Independent power producers in the country have served a seven-day ultimatum to the government, through the Ministry of Finance, to impress upon Power Distribution Services (PDS) to expressly release funds to pay all outstanding debts – estimated at US$300 million as at June 2019 – or they shut down their plants.
“We caution that should PDS fail to respect the terms of the PPA and make payment to the IPPs within the 7-day period, our members will be left with no choice than to shut down their plants as they cannot continue to be saddled with huge debts.
“This action, although it has huge implications for jobs, cannot be avoided,” said a statement issued by the Chamber of Independent Power Producers, Distributors and Bulk Consumers (CIPDIB) signed by its CEO, Elikplim Kwabla Apetorgbor, on behalf of the IPPs.
The chamber argued that since energy is neither stored nor destroyed, consumers are paying for the power that is being produced while PDS is still accumulating the revenue.
It, therefore, found it “very frustrating” that the company [PDS] has not remitted any payment to IPPs four months after taking over the operations of ECG.
“At the moment, most of the IPPs are stressed-out and finding it extremely difficult to manage their operations and management costs. Some have to depend on overdrafts to be able to pay salaries and others,” the statement said.
It further stated: “We are alerting the consuming public of looming power outages unless PDS fulfils its financial obligations to the IPPs within a 7-day period.”
The Electricity Company of Ghana’s (ECG] operations came under a barrage of criticism because of perceived inefficiencies, which included but were not limited to the huge indebtedness to power generators – particularly the Independent Power Producers [IPPs].
The efforts of successive governments to improve the management of this all-important institution to drive the industrialization agenda of the country resulted in the privatization of the company, with an eventual takeover by PDS in February this year.
According to the chamber, the expectation of IPPs that PDS would honor and abide by the terms of the Power Purchase Agreements (PPAs) inherited – particularly by avoiding delay in paying for power purchases with respect to the bargained credit days – has not been met, four months after the takeover.
“IPPs are saddled with huge debts to their creditors and suppliers, and are also challenged in paying employees’ salaries,” the statement noted.
CIPDIB has also called for depoliticization of the power sector to discourage undue political interferences in the sector, for the energy industry to be operated as a pure business.
It further urged all stakeholders in the power sector to ensure transparency in their dealings, as it is key to the sector’s growth and sustainability.