The Chamber of Independent Power Producers, Distributors and Bulk Consumers in the Republic of Ghana has rejected an assertion by the Akufo-Addo-administration that the Chamber is being used as a pressure group to create an unnecessary tension in the country.
The Deputy Minister for Energy in charge of Power and Member of Parliament for Afigya Kwabre South, Hon. William Owuraku-Aidoo had accused the IPPs’ Chamber of acting like a pressure group and hounding the government, following a warning notice to the CEO of Ghana Grid Company (GRIDCo) of shutting down their plants over unpaid invoices to the tune of US$1 billion.
However, a statement issued by the Chamber and signed by Elikplim Kwabla Apetorgbor, said, “We wish to assure the government and the public that we have no political motives for the timing of the communication that IPPs may be forced to shut down.
“This is based purely on commercial exigencies we currently face and not any political agenda. On average, IPPs, since 2017, are paid just barely 40 percent of power invoices on a monthly basis which is not enough to sustain operations, especially when these low payments have persisted for so long.”
The statement said their members have had to resort to loans in order to keep their operations going but at the cost of crippling debt service obligations which have become unsustainable, hence, the demand for the prompt payment of overdue invoices to the tune of $1.44 billion as at 30th September, 2020.
“This is against the backdrop of the recent US$1 billion Eurobond issue which we expected to be used to pay these outstanding invoices.”
Cash Waterfall Mechanism
The statement also set the record straight regarding the implementation of the Cash Waterfall Mechanism (CWM), saying it began on 1st April, 2020, and not 2019 as incorrectly put out by the Deputy Minister.
“The object of the policy was to ensure a more equitable and fair allocation of ECG’s collections per time to generators going forward. Based on our understanding, it was not meant as a solution for the payment of outstanding invoices owed IPPs which amount to US$1.44 billion as at 30th September, 2020.”
According to the Chamber, the government’s failure to settle its indebtedness is the cause of the Energy Sector debt to IPPs ballooning from US$124 million at the end of 2016 to US $1.180 million as at 30th September, 2020.
“Clearly, this is unsustainable and poses serious economic and financial risks to our members. This is why we are being compelled to serve notice to Ghanaians about the possibility of a forced shutdown due to lack of funds to maintain our operations.”
Below is the full statement