…..Controversial letter leaked
The Government, has been caught as having adopted a selective approach in resolving the financial crisis that has plagued Ghana’s power sector with issues under-recoveries and inefficient operations causing significant disruptions.
The Herald’s information is that, the government is in an unholy alliance with the Turkish company, Karpower, an independent power producer (IPP) and this is raising serious concerns among the industry’s stakeholders.
Accusations have emerged, suggesting that Karpower, which has 450MW capacity, has been prioritized by the government and given preferential treatment, undermining its fellow IPPs for political favour.
A threat by the IPPs to shut down their generators on July 1, 2023, was aborted in the last minute as a result of a letter the Turkish power company wrote to the IPPs begging on behalf of the government, saying “Ghana is going through a very delicate and critical period, with IMF, Paris meetings and is the focal observation point of international lending community”.
One of the key allegations against Karpower revolves around the significant financial disparity in payments received from the government.
While, other IPPs have struggled to secure timely payments from the Electricity Company of Ghana (ECG), Karpower, allegedly received a substantial US$50 million payment directly from the Ministry of Finance. This disparity has raised eyebrows and fueled suspicions that political influence is at play.
The IPPs heavily owed by the government, included Sunon Asogli Power Plant (SAPP 161), AKSA, Karpower, Cenpower, Twin City, Amandi, Early Power, Genser, Trojan, Meinergy Solar, BXC Solar, Tsatsadu Hydrop and Safisana. But the Turkish company, surprisingly pulled out at the last minute.
The controversial actions of Karpower, especially undermining colleagues for political favour, is said to have potential ramifications for the power sector in Ghana.
Leaked Letter and Betrayal:
Another contentious issue surrounding Karpower involves the leaking of a letter intended to announce the withdrawal of a shut-down threat.
The letter, dated June 23rd, 2023 and Dr. Volkan Buyukbicer, the Managing Director of Karpowership Ghana which was intended for internal circulation, found its way to the presidency, allegedly through Karpower’s involvement.
This incident has sparked outrage among fellow IPPs who view Karpower’s actions as a betrayal, further eroding trust and unity within the sector.
The Expensive Power with Promised Payments:
Despite being one of the most expensive power producers in the country, Karpower has reportedly been promised payments totaling around US$650 million.
This promise raises serious questions about fairness and equity within the power sector. Other IPPs, struggling to stay afloat due to delayed payments, view this preferential treatment as a significant blow to their operations and financial stability.
Consequences for the Power Sector:
The actions of Karpower not only create an atmosphere of distrust and discontent among industry players but also have far-reaching consequences for the power sector as a whole.
The preferential treatment undermines the principles of fairness, transparency, and healthy competition that are essential for a thriving industry. If left unchecked, such actions risk discouraging future investments and stifling innovation within the sector.
The letter was addressed to the Chairman of the Independent Power Generators Ghana titled “Suggestion to declare 0MW availability by the member IPPs”.
It said, “Dear fellow members, “As Karpowership, with 450MW Capacity and the highest amount of outstanding receivables out of all of us, we are fully aligned with the view that the discount rate which was suggested by the Ministry of Finance was unacceptable”.
“An interim payment of arrears by June 30th and ensuring current invoices are paid promptly would alleviate a lot of burden IPPs have been carrying against the lenders/stakeholders and would enable keeping the lights on in Ghana by alleviating some of the burden.
“However, today Ghana is going through a very delicate and critical period, with IMF, Paris meetings and is the focal observation point of international lending community.
“We believe, if such action is taken by the IPP Chamber at this time, the members would suffer the consequences of the action to shut down as well as Ghana. Not only the result may be harming the Ghanaian economy and its fragile international credit standing, in the medium to long term, but also, we will be reducing ECG’s revenues which may be counterproductive.
“Therefore, our suggestion is to escalate this vital matter to the highest office in the country, continue supporting Ghana, and achieve any desired results by utmost consideration given to the delicate balance between the well-being of Ghana and the IPP investors. Upholding Ghana’s international image for us all to have sustainable businesses in the long run is critical in getting through this rough patch.
“We believe GoG and all stakeholders will understand and appreciate that we are all in the same boat and a delicate and balanced approached would give the best results for everyone involved.
“We therefore would recommend as much as possible exercising restraint and full-on engagement by all sides to achieve productive results at the soonest, including the possibility to revisit this idea once Ghana passes this delicate period during these next coming days in solidarity.
