Private sector participation in power sector critical — Chamber of IPPs declare

The Chamber of Independent Power Producers and Bulk Distributors (CIBDiB) has said it is committed to creating a framework for the power sector that allows the continuation of private sector involvement in the delivery of electricity at least cost.

“The growth of the country, we believe, depends on and where the cost of power would, without the risk of demand for the power being assumed by the host Government/off-taker, be unduly expensive,” CIPBiD said in a statement to the media.

The statement said investors and lenders in the private sector production of power genuinely want to see the country progress.

“It may be considered by some that the “right thing” is to blame a “take-or-pay” contract or blame the private sector who are the other side to those contracts – but that would be wrong and be a mistake. That will, at best, waste time and lead to an erosion of confidence in Ghana, but at worst could lead to termination of the contracts with a vast termination sum being required to be paid by Ghana,” the statement from the Chamber said. 

Photo: Elikplim Kwabla Apetorgbor, CEO of CIPDiB

The Chamber wants the government to act reasonably and voice out its concerns on existing payment terms and also listen to the other side – to advisors, to supporting agencies – to enable the resulting path chosen to be accepted to all parties.

‘Take or Pay’ agreements can be reviewed

While sympathetic to government, the statement said concerns about the energy sector and the macro-economic stability of the country, a unilateral recalibration of the Power Purchase Agreements (PPAs) by Government of Ghana/ECG was not the way to address the concerns and would be tantamount to a breach and/or repudiation of those agreements. 

The statement said the same sort of “take or pay” PPA was in place in many IPPs across Africa including Nigeria, Cote d’Ivoire, South Africa, Kenya, Tanzania, Uganda, Zambia and across Asia / South America as well. 

 “The nature of a ‘take or pay’ arrangement is not, in itself, at all wrong. What always needs to be considered is which power projects are entered into by a state-owned off-taker on such a take or pay basis, what the tariff is for the project and how risks in the project are allocated,” the CIPDiB statement noted.

It said they would welcome the approach by the Government for a collaborative consultation process to address the challenges in the energy sector (which are not the making of IPPs and Gas Producers).

 “It is not right for Government to demonize what a “take or pay” contract is, nor portray the other side to those contracts as bad people or bad companies,” the statement added.