Energy debts: experts support the rationalization of electricity purchase agreements

Company News of Friday, July 12, 2019

Source: Myjoyonline.com

2019-07-12

Kwadwo Poku, an energy expert, has called on the government to cancel some power purchase agreements to reduce its debt.

The African Center for Energy Policies (ACEP) on Wednesday urged the government to streamline the electricity sector by removing some of the surplus energy generated by independent power producers.

According to ACEP, this can only be achieved when the government cancels some contracts boldly and pays the corresponding penalties.

Kwadwo Poku said on Thursday that the move would temporarily increase energy sector debt, but it will in the long run free the country from seemingly insurmountable debt.

"In the long run, some companies will end up paying them $ 1 billion. But now, if you let them go, you will pay a penalty and that penalty you can pay now, when the present value of that cost is better in the long run. Because, basically, they erase your accounts and you do not have to accumulate them in the long run.

"But the situation in Ghana in which we find ourselves is that at the moment we have no money, we owe these PPIs not even the means to buy money to pay. their bills, "he said.

The problem, however, was that the government needed to be able to find the money needed to pay off the IPP debt and pay the corresponding penalties.

Last year, the government embarked on a rationalization of the sector, ending some power purchase agreements and saving some $ 7 billion in the state.

At the same time, Albert Touna Mama, director of the International Monetary Fund (IMF) for Ghana, warned the government that the economy could soon sink into crises if the current debt problems of the sector of Energy are not solved.

According to the IMF boss, the government can remove many of the sector's PPIs because of the financial challenges facing the economy.

Dr. Albert Touna Mama made the remark at a stakeholder roundtable on the theme: "Addressing Ghana's Political Budget Cycle: Lessons for Ghana Beyond the IMF".