The Chamber of Independent Power Producers, Ghana (IPPs), has issued a stark warning, asserting that the sustained production of electricity is under threat unless the government promptly settles its outstanding debts totaling an estimated $2.3 billion.
Dr Elikplim Kwabla Apetorgbor, Chief Executive of the Chamber, disclosed this during a lecture on the opportunities and challenges in Ghana’s energy sector. Despite three months of discussions with the government regarding a payment plan, no favorable resolution has been achieved, placing the operations of IPPs at risk.
Dr Apetorgbor highlighted the financial challenges faced by IPPs as a significant impediment to Ghana’s energy sector, emphasizing that investors would be deterred unless the financial situation improves. Independent Power Producers constitute 47% of the country’s total power generation mix and contribute 67% of Ghana’s thermal power, playing a crucial role in the nation’s energy landscape.
The Chamber, representing entities such as Sunon Asogli, Cenpower, Karpowership, AKSA, Twin City Energy, and CENIT, emphasized that the debts owed are actual costs and rejected any form of debt restructuring proposed by the government, citing potential adverse effects on their economic viability.
In July, Finance Minister Ken Ofori-Atta acknowledged engagement with IPPs to address excess capacity payment impacts on the economy. However, Dr Apetorgbor indicated that the situation had reached a critical point, with IPPs currently operating on life support.
Moreover, Dr Apetorgbor criticized the announced 1.52% reduction in electricity tariffs, deeming it “unstrategic.” He argued that the move could undermine the revenue of the Electricity Company of Ghana, widen the company’s debt gap, and discourage investors from entering Ghana’s energy sector.
Dr Kwami Adanu, Senior Lecturer at the Department of Economics, GIMPA, urged the country to refrain from signing new thermal power agreements and emphasized the need to explore alternative financing mechanisms to settle accumulated debts in the energy sector. He advocated for a shift towards microgrids utilizing renewable fuels for long-term sustainability.
Source:norvanreports