Power ‘blackout’ looms over US$1.9bn debt to IPPs

File photo: Energy Minister, Matthew Opoku Prempeh
  • as deadline for 30% settlement ends

Barring any last-minute intervention by government, Independent Power Producers (IPPs) are set to go off the national grid effective July 1, 2023.

The IPPs, which account for about 46 percent of power generation, are threatening to withdraw their services over a US$1.9billion debt owed them for power bought.

The power producers said the unpaid money has resulted in the IPPs defaulting on loans contracted to build plants, and they are also unable to buy operational logistics to keep their operations going.

The group is therefore demanding a 30 percent – US$570million – payment on the amount owed from government by close of today, June 30, 2023. It said failure to meet this condition will result in the withdrawal of their services.

Should government fail to pay the said amount – which seems a distinct possibility given the tight fiscal position it finds itself in – it will likely plunge the country into a power-crisis.

This could spell trouble for consumers of electricity, particularly businesses that are already suffering from a harsh operating environment over the past three years.

Chief Executive Officer of the Chamber of Independent Power Producers, Distributors and Bulk Consumers (CIPDiB) – a lobby body for the IPPs – Elikplim Kwabla Apetorgbor bemoaned that its members have made countless sacrifices which they can no longer continue.

“Basically, we are saying that we lack the resources to continue generation beyond 30th June, and we gave them [Finance Ministry] up to March. We didn’t hear from them, but the fact is beyond June we just don’t have the resources to continue supplying,” he said.

Meanwhile, the IPPs have rejected any form of debt restructuring.

Commenting on this development, Executive Director at the Institute for Energy Security (IES), Nana Amoasi VII, asserted that should the IPPs do as they have threatened – with government also seen as not acting – it will cause some reputational damage to the country

“It will go to show government’s inability or poor handling of the power sector; that they are unable to avert a power-crisis should the situation result in a full-blown power crisis,” he said.

He added that the current situation creates an opportunity for IPPs to easily resort to such a path at any point they have a debt repayment issue with government – noting it has now become a common thing for them to do in recent times.

Furthermore, the energy expert insisted that amid other security implications it will also deepen the losses being made by Ghana Grid Company Limited (GRIDCo), Electricity Company of Ghana as well as Northern Electricity Distribution Company (NEDCo), and other resulting economic consequences due to the effect on business operations.

Nana Amoasi VII also told B&FT that in the near-future this development could also make it difficult to convince other IPPs to support the country, dampening the chances of investors financing domestic power plants.


Leave a Reply