September 24, 2020

IPPs to be paid after renegotiation of excess capacity charges – Adu Boahen

A Deputy Minister of Finance, Charles Adu Boahen, says plans are in place to pay arrears owed Independent Power Producers, IPPs in the country.

The assurance comes after the Chamber of Independent Power Producers and Bulk Consumers expressed disappointment over government’s silence on the debt of about USD$1.4 billion owed them in yesterday’s Mid-year budget review presentation.

Speaking on the Citi Breakfast Show, Mr. Adu Boahen said government needs to address a number of issues such as renegotiating excess capacity charges and revenue shortfalls before making any payments by the end of the year.

“We are in the process of renegotiating some of these excess capacity charges, and the idea is that we want to do it as a whole. There are some of the issues we need to address. We need to address the mechanism to ensure that the IPPs are paid in a regular graduated manner so that ECG and everybody is transparent. So the Cash Waterfall Mechanism has been implemented.”

Giving reasons why it was not included in the budget, Mr. Adu-Boahen said: “in November 2019, when we presented the 2020 budget, we had in there the GHS3.6 billion to address these capacity charges which we thought we will have for the year, so that is why it was not included in the mid-year because it is still in there to accommodate these excesses”.

However, the Deputy Finance Minister expressed the hope that the IPPs will receive the monies by the end of 2020 once the renegotiation deal is concluded.

“We are sitting at the table to look at their financing structure and then renegotiate the capacity charges, plus any areas or shortfalls they have in their books and see how we can re-finance it going forward. These discussions have started, we have engaged one or two IPPs, and we are doing it in a gradual manner. Hopefully, by the end of the year, we should have cleared them all up and we should be able to move on”, he assured.

Prior to the reading of the Mid-year budget, the Chamber of Independent Power Producers and Bulk Consumers, had appealed to government to capture the payment of the about USD$1.4 billion debt owed them in the budget.

According to them, 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.

Huge debt to Independent power producers could cause ‘dumsor’ – CIPDIB warns

The Chamber of Independent Power Producers and Bulk Consumers, which is made up of the Sunon-Asogli Power (Ghana) Limited, BXC Solar Ghana, Cenit Energy Limited, Cenpower Generation Company Limited and Karpowership Ghana Company Limited, has repeatedly complained that the continuous accumulation of debt is forcing them to contract costly loans to sustain their generations.

Earlier this year, they warned that power consumers could be faced with severe power outages if the then Power Distribution Services (PDS) fails to pay its huge debt owed them.

They have also called on government to review taxes and levies imposed on electricity to bring some relief to consumers as it has made the industry noncompetitive, over-burdening industry and households.

Source: Business