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World Bank Attributes Ghana’s Economic Challenges to Mahama’s Flawed PPAs

World Bank Holds Former President John Dramani Mahama Responsible for Ghana’s Ailing Economy Due to Power Purchase Agreements (PPAs)

The World Bank has placed blame on former President John Dramani Mahama for Ghana’s current economic challenges, attributing them to the Power Purchase Agreements (PPAs) signed during his administration. The World Bank has expressed concerns over the high costs and flaws in some of the country’s PPAs with Independent Power Producers (IPPs) and has called for urgent review.

Under the leadership of the Mahama-led National Democratic Congress (NDC) government, Take-or-Pay contracts were signed, resulting in Ghana paying GH¢12 billion for unused power. However, Finance Minister Ken Ofori-Atta successfully managed Ghana’s financial commitments to IPPs from 2017 to 2021, ensuring uninterrupted power supply and avoiding the power outages experienced during the Mahama administration.

Nevertheless, the impact of these PPAs is now taking a toll on Ghana’s economy. The World Bank has urged the review of Ghana’s PPAs as part of the efforts to revive the economy under the International Monetary Fund (IMF) bailout.

Pierre Frank Laporte, the Country Director of the World Bank responsible for Ghana, Sierra Leone, and Liberia, highlighted that many of the power generation PPAs in Ghana were signed at excessively high rates. He emphasized that Ghana is paying more for power, even for electricity that is not consumed, due to unfavorable PPA terms.

Laporte called on the government to promptly restructure some of these contracts and mentioned that discussions have already begun with IPPs to renegotiate certain PPAs.

The World Bank also criticized the Electricity Company of Ghana (ECG) for insufficient revenue collection and expressed support for the reforms being implemented in the power distribution sector.

Addressing the energy sector debt is crucial for Ghana’s economy, with contract renegotiation seen as a potential solution. The Energy Sector Reform Programme (ESRP) has been designed to address issues in the energy sector, including converting purchase agreements from Take-or-Pay to Take-and-Pay, which would eliminate payment for excess capacity. The government has initiated talks with IPPs to renegotiate some of these PPAs.

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