A group of Ghana’s independent power producers (IPP), which represents eight foreign and one local power suppliers has rejected a proposal from the government to include $1.4 billion in arrears as part of the nation’s external debt restructure, while pushing authorities to honor payments that start coming today, 24th March, 2023.
In an interview, the group’s chief executive officer, Mr. Elikplim Apetorgbor disclosed that the Independent Power Generators of Ghana, is asking the government to meet the payment it owes to six of its members, or face the possible shutdown of power plants. The money, he said, is needed to service bank loans and pay input suppliers.
“Our members reject any notion of restructuring their arrears or claims as part of the ongoing or any future debt restructuring program.
“Our members are accruing associated penalties on huge arrears with suppliers, while others are in default of their loans service with banks since the start of March. Clearly this is not sustainable.”
Mr. Elikplim Apetorgbor
Companies Owed By IPP
According to the association, IPP owes a number of six companies which are the Aksa Energy, Amandi Energy, Karpowership Ghana, Sunon Asogli, Cenpower Generation and Cenit, together with Meienergy and Trojan Power, adding that: “These suppliers provide 2,154 megawatts of the nation’s peak demand of 3,558 megawatts.”
Mr. Elikplim Apetorgbor also divulged that a ninth member, Early Power, is yet to connect its 400-megawatt plant to the national grid. The group has been at odds with the government since the Minister of Finance, Ken Ofori-Atta first communicated his intention to restructure the independent producers’ receivables in a letter dated13th February, 2023.
The association followed with a response earlier this month, objecting to the plan. A spokesperson for the finance ministry couldn’t immediately respond.
Ghana owes the power debts through its state-owned energy distributor Electricity Company of Ghana.
According to the Ministry of Energy, the company struggles to pay producers on time because it loses about $580 million of its revenue annually to transmission leakages, illegal connections and unpaid bills.
Ghana is restructuring most of its public debt, which stood at about 575.7 billion cedis ($47 billion) by the end of November, to qualify for a $3 billion financial aid package from the International Monetary Fund.
As part of the broad restructuring, the government has proposed to treat independent power suppliers’ receivables as external debt, together with bilateral obligations, Eurobond and commercial term-loan components of the 382.7 billion cedis of foreign debt. Creditors face a haircut of as much as 50%, according to S&P Global Ratings.
The association has therefore disclosed its readiness to engage with government on a sustainable payment schedule with regard to the arrears.
“Restructuring is an option that cannot be negotiated because it will basically spell doom for our plants.”
Mr. Elikplim Apetorgbor
