Home Business IES wants thorough engagement in gov’t, IPPs take or pay renegotiation

IES wants thorough engagement in gov’t, IPPs take or pay renegotiation

The Institute of Energy Security (IES) has called for further engagement between government and the independent power producers regarding the renegotiation of take or pay agreements.

Their comment comes after the Chamber of Independent Power Producers and Bulk Distributors also called on the government to consider an efficient way to renegotiate power purchasing agreements with private investors in the energy sector.

They, however, agree that take or pay agreement in itself is a good contract.

In the presentation of the Mid-Year Fiscal Policy Review of the 2019 Budget Statement and Economic Policy in Parliament, Finance Minister Ken Ofori-Atta announced plans by the government to renegotiate all take-or-pay contracts in the energy sector.

The current regime which compels the government to pay for fuel or power used will be changed to take-and-pay contracts to prevent the consistent payment of energy not used.

In an interview with Citi Business News Executive Director at the IES, Paa Kwesi Anamuah Sakyi said the move in itself is laudable.

“Just as the chamber indicated, the take-or-pay agreement is not just akin to Ghana; in other jurisdictions, in Africa, it is used. This is to ensure that both the investor and government share the risk in the contract and also ensure that their investment is protected in the end.

And so it is not a bad idea, it is in the power sector. It is also in other sectors of the economy. So literally, this is not a bad idea at all. However, in seeking to negotiate with them to have some form of relief, we need to engage them and for certain they have indicated that the chamber has indicated, that they are willing to engage government in ensuring we all get a win-win situation,” he said.