An Energy Expert and former Chief Executive of the Ghana National Petroleum Corporation (GNPC), Mr Alex Mould has chided government’s assertion that it made over $7billion savings from the cancellation of some Power Purchase Agreements (PPA)’s signed erstwhile in President Mahama’s administration.
He said a PPA is signed between Independent Power Plant (IPP) investor and the offtaker (in this case Electricity Company of Ghana (ECG)), and that no where was Government directly a party to that agreement.
He revealed that government “is only involved when the investors’ financiers require a guarantee to mitigate political risk.”
According to him, since government was not obliged to give such political risk support to the IPP development, “in the form of a Governmemt Consent and Support Agreement (GCSA) or in more recent times a Put/Call Option Agreement (PCOA), unless of course the government wanted a particular IPP developed, all the PPAs would expire worthless as no IPP could be developered without the explicit support of government”
In his latest educative series on project financing, the Energy and Finance expert said a PPA was not the end of the transaction but rather a necessary requirement to get the investor’s financiers interested in commencing the approval process.
Mr Mould stated that since the IPP investors had not reached a financial investment decision to move forward with the IPP projects they thus had not committed financially to the project and that, “this cannot be said to be costing the Government of Ghana significantly, let alone $7B (USD).”
“How then does cancelling a number of PPA’s when Investors’ financiers have not committed to these IPPs (with no mention of accompanying Government Consent and Support Agreement/PCOAs), save the Government of Ghana so much money?” he queried.
Mr. Mould who is also the former Executive Director of Standard Chartered Bank said such “references are disturbingly misleading to the public, and can only be alleged either from a strong point of ignorance of the overall process or simple political maneuvering – or both.”
Source: Ghana/Starrfm.com.gh/103.5FM
