The independent power producers (IPP) in Ghana have firmly rejected a government proposal to restructure the $1.58 billion arrears owed to them by the state.
Elikplim Kwabla Apetorgbor, the head of the Ghana Independent Power Producers (IPP) Chamber, expressed their concerns and warned that non-payment could potentially lead to a shutdown of their operations.
Ghana, a West African nation grappling with a severe economic crisis, aims to reduce $10.5 billion in interest payments on its external debt over the next three years.
This move is crucial for the successful implementation of a $3 billion loan deal from the International Monetary Fund (IMF). However, the IPP Chamber rejected the proposed debt restructuring, both collectively and individually.
Apetorgbor emphasized that the power producers, who contribute more than 65% of the available thermal power in the country, were unwilling to make concessions and were even considering shutting down their plants.
Minister of State at the Finance Ministry, Mohammed Amin Adam, expressed disappointment with the decision and stated that the government would continue engaging with the IPPs in a transparent and pragmatic manner. He also highlighted that threats of a shutdown during negotiations were unacceptable.
The government remains committed to finding a resolution and restructuring the debt owed to the power producers. The IMF has identified various factors contributing to shortfalls in Ghana's energy sector, including low tariffs and excess capacity due to take-or-pay contracts. These factors have reportedly cost the central government around 2% of GDP per year since 2019.
In an attempt to address the financial challenges, Ghana recently raised the electricity tariff by 18.36% for the second quarter of 2023, following an almost 30% increase in the first quarter.
The nation's utility regulator has also announced that tariffs will be adjusted on a quarterly basis.
The negotiations between the government and the independent power producers continue, as both parties seek a mutually agreeable solution to the outstanding debt.
The outcome of these discussions will have significant implications for Ghana's energy sector and the country's efforts to overcome its economic crisis.
