Power Supply Suspension: IPPs remind Gov’t of July 1 deadline over unpaid arrears
Independent Power Producers (IPPs) have issued a stern warning to suspend power supply commencing on July 1, 2023. This ultimatum comes as a result of the government’s failure to provide the IPPs with an interim payment amounting to 30% of their outstanding arrears. The IPPs, which hold sway over 50% of the country’s generation mix, argue that without urgent resolution, they will be unable to power the national grid beyond the end of this month.
At an emergency meeting held earlier this week, the IPPs reached a unanimous decision to take this drastic step due to their mounting financial woes. Faced with mounting pressures from creditors, contractors, and other crucial stakeholders, the IPPs claim to have exhausted all options to sustain operations amidst a dire cash flow situation.
In a letter addressed to the Finance Minister, members of the IPP Chamber expressed their disappointment over the government’s lack of commitment to addressing their concerns. Despite recent reports of Electricity Company of Ghana’s collection efforts, which yielded approximately ¢3.1 billion, the IPPs assert that no genuine indication or assurance of impending payment has been received as of the present date, June 21, 2023.
This dispute stems from the substantial debt owed by the Electricity Company of Ghana (ECG) to the IPPs, totaling around $1.4 billion in cedis as of May. The burden of this debt has left the IPPs unable to finance crucial operational costs, including the procurement of necessary inputs such as chemicals for water treatment in thermal generators, compounded by the fact that many of these supplies are priced in foreign currencies, primarily the US dollar.
The IPP Chamber has made repeated pleas to the government to prioritize the settlement of these outstanding arrears, emphasizing the urgent need to cover critical operational expenses and repay overdue debt service. Highlighting the severity of the situation, the IPPs stress that their prolonged silence on the matter should not be mistaken for acceptance, as they have grappled with escalating debts for an extended period.
With their letter to the Finance Minister, the IPPs have underscored the gravity of the issue and called upon the government, the Electricity Company of Ghana, and other stakeholders to accord it the utmost attention it deserves. The consequences of inaction could be dire, resulting in a suspension of power supply beyond June 30, 2023.
As Ghana faces the possibility of a power crisis, attention now turns to the government’s response and its ability to resolve this mounting debt issue in the energy sector. Stakeholders anxiously await tangible actions from all parties involved to avert the looming threat of an energy shortfall that could have far-reaching implications for the country’s economy and its citizens.
