The Chamber of Independent Power Producers and Bulk Consumers has expressed disappointment over government’s failure to address the debt of about USD$1.4 billion owed them in the Mid-year budget.
According to them, although the power sector has mane challenges, the Finance Minister, Ken Ofori-Atta, during the reading of the Mid-year budget review on Thursday, 23 July, 2020, did not speak about how to address the chronic financial challenges and revenue shortfalls.
In an interview with Citi Business News, the CEO of the Chamber, Elikplim Kwablah Apetorgbor, said the Chamber is yet to meet for their next line of action, but added that they cannot guarantee full supply of power.
“I would like to commend government for the interventions that they have outlined and that they were able to achieve or are in the process of achieving. If it happens, it will go a long way to provide some sort of relief to the sector. But more importantly, the most important consideration in this mid-year budget review should have been how to settle the indebtedness of the Electricity Company of Ghana to the Independent Power Producers because there is a lot of risk involved there,’ he said.
He says there is need to identify the root cause of the power sector challenges so that they can be addressed holistically.
“It appears to me that we have been dancing around the key challenges of the sector and this is the revenue shortfall. We need to understand that as at the end of 2016, ECG was paying almost 80% of its monthly invoices to the IPPS. The Minister made mention of a reduction in tariff. In 2017, that has also contributed significantly in the revenue shortfall. The tariffs that we are currently applying are just inadequate to fix or to apply to the actual cost of generation, transmission and distribution. It is not always a good thing to be borrowing to pay power sector debt,” he added.
Make provision for our $1.4bn debt in mid-year budget – IPPs to Gov’t
Prior to the reading of the mid year budget, the Chamber of Independent Power Producers and Bulk Consumers, had appealed to government to capture the payment of the about USD$1.4 billion debt owed them in the budget.
According to them, as at 30th June, 2020, the cumulative indebtedness to the IPPs is about USD$1.4billion and it continues to accumulate. Out of the 1.4 billion, 1.5 percent represents the unsettled legacy debt which dates from 2016. About 78 percent also represents the cumulative invoices from the PDS era till date and the remaining 20.5 represents the default claims with respect to our PPAs.
Huge debt to Independent power producers could cause ‘dumsor’ – CIPDIB warns
Earlier this year, the Chamber warned that power consumers could be faced with severe power outages if the then Power Distribution Services (PDS), fails to pay its huge debt to the Independent Power Producers (IPPs).
They also called on government to review taxes and levies imposed on electricity to bring some relief to consumers as it has made the industry uncompetitive, over-burdening industry and households.