Independent Power Producers (IPPs) in Ghana are calling on the government to license them under the Ghana Free Zones Act to enhance their competitiveness in the regional power market. This could resolve the issues of excess power that government has had to bear, grudgingly.
Dr. Elikplim Kwabla Apetorgbor, CEO of the Chamber of Independent Power Producers of Ghana, explains that this move would enable IPPs to export surplus electricity more efficiently and profitably.
Dr. Apetorgbor pointed out that Ghana’s electricity sector currently struggles with underutilized generation capacity, which places significant financial pressure on the Electricity Company of Ghana (ECG) due to take-or-pay contracts.
“The ECG ends up paying for unused capacity, contributing to a debt estimated at $2 billion,” he explained. Licensing IPPs under the Free Zones Act could help transform these challenges into opportunities, turning excess capacity into a revenue-generating asset for Ghana through regional exports.
He emphasized that the Free Zones Act, traditionally aimed at trade and manufacturing, provides tax incentives and regulatory benefits that could be extended to the electricity sector. This would enable IPPs to lower operational costs and compete effectively in the West African Power Pool (WAPP), supplying electricity to countries with high demand such as Burkina Faso, Niger, and Mali.
Dr. Apetorgbor highlighted the potential of streamlined regulatory processes and tax exemptions to attract foreign investment. “Including IPPs under the Free Zones framework would make them more appealing to investors, driving innovation and efficiency in the sector,” he said.
For Ghana to succeed in this strategy, Dr. Apetorgbor suggested key steps, such as amending the Free Zones Act to recognize IPPs as eligible entities and developing capacity pricing mechanisms for competitive exports. This initiative, he noted, could enable Ghana to secure bilateral agreements and formal power purchase deals with neighboring countries, ensuring a stable market for surplus power.
However, the Free Zones Act stipulates that companies within the Free Zones must export at least 70% of their production, leaving only 30% for the domestic market.
For IPPs, this would mean selling the majority of their electricity to neighboring countries under the West African Power Pool (WAPP), where demand is high due to persistent power shortages.
While this opens up lucrative regional markets, it also requires careful planning to balance export commitments with Ghana’s domestic energy needs, ensuring that local consumers continue to benefit from reliable and affordable power.
