$1bn power deal too expensive – Minority

• Posted on August 4, 2016August 4, 2016
• by Nana Kwesi Coomson
• Comment

Parliament yesterday ratified the $647 million power agreement for the purchase of combined cycle gas turbine power plant to be situated at Tema.

However, the minority leader, Osei Kyei-Mensah-Bonsu, strongly criticized the agreement, saying if the government had planned well, millions of dollars would have been saved for the country from the agreement.

The projected cost of the power plant, which will add 400 megawatts to the nation’s generation capacity, is $953.4 million, but the Deputy Minister of Power, John Jinapor, told parliament that the media had reported the cost of the project to be $953 million – but the actual cost is $647 million.

The minority leader said the project should have cost the nation $400 million and not $647 million or whatever cost since the price of one megawatt of power is $1 million all over the world.

The minority leader said though he understood that the purchase is an emergency, a little prudence on the part of the government would have given the nation tremendous savings.

He did not understand why the government should wait for all these years the nation had been plunged into power crisis before rushing to acquire this plant in an emergency situation.

“We don’t have to wait to do such emergency procurement because the nation has been witnessing dumsor over the last four years; and if the government had had the foresight and planned well, it could have procured this long time ago to save the nation huge sums of money,” the minority leader said.

Mr Kyei-Mensah-Bonsu said the media could not be faulted for putting out $953 million as the total cost of the purchase because that is what the government initially presented to the Committee on Mines and Energy for consideration.

He expressed the hope that the procurement of the plant would help completely resolve the nation’s power crisis, which has seriously affected the socio-economic lives of Ghanaians.

The Government of Ghana, Electricity Company of Ghana (ECG) and Early Power Limited, a private company have reached the agreement for the purchase of the plant to generate 400 MW of power for the period of 20 years.

Early Power Limited will purchase, install and operate the plant and sell the power to ECG, but the government is entering into the Put/Call direct agreement to provide suitable bankable project structure which has been one of the major constraints facing the development of Independent Power Producers in the country.

The support is also to enable Early Power Limited to meet some of the key requirements for attracting competitive loans for the project.

The breakdown of the project is as follows: total power infrastructure cost is $636.8 million, financing cost is $178.7 million, development cost is $39.8 million, operational and maintenance cost is $23.5 million, construction management cost is $13.5 million, working capital is $10.5 million, construction insurance cost is $3.5 million and other costs, including miscellaneous and contingency, is $49.9 million, which together add up to $953.4 million.

By Thomas Fosu Jnr