The Senior Minister, Yaw Osafo-Maafo, has given a special assignment to the Volta River Authority (VRA) to work to reduce the burden of take-or-pay arrangement on the government.
According to the Senior Minister, government and for that matter, the nation do not need that excess capacity, which it painfully is paying for annually.
He has thus tasked the VRA to use their rich experience to explore the export market to help reduce the burden.
“…It is my hope that the VRA, with their rich experience, will explore the export market to reduce the burden of over capacity on government. And since they have already attracted the capacity to export to our neighbours, now we have excess capacity; please increase the export ability of yours to make sure that our take-or-pay burden is reduced,” he remarked.
Mr Yaw Osafo-Maafo was speaking yesterday at the launch of the 60 years anniversary celebration of the VRA, an event held in Accra, where he declared the anniversary duly launched.
Prior to the declaration, the Senior Minister took dignitaries down memory lane when erratic power supply, otherwise called dumsor, become the new normal in the daily lives of Ghanaians.
He said: “We were all witnesses to the four years of dumsor prior to the coming into office of the NPP Administration. The Dumsor brought in its wake panic reaction from the then government which went into signing all sorts of Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs).
He continued that: “This resulted in installed capacity of 5,083MW according to the Energy Commission, when Ghana’s peak demand for electricity is about 2,700MW. Of the total installed capacity 2,300 MW has been contracted on a take-or-pay basis. The net effect is that government has had to pay over 500 million USD annually for power generation capacity it does not need.”
On the contrary, he reported that on assumption of power, the government of Nana Addo Dankwa Akufo-Addo established the Energy Sector Recovery Programme (ESRP) to bring the energy sector into balance by the end of 2023.
Under his chairmanship of the Ministerial Taskforce supervising the ESRP, several successes have been chalked up, he outlined some.
They include but not limited to the following:Establishment of the Cash Waterfall Mechanism (CWM) which ensures weekly sharing of tariff revenue among players in the electricity value chain, thus, improving liquidity in the sector.
Cash Waterfall Mechanism, which has been hailed by the sector players is to be extended to cover the gas sector revenues (MoEn/PURC/GNPC/GNGC and VRA) with the establishment of the Natural Gas Clearing House (NGCH).
According to the Senior Minister, “government has cleared the GH¢2.6 billion MDA bills arrears since 2016. In addition, government has a credit balance of GH¢500 million in respect of MDA bills.Government has instituted a least-cost fuel procurement strategy to ensure there is value for money in procuring fuel for the sector while plants convert from using liquid fuel to gas.
“Government is addressing excess take-or-pay generation capacity payments. Negotiations are still ongoing. Recently, Cenpower agreed to Gas Supply Agreement that will secure cost savings of up to US$3.0 billion during the lifetime of the project.”
He further mentioned the relocation of Karpowership to Takoradi to achieve full conversion of engines for the utilisation of natural gas instead of HFO.
He added that the Ghana National Petroleum Corporation (GNPC) is also in talks with Sankofa to reduce their gas prices by as much as close to 15%. (From US$9.59mmbtu to US$8.23mmbtu).
This, he explained, will significantly reduce sector cost.
Meanwhile, Mr Yaw Osafo-Maafo said the VRA, over the past few decades, has demonstrated the strength of its resilience in operation and engineering practice, while complying with best industry practices.
He took cognisance of the fact that yesterday’s launch of VRA’s 60th Anniversary “does not simply characterise the beginning of the celebrations alone, but affords the Management and Staff the opportunity to re-evaluate their journey, looking back to their past, a well-defined present and a hopeful future with prospects.
He noted that the theme for the anniversary is thus a direct reflection of this journey, and called on other institutions to learn from VRA.
“Mr. Chairman, on a personal note, I am impressed with your culture of excellence in engineering practice which should be an example for other institutions. I am also fully supportive of VRA’s efforts to diversify and expand its renewable energy portfolio. I am aware of the following projects;2.5 MW Navrongo Solar Facility; the 17MW Kaleo-Lawra Solar Facility currently under development; the 50MW Solar Plant under the Pwalugu Multipurpose Dam Project; and the potential Wind Projects to be located at Ada and Keta.
The post Reduce take-or-pay burden on economy -Senior Minister tells VRA appeared first on The Chronicle Online.
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