Boakye Agyarko, a former Energy Minister
• Boakye Agyarko says Ghana must take a decision against ‘take or pay’ contracts
• He has recommended ways the country can deal with such issues
• He says ‘take and pay’ should be adopted
Boakye Agyarko, a former Energy Minister has emphasized the need for the country to draw lessons from the $170million judgement that has been awarded against the state by the United Commission on International Trade Law tribunal.
Speaking on Net2 TV, Boakye Agyarko intimated that the debt could have been avoided had the country not signed up for a ‘take or pay contract’ with the Ghana Power Generation Company (GPGC).
He proposed that henceforth, the country must take a stance against such contracts and instead welcome take and pay in signing Power Purchase Agreements (PPA).
Boakye Agyarko stressed that most take or pay contracts tend to leave the country in either difficult position or huge debts and must not be welcomed.
He gave a historical context to the emergence of take or pay contracts and warned that it mostly does not end well for countries who enter into such deals.
“One big lesson we should take from this is to stop signing take or pay contracts and rather sign take and pay contracts. If you look at the history of take or pay, the British were overwhelmed with the North Sea issue. So, they wanted a contract that meant that once you commit them, you have to pay.
“British Thermal rushed and signed all kinds of contracts then Russia released their gas offer which were cheaper than Britain. British Thermal nearly collapsed. That is when the world learnt their lesson that take or pay is not the best,” he said.
In offering his expert opinion on the way forward, Agyarko recommended the setting up of a committee with representation from the major players in the power industry.
“In our part of the world, people make arrangement for contracts. Why do Ivory Coast produce power cheaper than us. There is a whole committee that negotiate these deals. My recommendation is that Energy Commission must chair a committee that deals with power purchase agreement. It must include personnel from the Attorney General, Ministry of Finance, ECG and Gridco,” he stressed.
He also revealed that the World Bank warned the then NDC government over the implication of some of the PPAs it signed.
“The World Bank gave the advice that if they didn’t cancel all the PPAs and if it goes on, business as usual, it will incur a lot of costs,” he said.
He also disclosed that the NDC government realized it had committed errors in some of the deals and commenced moves to rectify same.
He read portions of a report released by the Energy Commission during the Mahama administration saying, “The ECG has executed a number of PPAs and is in the process of negotiating additional PPAs to purchase power. However, it has been observed that the implementation of some of the PPAs may result in excess contracted capacity leading to the payment of capacity charges for power plants which may not be required in the short to medium term.
“The Ministry of Power, acting on the directive of the office of the president of the Republic of Ghana constituted an inter-ministerial committee to review the fiscal and legal implications of a power purchasing agreement executed by the Electricity Company of Ghana for the purchase and supply of electrical power from independent power producers.”