IPPs More Efficient Than State-Owned Power Plants – Dr Apetorgbor
Chief Executive Officer of the Independent Power Producers (IPPs), Dr Elikplim Apetorgbor, has challenged the perception that state-owned power plants are cheaper to operate than privately-owned ones, arguing that Independent Power Producers deliver greater efficiency and long-term value to Ghana’s energy sector.
Speaking during a panel discussion on the theme “Financing the Future: Tackling Legacy Debts and Building a Resilient Energy Economy” at the 14th Ghana Economic Forum in Accra on Wednesday, October 29, Dr Apetorgbor described such claims as “technically inaccurate,” explaining that the apparent cost difference fails to account for the full economic cost of power generation.
“In your intro, you mentioned that state-owned power plants are cheaper than independent power plants. That is not factual,” he said. “Many of the state-owned plants are almost at the end of their lifespan and have already recovered their capital costs, while most IPPs are newer and still recovering their investments in addition to energy charges.”
He noted that while the capital recovery component makes IPP tariffs appear higher, private producers operate with far more efficient technologies, yielding significantly higher energy output per unit of fuel consumed.
“For instance, if you give one million cubic feet of gas to a state-owned plant, it may generate about one megawatt of power. The same volume of gas to an IPP could produce up to 6.5 megawatts. That means state-owned plants could be operating at only about 25 percent of the efficiency levels of IPPs,” Dr Apetorgbor stated.
He added that advanced technologies deployed by IPPs reduce fuel costs, one of the biggest cost components in power generation by as much as 40 percent.
On addressing the sector’s financial challenges, Dr Apetorgbor proposed that government should monetize state-owned thermal assets to raise funds to support the Electricity Company of Ghana (ECG) and settle part of the sector’s legacy debts.
He further suggested monetizing idle generation capacity rather than labeling it as overcapacity. “We don’t have overcapacity; we have idle capacity. If we have contracted 200 megawatts and consume only 100, the remaining 100 can be sold to neighbouring countries that are hungry for power,” he said, adding that regulatory flexibility was needed to facilitate such cross-border sales.
Touching on renewables, Dr Apetorgbor urged policymakers to view renewable energy investments as part of national energy security rather than as developmental targets.
“Large-scale solar projects, for instance, should complement our thermal generation and shield us from the volatility of fuel supply and price hikes,” he remarked.
