IPPs Warn Against Plunging Ghana Into Darkness Over $700M Debt

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The country stands the risk of throwing Ghanaians into darkness, as some Independent Power Producers (IPPs) have threatened to withdraw their services over unpaid debt.

The IPPs who are six in number have explained that, being owed the sum of  $700 million leaves them with no other option than to shutdown power plants which supplies 1,500 megawatts of electricity to the country.

According to the power producers, the huge financial indebtedness of Power Distribution Services (PDS) has resulted colossal debts to their creditors and suppliers, and also put them in a very challenged situation where they are unable to pay employees’ salaries.

Against this backdrop, they have cautioned that, “Should PDS fail to respect the terms of the PPA and make payment to the IPPs within the seven to eight working days period; our members would be left with no choice than to shut down PDS’ plants as they could not continue to be saddled with huge debts.”

Elaborating on the issue, Chief Executive Officer (CEO) of the Chamber of Independent Power Producers and Bulk Consumers (CIPDIB), Mr. Elikplim Kwabla Apetorgbor, stated that, most of the IPPs are stressed and finding it extremely difficult to manage their operations and management costs, to the extent that some have to depend on overdrafts to be able to pay salaries and others.

He noted that, “For the love of country and its people, some IPPs had gone a step further to incur extra financial cost in borrowing to procure fuel to ensure reliable power supply.”

Mr. Apetorgbor stressed that, “Constrained by these existential threats, the Chamber of Independent Power Producers and Bulk Consumers (CIPDIB) is by this release alerting the consuming public of looming power outages unless PDS fulfils its financial obligations to the IPPs within a seven-day period.”

The $700 million debt was accumulated before and after the take over of the Electricity Company of Ghana (ECG) by the Power Distribution Services (PDS). The company owed the IPPs the sum of $400 million before it took over from ECG and has not paid any amount since the takeover, leading to additional debt of $300 million.

Meanwhile, the CEO of CIPDIB has encouraged government, through the Ministry of Energy, to compel PDS to clear the accumulated invoices presented by the IPPs within eight working days, together with interest on all overdue invoices which the IPPs could have profitably utilised.

CEO of CIPDIB, Mr. Elikplim Kwabla Apetorgbor.

Mr. Apetorgbor has also called on the Millennium Development Authority (MiDA) to compel PDS to adhere to best business practices and respect the terms of the PPAs and ensure the nation derives the optimum benefit from the concession arrangement.

The IPPs has expressed regret, saying, it appears PDS is reliving some of the very bad contractual and business practices that characterised the operations of ECG.

To them, following a a successful concession, they expected PDS to honour and abide by the terms of the Power Purchase Agreements (PPAs) inherited, particularly by avoiding the delay in paying for power purchases, with respect to the bargained credit days.

“It is very frustrating to note that PDS, for the past four months since taking over from March 1, 2019 to date, has not remitted any payment to the IPPs yet.

“In the midst of this issue, one would have expected PDS to engage the players in a bid to inform them of any challenges, if there is, but efforts so far made to cause PDS to honour its contractual bargains have yielded virtually no result,” he lamented.

In a sharp contrast, the Power Distribution Services, has refuted claims of having any financial indebtedness to the Independent Power Producers, saying, it has no contractual agreement with the IPPs.

In a statement issued by PDS, dated, Monday, 8th July, 2019, the company pointed out that, “PDS wishes to put on record that under the concession arrangement, PDS has signed a Bulk Supply Agreement with ECG to purchase power from the latter. PDS has no contractual relationship with the IPPs and has met its obligations under the Bulk Supply agreement.”

PDS has however, acknowledged the concerns raised by the CIPDIB, indicating, it is “ready to assist ensure a congenial working environment and efficiency within the electricity supply value chain.”

Companies who are members of the CIPDIB, threatening to withdraw their services over huge PDS indebtedness include, Sunon-Asogli Power (Ghana) Limited, BXC Solar Ghana, Cenit Energy Limited, Cenpower Generation Company Limited and Karpowership Ghana Company Limited.

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