Bloomberg: Ghana sets US$2 billion estimate for power deal restructuring

Ghana is setting a US$2-billion estimate for the restructuring of contracts with independent power producers to reduce the country’s bill for excess capacity and to settle arrears, according to two people familiar with the matter.

While Finance Minister, Ken Ofori-Atta already pledged to allocate US$1 billion from February’s Eurobond sale, the country is also talking with multilateral lenders such as the World Bank to help raise a further $1 billion, said the people who asked not to be identified because the matter is private.

West Africa’s second-biggest economy currently pays as much as US$500 million per year for power it doesn’t need and is in talks with independent producers to end the practice, Ofori-Atta said last year. Deals that obliged the government to pay for power regardless of whether or not the supplies were needed, have left the country with nearly double the generation capacity it requires to meet peak demand.

The government is willing to refinance the power companies’ debt on mutually acceptable terms, said the people. Outstanding arrears to power producers are about US$1 billion, but the amount may change according to the outcome of an ongoing audit, they said.

Ghana’s sovereign debt stock was GHS214.9 billion cedis at the end of November, or 62.1% of gross domestic product, according to central bank data.