The CEO of Chamber of Independent Power Producers and Bulk Consumers , Elikplim Kwablah Apetorgbor, has expressed his dismay over government’s letdown in addressing the debt of about USD$1.4 billion owed them in reading of the Mid-year budget.
Mr. Apetorgbor said, although there are inherent problems within the power sector, the Finance Minister, Ken Ofori-Atta failed to speak on how best the issues of financial challenges and revenue shortfalls can be addressed.
In an interview, he commended government for their interventions but further conveyed their chagrin over non-inclusion in the budget regarding debt payment. The Chamber is yet to meet to deliberate on the next move to make, albeit 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”.
Elikplim Kwablah Apetorgbor
He further reiterated the urgency in identifying the major challenges within the sector and consequently resolving them.
“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”.
Elikplim Kwablah Apetorgbor
IPPs call on Gov’t to make payment of $1.4bn debt in mid-year budget
Prior to the budget reading on July 23, 2020, the chief executive officer of the Chamber of Independent Power Producers and Bulk Consumers (CIPDiB), Elikplim Kwablah Apetorgbor petitioned government to factor in payment of about USD$1.4 billion debt owed them in the budget.
The Chamber Mr. Apetorgbor expressed frustration over the recurring buildup of debt which is invariably forcing them to contract costly loans to sustain their generations.
“As the Minister of Finance prepares to present to the nation how he intends to fund government activities for the remaining months of the year, we would like this budget to address specifically the debt that the government owes us. It has become very critical because we are seriously bleeding to fund our operations. 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. We have been very supportive. Most of the time we have to go around to borrow funds to be able to support our power generation especially in these trying times. We cannot continue, so we want this Mid-year budget statement to address specifically how government intends to pay for these services”.
Additionally, he requested for the inclusion of measures to offset the current pitfalls with ECG’s revenues as it will expedite IPP’s delivery of products and service to ECG with payment being made on time.
“That is the critical challenge of the sector. IPPs cannot be responsible for the government’s subsidies and other obligations. ECG is not able to generate enough revenue to pay for these invoices. And how does government intend to do the cover up”.
