Ghana suffered its worst power challenges from March 2012 to December 2015. According to a report by the University of Ghana, the power crisis destroyed businesses with economic losses running into almost ¢3 billion.
The era of Dumsor was and continues to be one of the darkest moments in Ghana that citizens fear should not be revisited. It was that bad. The power crisis resulted from generational capacity challenges, and there’s a lot of literature on the causes available on the internet.
Ghana’s President during the power crisis of 2012-2015 was John Dramani Mahama, who vowed to end the cycle of power crisis by “fixing it once and for all”. One of the strategies adopted by the then government was to improve on generation capacity by entering into several Power Purchasing Agreements (PPAs) that were emergency ones. That meant Ghana was almost always at a disadvantage with some of these PPAs with multinational companies.
In 2016, the World Bank raised issues of the excess capacity charges the numerous PPAs had/would generate and believed that will hurt the Ghanaian economy especially the energy sector.
A world bank report said Ghana was looking at paying almost $650m annually for excess capacity charges because of the numerous PPAs signed in our bid to end dumsor. The government agreed with the World Bank, and a roadmap on setting up a committee to look into some of these agreements was put into place.
The committee started its work in September 2016. It was headed by the then head of Ghana Energy Commission (EC), and they set out to look into 13 of these PPAs. In 2017, a new government came into power with President Akufo-Addo as President. The committee continued its work, but the head was changed because Dr Alfred Ofosu-Ahenkorah had taken over as Executive Secretary of the Energy Commission.
One of the 13 PPAs was between the Electricity Company of Ghana(ECG) and GPCG.
Government of Ghana through the then Energy Minister Boakye Agyarko sent a letter to GPCG terminating the contract. In a report(allegedly used advisedly) by the committee, they recommended that government may take steps to terminate the contract based on varied reasons like;
- The company had not fulfilled conditions precedent or subsequent
- That GPCG had not acquired license from the Energy Commission to operate
- Had no permit to start building
The report said GoG could pay $18m for the termination since the original sum was $99m for the full duration
These reasons were contained in the letter sent by Boakye Agyarko to GPCG for the termination of the PPA that was to start in 2018 and duration was 4 years
Note that the Attorney General, in August 2017, before the committee’s report, had given her legal opinion on the GPCG agreement and raised the same issues, including the assertion that the charges were costly. GPCG then heads to arbitration in the UK, asking for compensation for the termination of the contract. The arbitration panel had one rep each provided by both parties, and a third rep agreed on by both parties.
The arbitration panel has concluded its work and asked Ghana to pay GPCG $170m. So for a contract whose total value for 4 years was $99m, Ghana is now going to pay $170m.
How did we get here?
The Attorney General, Godfred Dame has been moving from media house to media trying to absolve the NPP government and himself especially(was Deputy AG then)of blame and threatening prosecution of government officials in the erstwhile government who signed that contract in the first place.
If the basis for Ghana terminating the contract was so legitimate, why did we lose at arbitration(even our own member ruled against us)
So this is it, all the reasons we gave for the termination were outright lies according to the arbitration panel.
- On the matter of GPCG not having a license, the panel said the company had applied for a license in 2017 but didn’t have it because the board of Energy Commission that grants it had not been constituted by the President. How then do you terminate the agreement when the fault is from you?
- On the matter of GPCG not having a permit to build, the panel said it was also not true because the Kpone Katamanso District Assembly had granted the company the permit to start
- Under cross examination, the panel said Dr. Ahenkorah said the basis for the AG’s advise was not provided by the Energy Commission. Also he said he couldn’t recollect the committee he chaired made the recommendation that the agreement should be terminated.
So how does GoG call such a witness and from Ghana he didn’t tell them all this?
The panel also found out that parts of the report the GoG submitted to support their case were redacted and their reason was they needed to protect third parties.
My next issue is this PPA with GPCG went to Parliament and it was accepted with 4 cents as the charge, but the AG said it was very expensive.
However the then Power Minister Kwabena Donkor has refuted that saying it was one of the cheapest. According to him Karpower(5cents) and Cenpower (5cents) were to end after 5 years but the current government has extended it to 15 and 10 years respectively. So how then do you extend 5 cents charge from 5 to 15 years but say GPCG that was 4cents for 4 years was expensive.
But this has been the quagmire we find ourselves in. When there’s a problem in Ghana, turn it into an NPP vs NDC battle and the culprits will get away with the crime.
The most talked about judgement debt in the history of Ghana was the 51m cedis paid to Alfred Woyome and we still refer to that corrupt payment 11 years after.
But, curiously, $170m GPCG needless judgement debt is 19x the amount paid to Woyome, and Ghanaians don’t talk that much about it. Why? The Attorney General has run to media to change the narrative and make it seem the previous government signed a bad agreement and threatening them with the prosecution.
Prosecute anyone who signed a dubious and disadvantaged Ghana contract, but what will happen to those whose actions have willfully caused a financial loss of $170m to the state of Ghana? How come we didn’t settle with the GPCG for $18m as the same report, the government relied on but now have to pay $170m. We are not angry enough and letting the NPP get away with so much ineptitude.