During a press briefing at the conclusion of Ghana’s participation in the IMF/WBG Spring Meetings in Washington, Finance Minister-designate Dr. Mohammed Amin Adam revealed that the government is on track to reach an agreement with Independent Power Producers (IPPs) regarding debt restructuring.
This move is part of a larger strategy to address the energy sector’s financial challenges and reduce the deficit, which has contributed significantly to recent power outages across the country.
Dr. Adam emphasised the importance of this agreement in alleviating the financial strain caused by accumulated debts and legacy payments in the energy sector.
He announced that negotiations with IPPs are nearing completion, with a signed agreement expected within the next month.
This restructuring is anticipated to significantly reduce the debt overhang and shortfall, marking a crucial step towards financial sustainability as outlined in the Energy Sector Recovery Programme.
“As a result of these”, we have renegotiated with the IPPs to restructure the debt and once we complete the negotiations, the debt overhung, shortfall will reduce. I can tell you that in the next one month, we should be signing off with the IPPs on the restructuring of our debt,” Dr. Amin stated.
Ghana currently faces a substantial $1.9 billion energy sector financing gap, prompting the government to take proactive measures to stabilise the sector.
These measures include implementing the Energy Sector Recovery Programme initiated in 2019, renegotiating IPP agreements to lower generation costs, and conducting quarterly tariff adjustments to account for economic factors.
Additionally, the government plans to procure one million revenue-efficient metres through a partnership with the World Bank, aiming to bolster revenue and improve operational efficiency within the value chain.
“Once the shortfalls are reduced, we should be working towards bringing the sector into financial sustainability in line with the Energy Sector Recovery Programme.
“We assure investors that while there are challenges, we’re bold as a government to take the necessary bullet for us to put the sector in a more sustainable manner so as to address the challenges that investors are usually worried about.”
In response to these developments, the Institute for Energy Security (IES) has urged collaboration between the Energy and Finance Ministries to swiftly address the energy sector’s challenges.
The IES emphasised the need to allocate resources to the Electricity Company of Ghana (ECG) to reduce technical and commercial losses, enhance metering systems, and improve overall distribution efficiency.
These efforts are crucial for ensuring reliable and affordable electricity services, supporting economic growth and development in Ghana.