The Chamber of Independent Power Producers (IPPs) has rejected the restructuring of arrears of its members as part of the ongoing or any future debt restructuring programme.
According to the Chamber, its members are rather prepared to engage with the government on payment schedules with regard to the arrears and other claims under the respective Power Agreements (PAs). It explained that this is to promote predictability of payment flows, while the energy sector reforms take hold to eliminate any accumulation of arrears going forward.
“We emphasize that our members reject any notion of restructuring their arrears/claims as part of the ongoing or any future debt restructuring program… We would like to advise that you prioritize and make payments of the arrears in the next three weeks to enable our members meet their debt obligations and sustain our production of electricity.”
Chamber of Independent Power Producers
Contained in a letter addressed to the Finance Minister, Ken Ofori-Atta, signed by the Chamber’s Chairman, Togbe Afede XIV, it stated that the outstanding and overdue receivables from the Electricity Company of Ghana have reached a critical point, for which members cannot guarantee continuous generation in the coming months. It revealed that as of January 31, 2023, its members’ total receivables accrued is over the cedi equivalent of $1.3 billion.
Nonetheless, the Chamber noted that members in good faith have continued to honor their contractual obligations to ECG, which is not sustainable.
“We herein bring to your attention that some of our members are in default of their debt service obligations with some quarterly debt service obligations due from March 2023. Kindly note that our members cannot continue defaulting on their respective debt service obligations and sustain operations. Additionally, we wish to highlight that our members have accrued huge arrears with their suppliers for which they are already in default and accruing associated penalties.”
Chamber of Independent Power Producers
Independent Power Producers make a case for arrears payment
The Chamber of Independent Power Producers also described the Cash Waterfall Mechanism (CWM) which was meant to bring transparency and fairness in the disbursement of the power sector revenue as a failure. Owing to this, it stated that most of the committee members from the State-Owned Enterprises rejected the IPP’s proposal for IPs to be represented on the committee.
It further expressed that CWM committee is dominated by the representatives of the State-Owned Enterprises (SOEs), VRA, ECG, and GRIDCo.
“The only information members receive are the bank credit alerts even though they are key stakeholders controlling over 50% of the market share. While we welcome the indication in your letter that review of the CWM will be part of the critical energy sector reforms, we emphasize that above-stated issues of transparency and governance of the CWM must be part of the agreed reforms and the Chamber duly represented on the CWM committee.”
Chamber of Independent Power Producers
In March this year, Government assured Independent Power Producers payments (IPPs) that it is undertaking the required measures to tackle outstanding payments owed to it – which stood at US$1.3 billion at the end of January 2023 – as part of its external debt restructuring process.
This, it revealed, is aimed at enhancing the sector’s efficiency and preventing an accumulation of arrears in future. In a statement released by the Ministry of Finance, government expressed its commitment to restoring financial sustainability for the entire power sector value chain.
The ministry also highlighted the recent announcement of an external debt payment standstill and the Domestic Debt Exchange Programme (DDEP), which was settled on February 14, 2023, as part of efforts to address the outstanding debt obligations.
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