The Minister of Finance, Ken Ofori-Atta says Ghana is producing excess electricity following government’s successful resolution of the inconsistent power supply.
According to him, although the inconsistent power supply, ‘dumsor’ is history, the country is still faced with serious challenges in the energy sector.
Presenting the mid-year budget review to Parliament on Monday, Mr Ofori-Atta said the challenges, which are mainly the take-or-pay contracts signed by the erstwhile Mahama administration “pose grave financial risks to the whole country.”
“I am happy to reaffirm that “dumsor” is history, and we are determined to ensure that it remains that way. However, we are facing serious challenges in the energy sector that pose grave financial risks to the whole economy.
“At the heart of these challenges are the obnoxious take-or-pay contracts signed by the NDC, which obligate us to pay for capacity we do not need. We must urgently address these challenges to protect the hard-earned economic gains we have made in the past two-and-a-half years and continue with our economic growth and jobs agenda to improve the lives of Ghanaians,” he said.
According to the Finance Minister, because of the take-or-pay contracts, the country’s installed capacity is almost double the peak demand.
He said on average, less than 40 per cent of the contracted take-or-pay capacity is actually used, “meaning that we are basically throwing away money by paying for the remaining 60 percent of excess capacity which we do not actually consume.”
“In monetary terms, what this means is that we are paying over half a billion U.S. dollars or over GH¢2.5 billion annually for power generation capacity that we do not need,” he said.
He noted also that the country was paying over $51 million a month under the Sankofa Offshore Cape Three Point take-or-pay contract for 154 million standard cubic feet (mmscf) per day even though only about 60 mmscf per day was being used.