Business News of Wednesday, 25 January 2017
Minister-designate for Energy, Boakye Kyeremateng Agyarko, has given an indication of the government’s commitment to reviewing all thermal plants acquired under emergency situations by the previously led National Democratic Congress (NDC) government.
Emergency power plants such as Ameri and Karpower, are the two outstanding contracts, the minister-designate referred to as which are seriously on the tables of the New Patriotic Party (NPP) government being considered for review.
Mr. Boakye Agyarko made this observation when he took his turn at the Appointments Committee of Parliament for vetting on Monday, January 23, 2017, over issues related to the ministry he has been designated to by the President, Nana Addo Dankwa Akufo-Addo.
Commenting further, he said the government does not understand why those two power plants where acquired under emergency situations and for a period of twenty (20) years each with the cost of the two about US$500million compared to the Kpong thermal plant which was acquired at a total cost of US$160million.
“It is prudent business commercial and managerial practice to periodically review whatever contracts you have on your books. So as it is to be expected, we will periodically review the contracts. We acquired the aforementioned [Ameri and Karpower] power plants under an emergency situation. Mr. Chairman there is a little difficulty defining an emergency as lasting it 20-year period. Karpower and Ameri were contracted for a period of 20 years each. Ideally, one would expect that if you are in an emergency situation, then there are two things to consider: how quickly the relief can be delivered; and how effective is that relief in terms of pricing.”
“All the studies I have seen indicated that 7-year contractual obligation would have sufficed. That would have allowed the amortization of the capital investment of those two plants.
If you are looking a 20 year contract, then you must have as well looked at your national infrastructure which in case it allows you to amortize the capacity charged over a 20-year life instead of a 5-year or 7-year life. That would have brought the prices down and made it a much cheaper option,” he noted.
He added “as it is, we will go through review of the emergency power plants that we have acquired and the 48 power purchasing agreements that put as 8,000MW when we are actually looking at 4,000MW. So these reviews will be done without prejudice and it is the national interest that will dictate what we will do.”