IPPs debt restructuring deal ends plant shut down threats – Finance Minister

The government has assured Ghanaians, individuals and businesses alike that there will no longer be threats of shutting down of power plants, following an agreement with Independent Power Producers (IPPs).

Dr. Mohammed Amin Adam, Finance Minister, gave this assurance, indicating that as of June 2024, the government had reached a US$1 billion debt restructuring agreement with some five IPPS after about six years of negotiations.

He said this at a press briefing in Accra on Monday, July 1, 2024, jointly organised by the Ministry, Bank of Ghana, and the International Monetary Fund (IMF).

“We have seven IPPs, and we’ve reached agreement with five of them. That’s very positive for our country; it tells us that the threats of shutting down power plants will be a thing of the past,” he said.

“We’re committed to implementing the terms of this agreement. To date, the government has paid in excess of US$400 million to all IPPs as part of our performance of the agreement that we just reached,” he added.

The five IPPs, which the government had reached agreement with regarding the legacy debt and Power Purchase Agreement are, Amandi, Cenpower, Early Power, CENIT and AKSA.

The Minister noted that the agreements were expected to be signed in about two weeks, adding that the amended Amandi, Cenpower and Early Power documentation would require Parliamentary approval.

He said the Government Negotiating Team was working on securing necessary approvals by the end of July 2024, while the restructuring package with the remaining IPPS – Sunon Asogli and Karpowership, were progressing.

He explained that the agreement reached would provide some fiscal relief and savings to the country, and guarantee a more reliable supply of power to support household and industrial activities.

He noted that the deal, which was part of the Energy Sector Recovery Programme (ESRP), would help in ensuring that the Electricity Company of Ghana (ECG) remained current on its payment obligations to IPPs.

Dr Amin Adam stated that ECG and the Ghana National Petroleum Commission (GNPC) had also agreed on all commercial terms under master gas supply arrangements, with final technical details being considered.

That, he explained, would see GNPC sell to ECG fuel in bulk for onward supply to the IPPs, as part of the conversion to a tolling arrangement.

All those measures, together with implementation of various policies under the IMF loan-support programme, he said would put the economy on the path of sustained recovery.

The Minister pledged the government’s commitment to working tirelessly to ensuring sustainable growth and prosperity for all Ghanaians.

About a year ago, the IPPs suspended their plans to shutdown power plants, having reached an interim agreement with ECG on arrears owed them, after earlier rejecting a proposal to restructure over US$1bn debt.

As of 2023, Independent Power Producers accounted for some 47 percent of the country’s total power generation mix, contributing as high as 67 percent of Ghana’s thermal power.