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Long energy crisis looms unless gov’t takes immediate steps to pay its debts to IPPs – Analyst


The government must immediately take steps to settle its debts in the energy sector, especially debts owed to the Independent Power Producers (IPPs) in order to forestall a looming crisis in the power sector, the Director of Research at the Institue of Economic Affairs (IEA), Dr John Kwakye, has said.

Dr Kwakye said any action apart from paying the debts, that will be taken by the government to keep the lights on will only postpone the crisis to the next administration. “Government must take immediate steps to address: i) costs associated with PPAs, ii) distribution inefficiencies, iii) under collected bills, iv) non-cost recovery tariffs, etc. so as to forestall a looming power crisis.

“Unless the government takes immediate actions to address the debt overhang in the energy sector, a long crisis looms. Any half-hearted measures to keep the lights on to placate the electorate in an election year will only postpone the crisis to the next administration,” Dr Kwakye wrote on X.

His comments come in the wake of the power cuts in part of the country which has been attributed to the inability of the Ghana National Peorume Authroity (GNPC) to fulfill its payment obligations to the West Africa Gas Pipeline Company Limited (WAPCo).

WAPCo is responsible for transporting gas from Takoradi to Tema for power generation. “I wish WAPCO would prioritize patience, relationships and customer service because they are as good as currency!” Ahiagbah wrote on X.

Meanwhile, Former Minister of Energy and Petroleum, Emmanuel Armah-Kofi Buah has said apart from the inability to pay the debt one can also track the ultimate problem to what he describes as the weakest link in the value chain which is the inability of the Electricity Company of Ghana (ECG) to pay off-takers.

He observed that Ghana is currently grappling with a severe case of Load Shedding, commonly known as Dumsor.

He said the situation is evidently clear, with 500 MW of load being shed as of  January 9th, 2024. Several parts of the country especially Accra have been plunged into darkness due to the unavailability of gas to fuel thermal plants within the Tema enclave which can be attributed to financial constraints.

“The Ghana National Petroleum Corporation (GNPC) is currently unable to fulfill its payment obligations to the West African Gas Pipeline, which is responsible for transporting gas from Takoradi to Tema for power generation. You can also track the ultimate problem to the weakest link in the value chain-ECG’s inability to pay off-takers.

“Compounding the situation is the absence of a load-shedding timetable, which hampers households and businesses from planning accordingly,” he said.

He added “The lack of transparency and communication regarding the power outage schedule only adds to the frustration and inconvenience experienced by the affected population. It is worth highlighting that even during the worst periods of Dumsor in the past, the power outage never reached the 500 megawatts threshold currently being shed yet the media associated with the NPP interestingly see this as no ‘Dumsor,’ ” he said in a statement.

Their loud silence on the current situation is deafening, he stressed. “The Ghana Grid Company must, as a matter of urgency, come out with a load-shedding timetable to allow households and businesses to plan better,” the Ellembelle lawmaker said.

By:  Laud Nartey

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