$134m GPGC judgment debt result of poor PPA negotiations – ACEP

The Africa Centre for Energy Policy has said the recent US$134 million judgment debt against the government over the termination of the Emergency Powe

The Africa Centre for Energy Policy has said the recent US$134 million judgment debt against the government over the termination of the Emergency Power Agreement with Ghana Power Generation Company (GPGC) Limited “is only an indication of the poor judgement that has characterised such negotiations”.

At a press briefing on the energy sector on Thursday, 11 March 2021, ACEP said although the government has “consistently indicated that it is negotiating” power purchase agreements (PPAs) “to relieve the country of excess capacity charges”, there “is no transparency around the negotiations”.

Apart from the $134 million cost awarded by the International Court of Arbitration against Ghana, the country is also to pay an accrued interest of $3 million since 2018.

The contract was cancelled because the Akufo-Addo said the agreement was not needed.

The International Court of Arbitration, in its ruling, ordered the government of Ghana to pay to “GPGC the full value of the Early Termination Payment, together with Mobilisation, Demobilisation and preservation and maintenance costs in the amount of US$ 134,348,661, together also with interest thereon from 12 November 2018 until the date of payment, accruing daily and compounded monthly, at the rate of LIBOR for six-month US dollar deposits plus six per cent (6%).”

The government of Ghana will also pay an amount of “US$ 309,877.74 in respect of the costs of the arbitration, together with US$3,000,000 in respect of GPGC’s legal representation and the fees and expenses of its expert witness, together with interest on the aggregate amount of US$ 3,309,877.74 at the rate of LIBOR for three-month US dollar deposits, compounded quarterly” to GPGC.

ACEP said while both installed and dependable generation capacity has increased significantly over the last five years, peak demand has not increased proportionally to consume the generation capacity.

The peak demand in 2019, for example, was 2,804MW, leaving an excess capacity gap of 1,891MW on paper.

The Centre said the outlook for the next four years shows a further increase in installed capacity with the introduction of 203MW Amandi⁵| and Phase I of Bridge Power delivering 142MW.

The government indicates that it pays about US$40 million a month for the excess capacity.

However, ACEP said it “is unable to independently verify this claim because excess capacity invoices are not available”.