Prioritise remaining US$750m debt, get us cheaper gas – IPPs to gov’t

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Power Station Plant

Government needs to prioritise ridding the power sector of its numerous problems, including the US$750million owed Independent Power Producers (IPPs), inefficiencies of power utilities and high cost of gas, in order to sanitise the sector.

This, the Chamber of Independent Power Producers argues, will prevent the debt from accumulating, make IPPs more competitive and ensure a liquid and very efficient sector.

“For us, we expect our bills to be paid as soon as they are due so that there is no backlog going forward. That is to say that all outstanding debts should be cleared as a priority,” says the Chamber’s Chief Executive, Elikplim Komla Apetorgbor.

In the latter part of last year, the IPPs demanded 80 percent payment of about the US$1.5billion owed them for power sales – but government was only able to pay around half of the total debt.

Mr. Apetorgbor, who confirmed the payment, added that government still has US$750million to settle; and that it is imperative to improve revenue collection by power utility providers.

More importantly, he said, government must work to resolve inefficiencies impeding operations of the Electricity Company of Ghana (ECG) – specifically by drastically reducing its technical and commercial losses of about 24 percent, as well as getting it to improve on its revenue collection from the current 86 percent to over 98 percent.

When this is done, he said, ECG – the largest electricity provider in the country – will be able to pay for the power it buys from producers.

Cost of gas

Almost all IPPs in the country are thermal – they use gas to produce power; but one main challenge affecting them, according to Mr. Apetorgbor, is the high cost of gas. At US$6.7mmbtu, he said, the price is too high; and the expectation of the industry is that it will drop down competitively to about US$4.

“As IPPs,” he said, “we challenged ourselves to compete to improve our efficiency, as well as by employing cost-efficient technologies for generation to bring our tariff down. So, it would be strategic for government to give us fuel-gas at a reduced price,” he added.

He also maintained that IPPs in the country are among the most competitive in sub-Saharan Africa, despite the high cost of gas and inability of government/ECG to pay for the electricity it buys from them.

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