A power systems economist has suggested that Ghana should consider licencing its independent power producers (IPPs) under the Ghana Free Zones Act to solidify the country’s place in the West African electricity export market,Dr Apetorgbor explains that licencing IPPs under the Act is an aid for the country lessen financial burden the caused by unused generation capacity and transform excess capacity into a revenue-generating assetGhana's

electricity generation capacity has reached 5,300 megawatts (MW), while the highest domestic demand peaks at 3,600 MW. This surplus creates considerable expenses, primarily due to take-or-pay agreements with Independent Power Producers (IPPs). These agreements obligate the state-owned Electricity Company of Ghana (ECG) to pay for capacity that is not utilized, resulting in an estimated $2 billion debt in the electricity sector.

“These conditions highlight the need for innovative solutions that can integrate Ghana into regional electricity markets, where its excess capacity can meet demand in neighbouring countries; thus providing economic benefits and relieving ECG of the financial burdens associated with surplus capacity,” he stated.

In light of this, he argued that licensing Independent Power Producers (IPPs) under the Free Zones Act would allow Ghana to utilize its generation capacity to fulfill regional electricity needs, alleviate ECG's financial burdens, and create opportunities for profitable exports.He stated that the Free Zones Act offers a creative approach to transforming Ghana’s electricity sector into an export-driven model.

Originally enacted in 1995, the Ghana Free Zones Act aimed to boost the country’s trade and manufacturing industries through tax benefits, duty exemptions, and improved regulatory processes.Dr.

Apetorgbor contended that applying this framework to IPPs would provide these producers with substantial cost reductions, enabling them to offer electricity at competitive prices within the West African Power Pool (WAPP) – a regional electricity network.He highlighted various provisions of the Free Zones Act that could be modified for IPPs, such as tax incentives.

The Act includes a corporate tax holiday of up to ten years, followed by a capped tax rate of 15 percent, which would significantly lower operational costs.Additionally, he pointed out that the Act offers exemptions on import duties for essential components and capital goods, further assisting IPPs in maintaining competitive pricing.

Regarding 'Export Quotas and Market Access,' he noted that Free Zone enterprises are required to export at least 70 percent of their production. Licensing IPPs under this framework would promote electricity exports and help Ghana access high-demand markets in neighboring countries like Burkina Faso, Togo, and Mali.

Moreover, he acknowledged the 'Simplified Regulatory Processes' provided by the Free Zones Act, which allows IPPs to navigate regulatory hurdles more effectively, thus enhancing their responsiveness to regional market demands.Dr. Apetorgbor suggested targeted actions for the effective licensing of IPPs under the Free Zones Act based on these insights.

These actions involve creating a Capacity Market Framework that supports the export goals of IPPs, implementing pricing strategies that facilitate competitive electricity exports within WAPP, and allocating funds for infrastructure improvements to enhance transmission systems for exporting electricity.“Amend the Free Zones Act for IPP Inclusion.

Explicitly recognise IPPs as eligible entities within the Act, granting them access to tax and regulatory benefits.”“Amend the Free Zones Act for IPP Inclusion. Explicitly recognise IPPs as eligible entities within the Act, granting them access to tax and regulatory benefits.”