By: Aikins Armstrong
IPPs considering shut down of plants as govt fails to settle $2bn debt
The Independent Power Producers (IPPs) are facing a dire situation, contemplating shutting down their power plants in the coming days if the government fails to settle their debt, which has ballooned to over $2 billion. The mounting debt crisis is posing a severe threat to the stability of the country’s energy sector.
Initially, the IPPs decided against shutting down their plants after engaging in discussions with the Electricity Company of Ghana (ECG) to find a resolution for the debt issue. However, despite assurances made during these talks, the agreements appear to have been breached, leaving the IPPs disillusioned and uncertain about their future.
In response to the escalating situation, the IPPs convened a meeting where they decided to continue power production for the time being. Nonetheless, they expressed serious concerns about their ability to sustain operations over an extended period without debt settlement.
During the meeting, a source disclosed that the severity of the situation has reached a critical point. The Ghana National Petroleum Corporation (GNPC) is struggling to pay for gas transportation services due to outstanding payments from the government. Additionally, the West Africa Gas Pipeline Company faces the threat of shutting down its valves if the government does not take urgent steps to settle its debt to the company.
Stakeholders in the energy sector have raised alarm over the potential power crisis that could arise if the IPPs decide to cut their supply due to the mounting debt. As major players in the country’s energy generation mix, controlling around 50 percent of it, the IPPs play a crucial role in ensuring power stability for Ghana’s populace.
However, the overwhelming debt burden has significantly impacted their operations, making it difficult for them to access working capital. This financial strain has hindered their capacity to finance essential inputs, such as chemicals for water treatment in thermal generators, many of which are priced in foreign currency, particularly the US dollar.
In light of the impending crisis, swift debt settlement is the need of the hour to avert a potential power shortage and safeguard the stability of Ghana’s energy sector. Resolving the debt issue will be crucial in ensuring that the IPPs can continue to fulfill their vital role in the nation’s energy supply and contribute to sustainable development for the country.