billion over a 13 year period.”

Redundant plants

Mr. Agyarko, who has described some of the agreements as knee-jerk reactions to the dumsor crisis, explained that the agreements would be providing excess power.

He said the review of the agreements revealed that, “the projected capacity additions from the PPAs were far in excess of the required additions inclusive of the 20 percent system reserve margin from 2018 to 2030, and would result in the payment of capacity charges for undispatched plants.”

The review recommended that; four PPAs with the combined capacity of 1810 MW be deferred from 2018 to 2025.

Three PPAs with the combined capacity of 1150 MW, are to be deferred beyond 2025 along with the 11 PPAs, with the combined capacity of 2808 megawatts set to be terminated.

President Nana Akufo-Addo, during his 2017 State of the Nation address, said the Mahama government had signed 43 PPAs.

The government has indicated that, it may be unable to cancel at least eight PPAs deemed excess capacity because the financial implications range between $400 million and $500 million.

With all the power projects signed by Ghana, the total capacity is estimated to be 10,800 megawatts, even though the country needs 5,000 megawatts.

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By: Duke Mensah Opoku & Delali Adogla-Bessa/citifmonline.com/Ghana

The post We’ll save $7.2bn from 11 terminated power deals – Agyarko appeared first on Citi 97.3 FM - Relevant Radio. Always.

Commenting on the need to streamline all PPAs, during a presentation at the Ghana Energy Summit on Tuesday, Mr. Agyarko said his government would do its best to save the country some money.

[contextly_sidebar id=”97v2jHxTGInMv8ZCAxDHZ6AOcjcefcCx”]He noted that, knee-jerk reactions in the wake of the dumsor crisis “led to the over procurement of expensive thermal power capacity with serious financial consequences.”

“If all the power purchase power agreements currently in place are implemented, the nation will incur annual extra capacity charges of nearly $700 million,” the Minister further warned.

According to Mr, Agyarko, “deals driven by generation capacity procurement have resulted in a very high average tariff for power, making our power the most expensive in the sub-region.”

About 20 PPAs cancelled

President Nana Akufo-Addo, during his 2017 State of the Nation address, said the Mahama government had signed 43 PPAs, while a further 23 were under review.

Vice President Mahamudu Bawumia, later disclosed that, the government had abrogated about 20 power purchase agreements signed by the erstwhile Mahama government, saving the country $300 million. These deals represent close to 3,000 megawatts.

But the government has noted that, it may be unable to cancel at least eight PPAs deemed excess capacity because the financial implications range between $400 million and $500 million.

The earliest any of these eight projects would come on stream is 2019, by which time they are likely not to be needed.

Indications from a Deputy Minister for Energy, Dr. Mohammed Amin Adam, are that the only option left to government is to defer the completion dates of these projects as far as 2030.

With all the power projects signed by Ghana, the total capacity is estimated to be 10,800 megawatts, even though the country needs 5,000 megawatts.

Future power deals will be strategized

With these challenges in mind, Mr. Agyarko had earlier said the government would adopt a more strategic approach to dealing with future power deals.

He also added that, most of the agreements with Independent Power Producers failed to fully address the energy needs of the country.

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By: Delali Adogla-Bessa/citifmonline.com/Ghana

The post ‘Knee-jerk reactions’ to dumsor could cost Ghana $700m – Agyarko appeared first on Citi 97.3 FM - Relevant Radio. Always.