In less than 24 hours, the Independent Power Producers (IPPs) may shut down their plants if the government fails to reach an agreement with them.

The Chamber of Independent Power Producers has in a memo, directed its members to shut down their plants from July 1 to July 8 if the government fails to pay 30 percent of the 1.73 billion dollars owed them.

But speaking on JoyNews’ AM Show on Friday, energy analyst, Kwadwo Poku said the planned shutdown will be a violation of the contract agreement between government and the IPPs which could pose serious legal implications for the IPPs.

He said the IPPs function under law and procedures, therefore for a possible shutdown, they must first call on their guarantees.

Even if plants were to be shut down, Mr Poku says he doubts that all IPPs would do so due to the legal ramifications of the Power Purchase Agreements (PPAs) held.

“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.