Dumsor to hit Ghana as chamber of IPPs orders members to suspend power supply from July

Ghana is on the brink of a power crisis as the Chamber of Independent Power Producers (IPPs) has instructed its members to curtail their electricity supply to the national grid starting from July 1.

This directive, which entails zero power nominations and unavailability declarations to the system operator, will remain in effect until July 8. Notable members of the Chamber include Sunon Asogli, Cenpower, Karpowership, AKSA, Twin City Energy, and CENIT.

Despite the approaching deadline for the Independent Power Producers to shut down due to outstanding arrears, no favorable response has been received from the government, leading to this latest order. The expectation was that the two parties would meet this week to negotiate an agreement, particularly regarding a 30 percent interim payment of the arrears.

The IPPs argue that without receiving payment by the end of June, they will be unable to sustain the national grid. Determined to achieve results, the Chamber emphasized the urgency of the matter in their email communication.

The independent power producers hold significant influence over Ghana’s energy sector, accounting for 47 percent of the country’s total power generation mix and contributing 67 percent of its thermal power output. As of May 2021, these six entities collectively carry an outstanding debt of approximately $1.73 billion in cedis, with the debt dating back to January 2021.

The IPPs highlight that this mounting debt has severely hindered their access to working capital, preventing them from financing critical inputs like chemicals for water treatment in thermal generators and other supplies, many of which are priced in foreign currency, particularly the US dollar.

Elikplim Kwabla Apetorgbor, the Chief Executive Officer of the Chamber of Independent Power Producers, Distributors, and Bulk Consumers (CIPDiB), expressed their inability to convince creditors, contractors, and other essential stakeholders to further delay payments and maintain operations.

He stated, “Essentially, we lack the resources to continue generation beyond June 30, and we are giving them [Finance Ministry] until March. We didn’t hear from them, but the fact is that beyond June, we just don’t have the resources to continue supplying.”

Moreover, the IPPs have rejected any form of debt restructuring since it would be challenging to explain to their lenders that Ghana’s economy is in dire straits, impeding their ability to repay the debt.

As the Chamber of Independent Power Producers implements this power supply reduction, Ghana faces an imminent energy crisis if the outstanding arrears issue remains unresolved. The government must swiftly address the concerns of the IPPs to ensure the uninterrupted supply of electricity and stability of the national grid.

SOURCE: Coverghana.com.gh