Independent Power Producers (IPPs) and government have agreed suspension of the planned shutdown of power plants following fruitful engagements with the Electricity Company of Ghana (ECG).
This follows what the Chamber of Independent Power Producers of Ghana (IPPG) describes as fruitful engagements with the Electricity Company of Ghana (ECG).
As part of the understanding reached, all the Independent Power Producers (IPPs) have received an offer of payments from ECG to enable them operate in the interim thereby providing the Government of Ghana (GoG) and ECG the needed grace period to address the outstanding arrears in the energy sector and to meet their contractual obligations.”
To this end, the IPPs have agreed to keep operating their power plants after July 1, 2023.
Players in the energy sector expressed fears of a looming power crisis should the IPPs carry out their threats to cut supply to the national grid over the $1.73 billion outstanding arrears.
The IPPs which control about 50% of the country’s generation mix had highlighted that the indebtedness has hindered their access to working capital, preventing them from financing crucial inputs such as chemicals for water treatment in thermal generators and other supplies, many of which are priced in foreign currency, primarily the US dollar.
The IPPs are optimistic that this agreement reached would help yield the desired outcome of providing a permanent resolution to the energy sector debt failing which the IPPs will be left with no other choice than to revert to their earlier decision to shut down without any further notice.
$937.5m paid for excess capacity charge in 4 years
Government paid $937.5 million to three independent power producers (IPPs) signed during the John Mahama era for excess capacity charge between 2017 and 2020.
AKSA was paid $347 million, Karpower $359 million and Cenpower $251 million.
AKSA paid $347m
AKSA was paid $35.7 million in 2017, $59.4 million in 2018, $136.8 million in 2019 and $115.3 million in 2020.
Karpower paid $359m
In the case of Karpower, the company received $65.5 million in 2017, $108.9 million in 2018, $138 million in 2019 and $46.8 million in 2020.
Cenpower paid $251m
With regard to Cenpower, the company received no payment in 2017 and 2018 but was paid $86.5 million in 2019 and $144.8 million in 2020.
Biggest driver of national debt
According to the Fitch Ranks, the energy sector is the biggest driver of national debt as Ghana currently owes independent power producers to the tune of $ 1.73 billion.
IPPs reject $1.73bn
Meanwhile, IPPs have rejected a government proposal to restructure $1.73 billion in arrears owed them by the state.
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