Ghana’s Independent Power Producers (IPPs) are on the brink of a crisis. If the government doesn’t settle their debt of over $2 billion, the IPPs will be forced to shut down their power plants in the near future.
Initially, the IPPs chose not to shut down their plants after holding discussions with the Electricity Company of Ghana (ECG) in an effort to resolve their debt problem.
During recent discussions, assurances were made regarding agreements, but it appears these promises have been broken.
As a result, IPPs are disappointed and unsure about their future. In response, the IPPs held a meeting on Thursday and decided to continue producing power for the time being.
However, they have expressed concerns that maintaining the plants without settling their debts will become more difficult as time goes on.
According to a source at the meeting, the situation has become critical as the Ghana National Petroleum Corporation (GNPC) is unable to pay for gas transportation services due to the government’s outstanding payments.
Additionally, the West Africa Gas Pipeline Company is at risk of shutting down its valves if the government does not take urgent steps to settle its debt to the company, the source added.
Stakeholders in the energy sector have been raising alarm over the potential power crisis that could arise if the IPPs decide to cut their supply due to the mounting debt.
The IPPs play a significant role in the country’s energy generation mix, controlling about 50 percent of it. However, the debt burden has severely impacted their ability to access working capital, hindering 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.
The IPPs are facing a critical need for debt settlement to avoid a power crisis and ensure the stability of the energy sector.