World Bank blames sole sourcing for Ghana’s high power costs
The World Bank has blamed Ghana’s relative high cost of power on the adoption of sole sourcing in the granting of power purchase agreements under the past NDC administration.
The Bank has also warned of some economic consequences following the country’s inability to sell off its excess power due to the high cost. The World Bank was compelled to cut back on its financial support to the private participation in the energy sector upon realizing that the country had signed more agreements than required.
Currently the NPP is reviewing the agreements whilst it is seeking to reduce the cost of power.
But the World Bank Country Director for Ghana, Liberia and Sierra Leone, Henry Kerali says the current government must limit sole sourcing in agreements. “One of the main challenges with a number of PPAs that were signed was that they were not through competitive processes but through sole sourced arrangements which makes it difficult to assess if they offered the best value for Ghana,” he stated.
Mr. Kerali added, “The relatively high cost is probably an indicator of the inefficiencies of doing sole sourced projects…our recommendation has always been to have a competitive process for public investments.”
The Deputy Energy Minister, Dr. Mohammed Amin Adam in a recent interview also told Citi Business News that the government will subject all agreements to competitive bidding at a time that renewable energy producers are offered waivers.
Also, the government has since commenced its decision to cap all power produced by Independent Power Producers at 10 cents per kilowatt hour. Energy sector analyst, Dr. Philip Adom however suggested that such decision could largely be influenced by a pro business argument with the IPPs.