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Settle your $900 million indebtedness – IPPs to ECG

The Electricity Company of Ghana’s (ECG) indebtedness to the Independent Power Producers (IPPs) in the Republic of Ghana has ballooned to $900 million as of the end of the first quarter of this year.

This was revealed by the Chief Executive Officer of the Chamber of Independent Power Producers, Distributors and Bulk Consumers (CiPDiB) in a statement presented at the public hearing on the Multi-Year Major Tariff Review in Accra.

Commenting on ECG’s proposal requesting a 148 per cent increment in Distribution Service Charge, Dr. Elipklim Apetorgbor, CEO of the Chamber, argued that ECG does not have any moral right to ask for that level of increment.

“You are heavily indebted and have not paid your generators. As of the end of the first quarter of 2022, you owed us almost $900 million in power supply invoices only, excluding other legitimate claims. It is wiser to continue making the effort to retrieve those difficult debts, no matter how small per time than writing off GHS 625million debts of your customers.”

Dr. Apetorgbor said it is baffling for ECG to be asking for an increment when the 2020 State Ownership Report revealed that ECG, the Volta River Authority and other energy-related institutions have made a profit.

Dr. Apetorgbor said for them to declare profit in the provision of constitutionally mandated service to the public is a deviation from the core mandate and rather competing with the private utilities service providers, adding, “and this is expected to result in tariff reduction to make the electricity tariff in Ghana competitive and not to seek for an increase in tariff.

“You recalled that the GoG/MoF laid claims in the recent past, via the mid-year budget review to the fact that the ECG/GoG is debt-ridden because of taking or paying PPAs. GoG’s subsequent notice of the application to the public in February this year revealed that it has made savings of $13.2 billion through the renegotiation efforts and also that the Average Cost of Generation for the IPPs has declined to 16.2 cents/kWh –10.5 cents/kWh. If these claimed savings are true and real, it should be good news to the sector revenue requirement and most importantly inure to the benefit of ECG. Indirectly, this should shore up ECG’s revenue and there should be no justification to increase tariff for ECG to make excess revenue,” Dr. Apetorgbor said.

He challenged the ECG in particular that if it claimed to make a profit, then it means it has excess revenue that it has achieved via efficiency, technologically and commercially.

This, he believes will result in tariff reduction to make the electricity tariff in Ghana competitive and not to seek an increase in tariff.

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