The Herald Editorial: Country shifting from dumsor to 'dumkraa'

Various Independent Power Producers (IPPs), have threatened they may be forced to shut down their machines as the government fails to settle the debt owed them, although the government, had boldly claimed it has settled debts owed, especially power distributors, ECG.

The Herald has gathered the amount involved is in excess of some US$1 billion. But the government has remained quiet since the umbrella body's warning to Ghana Grid Company in a letter dated Friday, November 13, 2020.

Failure on the part of the Finance Ministry to settle the debt in the coming days, will mean the country may be plunged into darkness.

In a 'notice of shutdown' letter to the Chief Executive Officer (CEO) of the Ghana Grid Company, the power producers noted "we would like to inform you about our firm resolve to withdraw our services in the coming days' ad Infinitum."

The letter signed by its CEO, Elikplim Kwabla Apetorgbor, stressed: "this action follows our demand on the Electricity Company of Ghana (ECG) and Government of Ghana (GoG) to settle at least Mb of our overdue receivables worth about USD1Billion, as a matter of urgency and priority."

"The respective Central Control Rooms (CCRs) of the IPPs, are expected to communicate with the GRIDCo's Systems Control Centre, please. Any inconvenience is deeply regretted, Sir," it added. The ministry of energy was copied in the letter.

The latest development, follows government insistence a few months ago, that it has settled debts owed, especially power distributors, ECG.

According to the government, it paid over GHC200billion ($345,721,680) debt owed ECG, which put the power distributor on a sound financial footing.

At a press conference on Tuesday (May 19, 2020), the Energy Minister, John Peter Amewu, indicated that the government has paid its debt with the ECG with a credit of GHC500 million.



"In 2016 when the NDC left power, the total amount owed to the ECG was 2.63 billion Ghana cedis. The NPP on the assumption of office ensured it was current on all the bills incurred from 2017 to date…President Akufo-Addo, has paid 2 billion annually to cover bills to ECG."

"All bills have been paid to ECG with a credit of 500 million," Mr Amewu added.

Earlier letter responding to a statement by the Finance Minister Ken Ofori Atta announcing the "Rationalization of Commercial Agreements in Ghana's Energy Sector and Re: Implementation of Key Outcomes of 3rd March, 2020, the IPPs acknowledged the various correspondents between the Ministry and the IPPs on the same issue.

The IPPs said, although they acknowledge the fact that the government position that it was taking proactive measures to address the payment of outstanding arrears, no such thing has been done.

"Regrettably, however, after several months and assurances of imminent payment, a substantial part of the outstanding arrears to IPPs remains unpaid".

The power producer,s decried how the Finance Minister, had sought to create the wrong impression that they as a group are not engaging government constructively in finding the best solution to the structural challenges the sector finds itself. The letter dated November 16, 2020, mentioned that there were two critical issues that needed to be resolved.

The eight paragraph letter from the IPPs to the Finance Minister listed the two as "Ensuring that IPPs are paid for the energy we supply so that we are solvent financially and can cover our financial obligations".

It continued "It seems that our cry for help in our petition to the Father of the Nation, the President as a last-ditch effort and last resort to help address our imminent and increasing financial distress and its constraining adverse effect on our ability to sustain our operations and continue our business of generating power for the nation has unfortunately been misconstrued in certain quarters within government as constituting blackmailing government".

The letter signed by Togbe Afede XIV, who happens to be the board chair of the CIPOiB, said the impression was erroneous as the power producers held no such intention.

"All IPPs are genuinely committed to working with Government in addressing the sector challenges. We hope we can continue this important collective national collaborative effort devoid of any blame-game.

We must, however, reiterate and underscore the point that, unless an immediate steps are taken to settle a substantial part of the outstanding arrears to us, it will be virtually impossible for us to continue operating. Indeed, as indicated in previous correspondence, many of our members face a real threat of insolvency ".

According to Togbe Afede, they are unable to go any further feasible ways to sustain their operations and continue supply of power at a time there is persistent payment default by off-takers.

The letter, having cleared itself of any mischief implored the Finance Minister to use his good office to take steps to settle at least 80percent of the overdue receivables as a matter of extreme urgency, while undertaking any auditing or reconciliation deemed necessary.

The reality we face is that unless we receive payment to enable us discharge pressing long-overdue obligations to our lenders, suppliers and other stakeholders, we simply cannot guarantee supply in the coming days." It said they are committed to engage in a constructively with the government to find an amicable solution to the issues concerning the sector.

Despite their plea, it appears no amicable resolution has been reached, hence the latest letter on Friday warning imminent shut down in the event that the government does not work to pay the debt on time.