Power Barge-bad Investment And Misplaced Priority

The first emergency power barge from Turkey, arrived in Ghana late October,2015.It is expected to add some 225 megawatts of power to the national electricity grid.

Typically of Ghanaians, a ceremony was organised to commission to commemorate the arrival of the barge. Chiefs,Opinion leaders,Government officials and the media were drawn to the program.

Every soul in Ghana, more especially those living in the southern part of Ghana met the news of the arrival of the power barge from Turkey with a lot of joy and nostalgic feelings. To the 'common' Ghanaian,its seen as the end to the biggest national canker,dumsor.

The middle class however saw it as a relief to the dumsor and a massive improvement yet to come when the Power barge is connected to the Ghana Gas Company Limited.

Meanwhile, no one took his or her time to realise whether or not the power barge has passed through a value for money test and the investment is really worth it.

A close sources to the Ministry of Power and the seat of Government has disclosed some figured to us on the cost and maintenance of the barge for the period of 10 years that Ghana has rented it.

Government of Ghana paid $138 Million for a finance lease of the power barge for 10 years. This translates to $13.8M every year! (1)

Fueling and maintenance of the power barge will cost Government of Ghana some $9 Million every month. (2)

This translates to $108M every year.
This means that the power barge will cost Ghana $121.80 Million every year.

Splitting it for a month,Ghana will be spending $10.15 Million every month.

At the end of the 10 years, the cost of the rental barge and its fueling + maintenance will cost Ghana $1,218 Billion.

Basic prudence accounting will tell you that when the cost of maintaining an asset far exceeds its carrying value, then its better to dispose of the asset.

The total carrying value of the asset for its 10 years is $138 Million yet the cost of maintenance for the same 10 years is $1,080 billion, representing 688% more than its carrying value!!

The big question that is begging of an answer is who endorsed this 'crazy' agreement??

It is even more surprising that Hon Seth Terkper,Minister of Finance of the Republic of Ghana who is a qualified accountant and is familiar with the International Accounting Standards 17 which governs the practice of leasing will agree to such a bad investment by the government.

This is certainly in terms of monetary value is a bad investment and burdensome for the future and unborn generation.