We can solve power crisis - IPPs

Independent Power Producers (IPPs) say as lead partners with government; they can generate enough electric power to make up for the shortfall, if only off-takers are willing to pay and if tariffs are made cost-reflective.

At a seminar in Accra, on the private sector’s response to the lingering electricity crisis in the country, Eunice Biritwum, CEO of Independent Power Producer CENIT Energy Limited, said IPPs have provided about 60% of new power plants in the last thirteen years, and that if they are incentivised, they could do far more.

“Nobody is in business to lose money; we all want to go into business to make money. So if people come in and they are willing to invest in the infrastructure, but they are not being allowed to recover the costs of their investment, they will not want to come in; we will end up in a situation where we will not have enough power for our needs,” she told the B&FT on the sidelines of the seminar.

“If you have unlimited resources and you know you can make your return on investment for that, it could be achievable. If you have the money and you know you can invest and recover your investment, anything is achievable,” she added.

But the Executive Secretary of the Energy Commission Dr. Alfred K. Ofosu Ahenkorah said regulatory bottlenecks have been removed, and that Government is indeed looking to IPPs to “fill the gap” in power demand.

Seven IPPs, he said, have been given “provisional licences” to provide about 2000megawatts of electricity.

“Some of the IPPs have already started acquiring lands and are starting with their studies and other things to begin construction. If you have all the equipment, it takes about two years to build a plant,” he told the B&FT.

“We now allow corporate bodies -- large consumers -- to go direct to the IPPs and sign contracts with them,” he added. Speakers at the forum identified the distribution-end of the power value-chain as the most problematic, with the power utilities unable to collect large sums of monies owed them by consumers, both public and private.

This, in turn, has hampered the ability of the utilities, as off-takers, to pay IPPs promptly for delivered power.

To reverse the trend, Government has to hold the board and management of the power utilities accountable while making sure it honours its own obligations to them, Theo Sackey of the Africa Finance Corporation said.

VALCO and other institutions are said to owe the Volta River Aauthority (VRA) a whopping GH¢1,086,423,500, being non-payment for bulk sales of electricity made to them.

Of the said amount, MDAs are indebted to the tune of GH¢230million; Electricity Company of Ghana (ECG) GH¢270 million; VALCO GH¢77million; and Government owes the Authority GH¢509million.

Government has had to instruct that Ministries, Departments and Agencies to switch to using pre-paid meters. With just over 2000megawatts of installed power and an annual demand of more than 200 MW, the country will have to take “some tough decisions”, speakers at the forum said.

The rising demand, meanwhile, is driven more by domestic consumers (51%) than by industry, Dr. Alfred K. Ofosu Ahenkorah, Executive Secretary of the Energy Commission disclosed, saying the trend has to be reversed for industry to use more power to cushion domestic users by paying more.

“Between October 2012 and now, the demand has grown by 100 megawats. This means as a developing country, our demand for power will continue to grow,” Dr. Ahenkorah said.