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The government is calling on Independent Power Producers (IPP) to speed up the conclusion of their energy agreements with the country to help reduce burdensome debts and provide a stable energy supply for the people of Ghana.
This follows the successfully secured terms for a modified Power Purchase Agreement (PPA) with CENIT Energy Limited.
CEL is an IPP from Ghana that started commercial operations in 2012.
It has agreed to convert its power plant to a toll structure and transfer all the resulting cost savings to the Ghana Power Company.
According to a statement from the Ministry of Finance, CEL agreed to a further reduction in the capital recovery fee of 38.9%, resulting in total savings for the government and all Ghanaians in excess of $ 200.0 million during the remaining life of the PPA.
He emphasized that the commitment made by the CEL is crucial to reinforce the government’s efforts to build a balanced and sustainable energy sector. The terms agreed between the government and CEL will produce a more favorable situation for both parties and ultimately reduce the cost of electricity for the people of Ghana.
Commenting, Finance Minister Ken Ofori-Atta said: “We welcome CENIT Energy’s commitment to Ghana and its role in the regeneration of the energy sector. CENIT is an important partner and a major energy producer in Ghana.
“We encourage other IPPs to join CENIT to collaborate to help reduce burdensome debt and provide a stable power supply for the people of Ghana.”
He added that “we are committed to building a competitive and dynamic energy sector in which private investment can flourish and the interests of the Ghanaian people and businesses continue to flourish.”
Cost of unused electricity
The government says it currently pays more than $ 500 million a year for unused electricity.
As such, most PPAs are inherited deals, entered into under the previous administration in an uncoordinated and hasty attempt to stamp out the dumsor.
He highlighted that the agreed rates were not competitive and have contributed significantly to the accumulation of debt in the sector and the excess supply of energy.
World Bank / GoG Agreement
This Government, in collaboration with the World Bank, created the Energy Sector Recovery Program (ESRP), identifying the policies and actions necessary for the financial recovery of the energy sector in a five-year horizon (2019-2023).
As part of the reforms, the government said it is taking steps to institute competitive tenders for future additional capacity to ensure future rates are fair and in line with expected price benchmarks.
IPP Threat to Close Plants
IPPs have threatened to close the plants in late September if the government fails to pay off its outstanding debt of more than $ 1.4 billion to them.
This comes after their bankers pressure them to pay off their debt or cut their lines of credit.
A notice from the IPP Chamber said: “We hereby send you this notice of closure of the power generation of our plant by the end of September 2020. This closure is due to our difficult cash flow situation as we do not we receive enough payment to meet our gas bill and past due financial obligations. “
