Invoices on debt payment to IPPs could reach $450 million by end of 2024 - Report

The total debt accrued by the government and expected to be paid to Independent Power Producers (IPPs) is projected to hit $450 million by the end of this year.

According to a Citi Business News report, the situation will worsen if discussions on the restructuring of the debt for the energy sector fail to progress.

The government is currently engaging with IPPs over a debt revamp of about $1.46 billion spanning several years.

While the government is said to be nearing an agreement with the IPPs, power producers continue to insist that a significant portion of legacy debt payments must be made before a final agreement on the debt revamp is reached.

The report adds that the government has yet to formally finalize the preconditions of the debt restructuring deal, even though win-win terms with the IPPs have been reached.

Currently, the IPPs insist that the government make payments on the bulk of the legacy debts before progress can be made on the debt restructuring. Some IPPs are demanding a 15% down payment, while others are proposing different payment terms.

The latest development is expected to worsen the situation in the energy sector.

For example, the ECG has been paying about 70 percent of the invoices, while the remaining 30 percent has yet to be honored as of July 2023.

The accumulation of these debt payments is expected to reach about $450 million by the end of the year if negotiations fail to progress, according to sources who spoke with Citi Business News.

Furthermore, any delays in debt payments or debt restructuring could lead to power supply disruptions.

Since 2023, Independent Power Producers have threatened to withdraw their services from the national grid, citing the government's inability to honor their legacy debts.

MA/NOQ

Watch the latest edition of BizTech below:



Ghana’s leading digital news platform, GhanaWeb, in conjunction with the Korle-Bu Teaching Hospital, is embarking on an aggressive campaign which is geared towards ensuring that parliament passes comprehensive legislation to guide organ harvesting, organ donation, and organ transplantation in the country.

Click here to follow the GhanaWeb Business WhatsApp channel