Former Power Minister, Dr. Kwabena Donkor, says he does not agree with government deciding to pay Independent Power Producers (IPPs) for energy consumed only.
According to him, the decision is not rational and has to be revised.
Government in ongoing negotiations with IPPs to restructure a $1.73 billion debt has agreed on a $43 million monthly payment to address the financial crisis threatening the energy sector.
This comes after IPPs threatened to shut down their power plants in the wake of a ballooning energy sector debt.
The monthly payments, however, are to cover only power generated and consumed by the state as government insists it has no money to pay for the excess capacity.
Speaking on Joy FM’s Midday News, Dr. Kwabena Donkor said the decision does not take into account energy reserve margins without which power plants will not be able to run smoothly in case of a faulty machine.
“Well I don’t agree obviously, I don’t agree. If government is incapacitated by financial constraints, that’s a different argument, but in terms of contractual obligations – for example, if you say today that you’re only paying for energy used, that is fine.
“In running any power system, there is a redundancy, a reserve capacity of between 18 to 20 per cent depending on the jurisdiction.
“So who pays for that redundancy, that reserve margin? It is that reserve margin that enables the system to run smoothly so that when one plant goes off, and machines do go off, there is enough capacity to kick in.
“There’s that redundancy, are you saying they should not be paid for?” he said.
Minister of State at the Finance Ministry, Mohammed Amin Adam, had earlier blamed contractual agreements signed between the previous NDC government and the IPPs for the ballooning energy sector debt.
He said, “The IPP debt is around $1 billion, and of this, about $340 million is for unutilised capacity as a result of the contract signed by the previous NDC government take or pay contracts excess capacity which we didn’t need.
“The $1 billion arrears has about $340 million arrears related to capacity not used. But because of the take or pay obligations, we have an obligation to pay that money. So that 1 billion is what we’re seeking to restructure.”
However, reacting to the Minister’s claims, the former Power Minister explained that talk about excess capacity is a myth.
“Again you’re talking about excess capacity, I challenge anyone to produce the excess capacity that we have in 2023.
“We’ve looked at some of the Energy Commission outturns for 2022 and we’ll tell you that in 2022/23, the idea of excess capacity is a myth.
“If we had excess capacity, why would ECG renew or sign two new agreements with Aksa Energy? Aksa’s five-year contract has lapsed, and ECG has renewed that contract. There’s also a new contract signed in Kumasi for Aksa to put up a plant in Kumasi.
“If we had excess capacity, why would this government go ahead and sign two new agreements? So please when it comes to the energy space, emotions, propaganda wouldn’t take us far as a country, let’s be rational,” he said.