By The Volta River Authority has opposed calls from Independent Power Producer for an upward adjustment of their monthly payments. VRA said if the PURC agrees to increase the IPP’s monthly payments from $45 million to $59 million, the three state power entities would face dire financial consequences.
The Volta River Authority (VRA) said the Independent Power Producers (IPPs) demand for an increase in their monthly payments under the Cash Waterfall Mechanism (CWM) would have severe financial consequences for all three state power entities. The Independent Power Producers are demanding $59 million from an initial $45 million, which VRA posits would have a negative impact on the VRA, Bui Power Authority and GRIDCo.
The VRA’s statement follows the Public Utilities Regulatory Commission’s (PURC) initiation of the Cash Waterfall Mechanism review to address the challenges with payment allocations. Jerry Nelson Nettey, the National Treasurer of the VRA Senior Staff Association, told JoyNews that the concern is about the potential mismanagement of the Cash Waterfall Mechanism within the sector.
He stated that if the IPPs continue to demand $59 million, the Electricity Company of Ghana (ECG) will be unable to pay.
He noted that the ECG does not make that amount of money in a month, and thus, implementing their demands would increase the company’s debt burden. He added that the VRA is also struggling to make ends meet due to ECG’s indebtedness and only manages to maintain its operations due to revenue from NEDCo; thus, more financial demands from the two power distributors could cripple the authority.
Regarding power exports as a revenue source, he stated that revenue from that area has also dipped following Akufo-Addo’s request to reduce the amount of power exported to neighboring countries. Meanwhile, the Africa Sustainable Energy Centre (ASEC) has agreed with the VRA’s position on the IPPs request. Dr Elvis Twumasi, the Director of Research and Innovation at ASEC, told BartaNews that aside from the fact that such a request could severely affect payment to the VRA and other public entities, the ECG is not in a financial position to meet this additional request.
This will place immense pressure on the amount due Category B receivers, particularly the VRA and other public-owned entities.
ASEC foresees that these demands may be part of a strategic move to cripple tier 2 receivers, such as the VRA, potentially laying the groundwork for arguments in favor of privatizing the VRA’s thermal assets. Such liquidity challenges could be leveraged to justify privatization,” he said.
