Finance Minister Ken Ofori-Atta said many of the contracts, signed by former President John Mahama’s government, were found to be overpriced and higher than prices charged locally.
During the presentation of government’s 2017 mid-year budget review yesterday, he told parliament that after renegotiating the terms of those contracts, an estimated $1 billion was taken off.
The past National Democratic Congress (NDC) government endorsed several contracts, including the Liquefied Natural Gas supply contract situated at the eastern port city of Tema.
The facilities are expected to provide gas directly to the thermal plants of state-run Volta River Authority (VRA) to boost power generation in the country.
The contracts were signed at a time the country was plunged into a power crisis localised as ‘dumsor’. Businesses suffered and some workers were laid off.
As a result of the crisis, VRA spent an estimated $20 million every fortnight on crude oil purchases which ended up draining the coffers of the country.
As part of measures to resolve the energy crisis, the floating unit situated at Tema was signed to deliver at least 250 million cubic feet of LNG per day which is 1.75 million tons annually.
But barely a year after assuming the rein of leadership, the Nana Addo Dankwa Akufo-Addo government said it has saved the state the amount of $1 billion after reviewing the many contracts entered into by the previous administration.
The Finance Minister said because of the renegotiation, the prices of the contracts are now “below that of indigenous gas and guaranteed for the long term”.
Mr Ofori-Atta said the government has also approved the VRA restructuring agenda to bring about “increased operational efficiency and private sector investments in the power sector”.
In the area of e
nergy regulation, the Minister said Cabinet has approved the establishment of the Electricity Market Oversight Panel (EMOP) to exercise oversight responsibility for the Wholesale Electricity Market (WEM).
The objective of EMOP, Mr Ofori-Atta said is to infuse operational sanity in the generation and supply of electricity in the country particularly “managing and optimising hydroelectric generation in the country”.