WB is twisting the facts on IPPs PPAs guarantees – Mould

 

Adnan Adams Mohammed

Alex Mould has challenged the rejoinder of the World Bank which sought to twist a portion of a news article by Accra based radio after granting an interview to the station.

Mr Mould corrected the misleading aspect of the rejoinder which sought to suggest that, Mr Mould had said in the interview that, World Bank provided a direct guarantee to Independent Power Producers (IPPs) in setting their Power Purchase Agreements (PPAs).  He said the IPPs he referred to was not those emergency power barges (‘Dumsor’ power barges) that were signed between the periods of 2014 to 2016, the four IPPs which are yet to start producing power including the Amandi, Early, Ghana Power Generation Company (GPGC) and one other which the WB was directly involved in their selection.  

The interview of Mr Mould was premised on the accusations of the current government against the former Mahama-led administration for signing unproductive PPAs under 'Take-or-Pay' agreements which they claim causing financial loss to the state as the country is paying for unused power. But, the World Bank seemed not happy for it to be linked to the IPPs PPAs and thereby issued a press statement to clear itself which also got Mr Mould to counteract to the statement.  

“I never said the WB gave guarantees to the IPPs”, Alex Mould, former CEO of GNPC corrected. “I said they supported Ghana government by giving guarantees, that is, backing the GCSA that Government of Ghana had to give to the IPPs.”

In the said news publication being referred to by the WB, Mr was quoted to have said, “What people don’t know is that the World Bank supported the government of Ghana to support four IPPs to be built mainly because they needed guarantees for the off-takers of the ENI-Sankofa-Gye Nyame gas”, Alex K. Mould in an interview last week.

"World Bank had given Ghana US$750 million in terms of guarantees to guarantee the ENI-led Sankofa-Gye Nyame gas project, one of the conditions were that we would either build a pipeline or do the convertibility so that the gas can go from the west to the east and we would have off-takers – IPPs that are ready to take the gas”.

“And, as such, they supported Ghana to give what we call a Government Support and Consent Agreement to these IPPs for them to be able to take to their financial institutions to say that: ‘We have a guarantee from the Ghana government which is backed by the World Bank; and, as such, they were able to get the financial decision to build these plants”, he explained.

“That is what we have to understand; that there was a reason for these plants to be built”, he argued, noting: “It wasn’t like these guys came willy-nilly, they had a PPA, they went to their banks, they got financial [support] and now we are saddled with that. No”.

From the direct quotations, it is clear Mr Mould did not in any way indicated otherwise as the WB press release tried to twist the facts the former GNPC said in the interview.

The WB in its release said; “Following recent media reports, the World Bank wishes to clarify that it has not provided any financing or guarantees to the Independent Power Producers (IPPs) that signed Power Purchase Agreements with the Government of Ghana or the Electricity Company of Ghana during the (Dumsor) energy crisis in 2014-2016.”

“To secure Ghana’s energy future, the World Bank supports the Energy Sector Recovery Plan (ESRP) of the Government of Ghana for affordable and reliable electricity supply and enhance the accountability in the energy sector.”

Consequently, the WB did agree to the facts Mr Mould said during the interview on how the WB’s financing and guarantee supported Ghana in the Sankofa Gas Project translated into helping Ghana to be able to partial risk guarantee to IPPs which, the WB was practically involved in their selection since they were going to be off-takers of the Sankofa gas.

 The WB statement stated; “The World Bank Group provided financing and a guarantee to the Sankofa Gas Project, which since 2019 has increased the availability of natural gas for power generation by leveraging private capital investment and promoting a cleaner energy mix.

“The World Bank is committed to supporting Ghana in its efforts to sustain economic growth, accelerate poverty reduction, and enhance shared prosperity in a sustainable manner.”

Mr Mould in his comment reacting to the WB release posited: “Yes, the WB supported Ghana with a “CREDIT Program” - involving loans Grants and credits - and part of that program was used by GoG to support the Partial Risk Guarantees (PRGs) given to IPPs that acts as a credit derivative and lessens the risk of default by the counterparties.

“So, they provided support in the form of credits which was given to GoG as part of the WB Program to Ghana so that GoG could provide a credit-backed PRG to enable these IPPs to raise the financing.

“The WB was not only aware but also involved in the discussion of the selection criteria to be used (since we had more than 8 IPPs that qualified) for the PRG to be given to these IPPs.

“The WB lent support to Ghana government via their program as the PRG without a credit enhancement from a multilateral development institution, such as the WB, was not acceptable to the lenders to the IPPs.”