Review power contracts now -- ACEP counsels gov't on debt reduction

Executive Director of Africa Centre for Energy Policy (ACEP), Benjamin Boakye, has advised the government to rationalise the power sector by cutting out some of the excess power generated by the Independent Power Producers (IPP).

According to Mr Boakye, this can only be achieved when government boldly cancels some contracts and pay the relevant penalties that may be incurred.

“We need to sit down as a country and resolve this energy situation because it is going to be recurrent,” he said on PM Express, a current affairs programme on MultiTV, Wednesday.

The Chamber of Independent Power Producers and Bulk Consumers (CIPDIB) hinted of possible power outages across the country in the next few days over accumulated debts.

A statement issued and signed by the Chief Executive Officer of CIPDIB, Elikplim Kwabla Apetorgbor, urged the government through the Ministry of Energy to compel Power Distribution Services (PDS) to expressly pay all accumulated invoices to the IPPs within the seven days.

The PDS has said the IPPs should chase the Electricity Company of Ghana for their monies.

PDS said it has no contract with the Independent Power Producers.

They, therefore, owe the IPPs no obligation to respond to their correspondents or make payments to them.

However, speaking on the matter, Mr Boakye said it was about time government bites the bullet.

“Some of the contractors have to go because if you are going to pay $200 million dollars today, it is better than waiting to pay $500 million or $1 billion in two to three year. These are the decisions that we need to be making else we are not going to [clear the debts],” Mr Boakye said.

Concessionaire

Manila Electric Company (Meralco) officially took over running of ECG from March 1st this year, under a 20-year concession agreement.

The negotiated Transaction Agreements – namely the Lease and Assignment Agreement, Bulk Supply Agreement, and Government Support Agreement – to secure the proposed Private Sector Participation (PSP) in ECG were approved by Cabinet and ratified by Parliament.

The Concessionaire, according to the agreement, is expected to inject an amount of $580m into the distribution system during the agreement period’s first five years.

The Bulk Supply Agreement between ECG and the Concessionaire deals with the Concessionaire’s back-to-back purchase of the capacity and energy made available to ECG under the Power Purchase Agreements (PPAs).

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