Home Headlines ACEP proposes alternative approach to IPP debts, discourages shutdown

ACEP proposes alternative approach to IPP debts, discourages shutdown

Africa Centre for Energy Policy (ACEP)
Africa Centre for Energy Policy (ACEP)

Mr Benjamin Boakye, the Executive Director of Africa Centre for Energy Policy (ACEP),  says the decision to shut down and cut power supply to the national grid is not the solution to the debt challenge Independent Power Producers (IPP) faced. 

He said because the cut in power supply as communicated by the IPP had a revenue loss implication to them as well.

“What has sustained the power and the stability of the grid is that the IPPs preferred to be owed than shutdown and not get paid. Because contractually, once you shut down, then it means you don’t want to get paid, ” he said.

Speaking in an interview, he advised that the larger problem of debt accumulation in the power sector be given priority and resolved as it negatively impacted the fiscal situation of the country.

“The national budget is suffering from the power sector. If you accumulate what we have spent in the past three to four years ago, it is more than $6 billion essentially for power people have consumed and refused to pay,” he stated.

He called for a broader engagement on how the country could produce power, sell, and recover its money efficiently.

Mr Andrew Egyapa Mercer, Deputy Minister of Energy, said that the Government was meeting three Independent Power Producers (IPP) today over the possible cut in power supply due to the about $2 billion debt.

“These are our partners that we have worked with over the years, and we will continue to with going forward. It is important that we engage with them to resolve problems that are there, ” he said.

He said Government’s indebtedness to the IPPs was an albatross due to the pay or take agreements signed.

The IPPs, which produce 2000 megawatts of power are demanding an interim payment of at least 30 per cent of their arrears or they will cut power to the national grid on July 01, 2023.

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