The government has successfully restructured $1 billion in legacy debt owed to Independent Power Producers (IPPs), marking a significant milestone in the country’s energy sector reform efforts.
The negotiations, spanning several months, focused on restructuring Power Purchase Agreements (PPAs) and clearing arrears accumulated over years of financial strain in the energy sector.
Key components
Key components of the agreement include revised payment terms and adjustments to contractual obligations, aimed at ensuring IPPs receive timely payments and continue to contribute to Ghana’s energy needs without interruptions.
Capacity charges
During the reign of ex-President Mahama, power contracts were signed on take-or-pay basis, which means that the cost of power has to be paid whether the power is consumed or not.
GH₵12bn capacity charges in 4 years
This is what has given rise to the payments of GH₵12 billion within four years and counting as capacity charges.
This announcement was made by Finance Minister Dr Mohammed Amin Adam during a joint press conference, alongside the Bank of Ghana (BoG) and the International Monetary Fund (IMF).
Parliamentary approval required
He noted that some agreements, such as those with Amandi, Cenpower, and Early Power, will require parliamentary approval to finalize amended terms.
“We have successfully concluded negotiations with several IPPs to restructure over $1 billion in legacy debt,” Dr Adam stated.
“This agreement not only provides fiscal relief but also sets the stage for a more stable and reliable electricity supply across Ghana.”
In his address, Dr. Adam highlighted the strategic importance of these agreements in revitalizing Ghana’s energy infrastructure and bolstering economic growth.
‘”The restructuring of PPAs with IPPs like AKSA, Amandi, CENIT, Cenpower, Karpowership, Early Power, and Sunon Asogli will alleviate financial pressures and enhance operational efficiencies. This initiative underscores our commitment to resolving longstanding challenges in the energy sector while promoting sustainable development goals,” he stated.
The restructuring efforts are part of Ghana’s broader Energy Sector Recovery Programme (ESRP), designed to address systemic challenges and enhance sectoral resilience.
The Minister expressed confidence in the transformative impact of these reforms on Ghana’s economic stability and growth trajectory. “With these agreements in place, we anticipate improved financial health for the energy sector, reduced operational risks, and enhanced investor confidence.
This marks a significant step forward in our journey towards sustainable energy provision and economic prosperity for all Ghanaians,” he added.
He said the restructuring deal with the IPPs is expected to significantly boost investor confidence and provide a solid foundation for Ghana’s economic recovery, setting the stage for sustained growth and development in the coming years
