‘Dumsor will not return’ – Government quells fears following threats by IPPs

The Finance Ministry has quelled fears that power cuts, popularly known as “dumsor”, will return following threats by Independent Power Producers (IPPs) to strike over government indebtedness to them.

In a statement dated December 3, 2020, the Finance Ministry said this year, government has paid more than US$1 billion to the IPPs, which is in addition to some GH¢2.7 billion paid by Electricity Company of Ghana Limited (ECG).

“Government has saved the energy sector over US$5 billion by relocating Karpowership Ghana Company Limited and securing agreements with CENIT Power Limited and Cenpower Generation Company Limited, with more savings to come,” the statement from the Finance Ministry explained.

The statement said the government is committed to undertaking the Energy Sector Recovery Programme (ESRP) in good faith and in partnership with its stakeholders.

According to the government, many of the current problems in the energy sector were inherited from the previous administration.

“While attempting to provide emergency power to address a spate of persistent load-shedding (“dumsor”) which crippled business and adversely affected GDP growth as a result of signed contracts with IPPs in an uncoordinated and non-competitive manner.

“Consequently, today, Ghana pays over US$500 million a year in excess capacity payments, i.e., payment for power that it simply does not use or need. Despite the challenges, this government has prioritised making payments to the IPPs to reduce the debts,” the statement added.

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

This move, 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 threat by the chamber prompted fears of a return to dumsor.

Read the full statement from the Ministry of Finance below: