Private electricity producers in Ghana are considering withdrawing from negotiations to restructure $1.6 billion in outstanding payments, posing a potential obstacle to the country’s ongoing efforts to manage its debts.
According to Elikplim Apetorgbor, CEO of Independent Power Generators Ghana, the government has failed to fulfill its commitments regarding payments, despite some producers agreeing to reduce debts and others lowering energy tariffs.
Independent power producers “were expecting that by now half of the outstanding would be settled and a payment plan prepared for the remainder,” he said in an interview. “We are compelled to re-evaluate our concessions and may be forced to demand the full settlement of arrears.” The government has paid about $400 million as at the end of December, Apetorgbor said.
According to Apetorgbor, as per the agreement with the Independent Power Producers (IPPs), the state-owned Electricity Company of Ghana was supposed to fulfill its payment obligations promptly starting from June 2023. However, it was only paying 70% of the monthly bills, and this decreased to 21% in the past three months.
A representative from the Finance Ministry did not respond immediately to requests for comment.
Ghana has been engaged in negotiations with the IPPs since the previous year to renegotiate the outstanding payments as part of its external debt restructuring efforts. This impasse could potentially impact the assessment of the country’s debt sustainability under an International Monetary Fund (IMF) program.
Following a debt crisis and a missed eurobond payment, Ghana secured an IMF bailout in 2023. It successfully completed a domestic debt restructuring last year and is currently in the process of finalizing discussions to restructure $5.4 billion in loans and $13 billion in eurobonds.
The nine-member Independent Power Producers Group (IPGG) accounts for over 60% of Ghana’s peak electricity demand of 3,618 megawatts and 80% of its thermal generation capacity.