Dumsor looms as IPPs threaten to cut power supply over US$1 billion debt

The Chamber of Independent Power Producers, Distributors and Bulk Consumers has resolved to withdraw their services in the coming days ad infinitum.

This action, according to them, follows the inability of the government of Ghana and the Electricity Company of Ghana (ECG) to meet their demand to settle, at least, 80% of their overdue receivables worth about US$1 billion, as a matter of urgency and priority.

The Chamber, in a letter signed by its CEO, Elikplim Kwabla Apetorgbor, to the Ghana Grid Company Ltd, noted that the respective Central Control Rooms (CCRs) of the IPPs are expected to communicate with the GRIDCo Systems Control Centre.

The Chamber, late last year, called on the Akufo-Addo-led administration to pay the US$1.5-billion debt owed its members to guarantee uninterrupted power supply.

The Chamber, in a statement signed by Mr Apetorgbor, said its members expected the delays in payment to end with the introduction of private sector participation in the distribution of electricity when Power Distribution Service Ghana Limited came on board but that has not happened.

“Sadly, the reality we have experienced is that the receivable accounts position of the independent power producers has deteriorated since the PDS arrangement came into effect,” the statement said.

Mr Apetorgbor explained further that: “When on the 8th of July 2019 the CIPDiB issued a statement about having gone for four months without any payment, PDS came out in rebuttal, claiming they had honoured their obligations to ECG. This was later found out to be untrue.

“The cumulative outstanding debt position of the GoG/ECG to IPPs alone has escalated to about US$1.5 billion.

“The CIPDiB is, once again, compelled to ask that payment of the obligations of GoG/ECG be made as a matter of urgency. Immediate disbursement from funds that have been built up in the PDS accounts is essential to enable us to continue to produce”.

Below is the full statement:

Strengthening the power sector – a national priority.

Strengthening the power sector, particularly the electricity distribution sub-sector, was a key rationale for private sector participation in ECG. The technical and financial capability of the selected private sector partner would address the need for additional investment in the distribution system complementing the US$500 million that would be provided by the Millennium Challenge Corporation (MCC).

For us, members of the Chamber of Independent Power Producers, who provide over 2500MW reliable power generation capacity (representing over 60% of the total generation in the power sector of Ghana), there were assurances that with private sector participation in ECG, delays in being paid for the power we generate would be a thing of the past. During countless stakeholder engagement sessions, MiDA and its Transaction Adviser, the International Finance Corporation (IFC), trumpeted these anticipated benefits of private sector participation.

It was indicated that, under the concession arrangement, the concessionaire would be paying in full all invoices of the power producers within 10 days.

The concessionaire was also to put in place a revolving letter of credit which could be called upon on the 11th day for settlement of the invoices.

Furthermore, the concessionaire was expected to replenish the revolving letter of credit in two weeks to ensure that there was always sufficient funding to cover the power produced by the Generators. Sadly, the reality we have experienced is that the receivable accounts position of the Independent Power Producers has deteriorated since the PDS arrangement came into effect!

When, on the 8th of July 2019, the CIPDiB issued a statement about having gone for four months without any payment, PDS came out in rebuttal claiming they had honoured their obligations to ECG. This was later found out to be untrue!

The cumulative outstanding debt position of the GoG/ECG to IPPs alone has escalated to about USD$1.5 Billion! The CIPDiB is once again compelled to ask that payment of the obligations of GoG/ECG be made as a matter of urgency. Immediate disbursement from funds that have been built up in PDS accounts is essential to enable us to continue to produce.

The energy sector is clearly under serious threat and we would urge the Government of Ghana and its agencies, including ECG and MiDA, as well as the MCC to co-operate to ensure that decisions are taken that enable Ghanaians to have access, affordably, to reliable energy supply.

The CIPDiB, as a key stakeholder in the sector, is willing to engage in consultations about the process of securing private investment in the electricity distribution sub-sector in Ghana, and the interface with the generation sub-sector.

Our experience in bringing in billions of dollars of private sector investment into power generation in Ghana makes us confident that this can also be done in the distribution subsector.

With credible, transparent and fair processes, the right calibre of investors can be attracted.

We remain committed to helping Ghana strengthen its power sector so as to serve the needs of Ghanaians.

Elikplim Kwabla Apetorgbor

Chief Executive Officer.