The President of policy think tank, IMANI Africa, Franklin Cudjoe, has stated that the World Bank is actively involved in Ghana’s energy sector recovery programme, therefore, the Bank’s statement about a chunk of the country’s debt emanating from that sector is questionable.
He noted that some expensive power agreements signed by the previous administration that was to be reviewed were extended without caution from the World Bank despite being an active financial supporter.
In a post on June 5, 2023, he wrote “It is true that some take or pay power contracts signed by the NDC were very expensive. The current government set up committees to review them. However, the terms of these contracts were extended.
“In effect, as ACEP's Ben Boakye puts it," the same power plants the World Bank director complains about have been extended to long-term agreements without caution from the Bank". The World Bank in Ghana has been a very active financial supporter of Ghana's Energy Sector Recovery Programme for the past four years. So, there you are,” he added.
The World Bank (WB) Country Director to Ghana, Pierre Frank Laporte, has stated that Ghana’s energy sector debt is a major contributor to the country’s debt woes.
According to Laporte, the deficiencies in the sector characterized by the tariff systems and management issues coupled with expensive power purchases by the state in addition to the transmission losses were the major problems in the energy sector driving Ghana’s debts.
He said the mismatch between the production cost of the Independent Power Producers (IPPs) vis-à-vis how much consumers paid led to an upsurge of debts since the Government could not make financial commitments to them (IPPs).
Laporte also said the Power Purchasing Agreements (PPAs) the Government had signed were expensive. In addition to the exorbitant power purchases the country was paying for energy it does not use due to the “take or pay contracts.”
“In the case of Ghana, those contracts that have been signed as PPAs are just expensive and the kind of PPAs signed are take or pay. You pay although you do not use it. The fact is that in the past few years, Ghana entered into an agreement at the wrong rate and the wrong price, and it has impacted the debt situation,” he said.
Franklin Cudjoe is Executive Director for IMANI Africa