The Finance Minister says the government has saved the country an estimated $1 billion after it renegotiated and restructured the terms of a Liquefied Natural Gas (LNG) supply contracts entered into by the past government.
Ken Ofori-Atta said the August 2014 contract, signed by former President John Mahama’s government, was found to be overpriced and higher than prices charged locally.
He told Parliament during the presentation of government’s 2017 mid-year budget review Monday, after renegotiating the terms of the contract, an estimated $1 billion was taken off.
The past National Democratic Congress (NDC) government endorsed a Liquefied Natural Gas supply contract situated at the eastern port city of Tema.
The facility is expected to provide gas directly to the thermal plants of state-run Volta River Authority (VRA) to boost power generation in the country.
The contract was signed at a time the country was plunged into a power crisis localised as Dumsor. Businesses suffered and some workers were laid off, the Association of Ghana Industries (AGI) said.
The VRA spent an estimated $20 million every fortnight on crude oil purchases which ended up draining the coffers of the country.
As part of measures to resolve the energy crisis, the floating unit was expected to deliver at least 250 million cubic feet of LNG per day which is 1.75 million tons annually.
But three years later, the Nana Addo Dankwa Akufo-Addo government said it has saved the state the amount of $1 billion after reviewing the contract.
The Finance Minister said because of the renegotiation, the price is now “below that of indigenous gas and guaranteed for the long term”.
Mr Ofori-Atta said the government has also approved the VRA restructuring agenda to bring about “increased operational efficiency and private sector investments in the power sector.”
In the area of energy regulation, the Minister said Cabinet has approved the establishment of the Electricity Market Oversight Panel (EMOP) to exercise oversight responsibility for the Wholesale Electricity Market (WEM).
The objective of EMOP, Mr Ofori-Atta said is to infuse operational sanity in the generation and supply of electricity in the country particularly “managing and optimising hydroelectric generation in the country.”