The Minority in Parliament has challenged the claim by Vice President Dr Mahamudu Bawumia at a recent public lecture that the government has paid GH₵17 billion for excess capacity payment arising out of the “take or pay” agreement.
According to the Minority, the claim by the Vice President is untrue and therefore challenged him to provide evidence to substantiate the assertion.
Mr John Abdulai Jinapor, Ranking Member on the Mines and Energy Committee, threw the challenge when he addressed a press conference in Parliament House in Accra, in reaction to the pronouncement by the Vice President at the Accra Business School that the energy sector “Take or Pay” Agreement contributed to Ghana going to the International Monetary Fund (IMF) for a bailout.
The Vice President, speaking at the forum, gave four reasons why Ghana opted for IMF support and categorized his reasons into two internal and two external causes.
He named the internal causes to include the energy sector “Take or Pay” Agreement and the banking sector clean-up and attributed the external causes to COVID-19 and the Ukraine invasion by Russia.
However, Mr Jinapor stated that the Vice President, instead of showing leadership and integrity in the face of the current dire economic crisis rather chose to blame the erstwhile Mahama Administration for the predicament.
He dared the Vice President to provide that proof that GHC 17 billion claims on so-called excess capacity arising from take or pay.
“I am ready to stand down as the Ranking Member of the Mines and Energy Committee. I say so with conviction knowing what the Vice President is saying is untrue,” he added.
Mr Jinapor explained also that excess capacity is incurred when the plants are declared available, but the buyer is unable to offtake the power from the plant. The reserve margins are not excess capacity but are insurance every country ought to have.
He cited for example that the Electricity Company of Ghana (ECG) presentation to the Mines and Committee of Parliament shows that as a result of mismanagement the company incurred almost 900 million cedis from foreign exchange losses.
He clarified that because the PURC pegged their tariffs at 5.6 cedis to the dollar but today the cedis has fallen to about 8.2 cedis to the dollar, saying even without anything, just the mismanagement of the economy alone would incur a debt of about one billion cedis in a year.
“So, when the Ministry of Finance pays for that shortfall, you cannot add that and call that excess capacity. In addition to that because of political interference at ECG, ECGs (Electricity Company of Ghana) Aggregate Technical and Commercial Collecting (ATCC) losses has risen to 30 percent. So, when you look at cost distribution as presented by the ECG itself, sales revenue was estimated at 7.3 billion cedis, but they collected only 5.3 billion cedis leaving a shortfall of two billion cedis.
“When you add the two billion cedis to the foreign exchange losses of one billion cedis it takes the debt to three billion cedis. So, if the Ministry of Finance makes payment for this three billion the Vice President cannot in a haste…. claim that this three billion cedis annual payments constitute excess capacity, that is not excess capacity” he insisted.
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