Ghana is on the verge of a severe power crisis in the coming days if immediate measures are not taken to address an outstanding debt of $1.73 billion owed to the Independent Power Producers (IPPs).
The IPPs have issued a renewed ultimatum, threatening to shut down their plants starting July 1, 2023, unless the government provides an interim payment of 30% of the outstanding debt.
The IPPs argue that without receiving payment within the next few days, they will be unable to sustain the national grid beyond June 30.
In an interview on the Citi Breakfast Show on Tuesday, June 27, Elikplim Kwabla Apetorgbor, the Chief Executive Officer of the Chamber of Independent Power Producers, Distributors, and Bulk Consumers (CIPDiB), expressed their inability to convince creditors, contractors, and other essential stakeholders to further delay payments and maintain operations.
“Basically we are saying that we lack the resources to continue generation beyond 30th June and we are giving them [Finance Ministry] up to March. We didn’t hear from them but the fact is beyond June we just don’t have the resource to continue to supply.”
Mr Apetorgbor added that “all the IPPs are operating on borrowed funds and the critical part is our ability to pay our debt. The second quarter is about to end, so the six of us have no resources to continue to supply, so we are not going beyond June 30th.
Mr Apetorgbor also stated that the IPPs have rejected any form of debt restructuring because they cannot explain to their lenders that Ghana’s economy is in shambles and are unable to repay their debt.
“We have sacrificed a lot for the economy, the debt in question is already debt we have borrowed from our lenders and we can’t explain to them that we can’t pay because Ghana’s economy is in shambles, they won’t listen.”
Independent power producers play a significant role in Ghana’s energy sector, controlling 47 percent of the country’s total power generation mix and contributing 67 percent of Ghana’s thermal power.
As of May 2021, the six enterprises collectively claim an outstanding debt of approximately $1.73 billion in cedis, with the debt dating back to January 2021.
The IPPs highlight that this debt has hindered their access to working capital, preventing them from financing crucial inputs such as chemicals for water treatment in thermal generators and other supplies, many of which are priced in foreign currency, primarily the US dollar.