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05.02.2024 Business & Finance

Independent Power Generators kick against Emissions Levy

Dr. Elikplim ApetorgborDr. Elikplim Apetorgbor
05.02.2024 LISTEN

Independent Power Generators, Ghana (IPGG) has indicated the implementation of the Emissions Levy may spike up the prices of power because it exerts a levy of GH¢100 per tonne on carbon dioxide equivalent emissions from producers.

Chief Executive Officer of IPGG, and a Power Systems Economist, Dr. Elikplim Kwabla Apetorgbor, in a release issued recently, called for a review of electricity generation tariffs to protect the cash flow responsibilities of power producers.

According to him, the upward adjustment would cover any increased operational costs induced by the imposition of the Emissions Levy.

He stressed, “This law imposes a levy of GH¢100 per tonne on carbon dioxide equivalent emissions from the electricity producers…As a direct consequence of this statutory incidence on the power producers, there will be an upward adjustment in the cost build-up of the electricity generation. Power plant management and operation are cost-sensitive, just as the downstream petroleum sectors. Specifically, the levy will be added to the operational costs build-up of the power plants.”

Dr. Elikplim continued that the implementation of the Emissions Levy Act, 2023 necessitated an equal measure of review of power generation tariffs, “to ensure the predictability of the cash flow obligations of the power producers. This adjustment is essential to cover the increased operational costs induced by the imposition of the Emissions Levy, Act 2023 (Act 1112) to ensure an operational reliability and sustainability.”

He explained further among other things that in accordance with the Power Purchase Agreements (PPAs), such legislation was a political risk (an increased cost event) mitigated by an increased costs clause in the agreements, which suggested a pass-through mechanism, where the economic incidence went to the end user; adding that “as a direct consequence of this statutory incidence on the power producers, there will be an upward adjustment in the cost build-up of the electricity generation. Power plant management and operation are cost sensitive, just as the downstream petroleum sectors. Specifically, the levy will be added to the operational costs build-up of the power plants.”

-Daily Guide

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