$170m Judgment Debt: CID To Investigate Power Purchasing Agreement

The Attorney General and Minister of Justice, Godfred Yeboah Dame, has said he intends to invite the Criminal Investigations Department (CID) to look into how Ghana came to incur a $170 million judgment debt.

The cost was incurred as a result of an “unlawful termination of contract” between the Government of Ghana and the Ghana Power Generation Company (GPGC), a court in London has ruled.

Speaking in a radio interview on Wednesday morning, Dame argued that the agreement that was made while John Mahama’s National Democratic Congress (NDC) was in power, was improperly contracted.

As a result of this perception, the New Patriotic Party (NPP) government that was installed in 2017, cancelled the agreement in 2018. This cancellation, according to Dame was based on audited findings.

“[T]he fact as borne out by the PPA [power purchasing agreement] committee’s report was that the agreement, together with other agreements, had resulted in such excessive power supply to the state. The state was going to lose $586m per annum and a cumulative cost of about $7.6billion dollars between 2013 and 2018,” Dame alleged.

The attorney general blamed the eventual judgment debt on the erstwhile NDC government because “[t]he basic point is that the entry into this transaction was unnecessary. The entry into this transaction was what resulted in financial loss to the state”.

The minister consequently disclosed that he will formally write to the CID to look into “the manner which resulted in the signing of an agreement which resulted in financial loss to the state”.

History of the deal

The Mahama-led NDC government went into various power purchasing agreements with independent power producers (IPPs) in order to complement Ghana’s traditional power generation outlets. This was in the thick of the “dumsor” challenges faced by that government.

Among the agreement partners were the GPGC, Karpwer and Cenpower. But Dame believes some of these agreements were needless because, at a point, Ghana was paying for more power than it needed.

This is what has been called the excess capacity charge.

“The committee set up by the NDC in 2016 – against the background of a recognition that there were so many PPAs entered into by the NDC administration, and therefore those agreements were going to result in excessive capacity development, as it was termed – came to a conclusion that this agreement had to be terminated. The committee singled out this particular agreement for termination,” Dame told Accra-based Joy FM.

In Parliament last week, the Minister of Finance, Ken Ofori-Atta, disclosed that Ghana owed nearly $1 billion to three IPPs. This was an excess capacity charge incurred between 2017 and 2020.