IPPs owed $900m by ECG
Independent Power Producers [IPPs] in the country are owed some $900 million by state-owned power distribution company, the Electricity Company of Ghana [ECG].
This is according to the Chief Executive of the Chamber of IPPs, Distributors and Bulk Consumers, Elipklim Apetorgbor.
Making the assertion during the Public Hearing of the Multi-Year Major Tariff Review by the Public Utilities Regulatory Commission [PURC], Mr Apetorgbor stated the ECG has no legitimate reasons for demanding the 148% increment in electricity tariff.
“You are heavily indebted and have not paid your generators. As at the end of the first quarter of 2022, you owed us almost $900 million in power supply invoices only, excluding other legitimate claims. It is wiser to continue making the effort to retrieve those difficult debts, no matter how small per time than writing off,” he stated.
Recently, the 2020 State Ownership Report revealed that ECG, the Volta River Authority and other energy related institutions have made profit.
But the Chamber of Independent Power Producers said for them to declare profit in the provision of constitutionally mandated service to the public is a deviation from the core mandate and rather competing with the private utilities service providers, adding, “this is expected to result in tariff reduction to make the electricity tariff in Ghana competitive and not to seek for an increase in tariff.”
“You recalled that the GoG/MoF laid claims in recent past, via the mid-year budget review to the fact the ECG/GoG is debt ridden because of take or pay PPAs. GoG in a subsequent notice of application to the public on February this year revealed that it has made savings of $13.2 billion through the renegotiation efforts also that the Average Cost of Generation for the IPPs have declined to 16.2 cents/kWh – 10.5 cents/kWh. If this claimed savings are true and real, it should be good news to the sector revenue requirement and most importantly inure to the benefit of ECG. Indirectly, this should shore up ECG’s revenue and there should be no justification to increase tariff for ECG to make excess revenue”, Mr. Apetorgbor said.
He challenged the ECG in particular that if it claimed making profit, then it means it have excess revenue that it has achieved via efficiency technologically and commercially.
This he believes will result in tariff reduction to make the electricity tariff in Ghana competitive and not to seek an increase in tariff.
Recently a media publication revealed that ECG spent $1.5 billion to maintain and upgrade its system. The Chamber of IPPs said the prudent activities are meant to improve its system and consequently a reduction in operational cost, and for that matter not to increase it.
ECG makes 148% increase in tariff proposal to PURC
Power distribution company, the Electricity Company of Ghana (ECG), has submitted a proposal to the Public Utilities Regulatory Commission (PURC), seeking approval for the upward review of electricity tariff by 148% for this year.
For the subsequent years – from 2023 to 2026 – the ECG is seeking further approval of 7.6% tariff increase on its Distribution Service Charge (DSC) ie charge for distributing electricity to Ghanaian households.
ECG in its multi-year tariff review proposal for the period from 2022-2026, asserts the high tariff increase is attributable to the cost of investment projects, existing gap between actual cost recovery tariff and PURC approved tariffs and the effect of macroeconomic factors such as inflation and exchange rate.
According to the electricity distribution company, the current DSC of GHS 16.10/kWh is inadequate and has eroded the financial viability of the ECG which has had an adverse impact on the entire distribution sector.
It however believes that, with a DSC charge of GHS 39.95/kWh – that is the 148% increment – it will be able to recover actual cost of electricity distribution and remain financially viable.
Adding that, with the huge investment needs facing the distribution industry over the next five years, it is expected that the proposed tariff increases would inevitably be approved to sustain efficient and reliable electricity distribution service.
