Energy analyst, Kwadwo Poku, has stated that if the Independent Power Producers (IPPs) proceed with their planned shutdown, it would constitute a breach of their contract agreement with the government, potentially leading to significant legal consequences for the IPPs involved.
Poku highlighted that IPPs operate within a legal framework and adhere to specific procedures. In the event of a potential shutdown, the IPPs would need to invoke the guarantees outlined in their agreements. He expressed skepticism that all IPPs would actually proceed with the shutdown, considering the legal ramifications associated with the Power Purchase Agreements (PPAs) they have in place.
The analyst emphasized that the situation calls for a resolution through negotiations and mutual agreement between the government and the IPPs. By engaging in constructive dialogue, both parties can work towards finding a satisfactory solution that respects contractual obligations, avoids legal disputes, and ensures the continued supply of power to the country.
“There is what is called PPA –for you to basically shut down your supply and not supply anything to government, there is a process that you need to follow. One – there is a guarantee that you have. If you feel that you are indebted, you can call on that guarantee.
“When you call on that guarantee within 30 days, government has to replenish the guarantee. If government doesn’t replace the guarantee, the PPA is terminated. Now, do the IPPs want to terminate the PPAs? No! I don’t think so… if they shut down their plants without calling on the guarantees it means government can sue them,” he explained.
But, Research, Policy and Programmes Officer of the Institute of Energy Security, Adams Yakubu says, although government can take steps to prevent the IPPs from shutting down, a legal action will not be in the interest of the government at this point.
He explained that IPPs did not take this decision overnight to shut down but had engaged the government for several days before the deadline given.
“.. the problem goes beyond legal battles because at the end of the day, the economy needs to run so that government can get whatever monies they need from the different actors of the economy to be able to meet some of its commitments with the IMF. So even that conversation of legal options available to the government, let’s not even get there,” he said.