Business24 Editorial: Consensus needed on energy sector debt

Debt from uncompetitive power contracts with independent power producers could collapse the nation’s energy sector with dire implication to every facet of the economy if nothing is done about it.

Most of the contracts were signed at a defining moment in the sector when a sustained period of the power crisis nearly brought the economy to its knees and threatened livelihoods.

Although the independent power producers served a peculiar need of the time, the cost of the power they produced then and now has become a huge albatross hanging over the sector especially with no immediate need for the excess power they generate.

Government is locked in talks with them to renegotiate their contracts hoping that a successful outcome would ease the burden on both the sector and the public purse.

Energy Minister-designate, Mathew Opoku Prempeh said at his vetting in Parliament that the willingness of the IPPs to play ball would inure to the benefit of all stakeholders.

Emphatically, he said “if we don’t reform and agree on certain parameters, we [the industry and its players] will collapse”.

We do not expect the government and IPPs to force the sector to cross that catastrophic bridge as the consequence will be too chaotic.

Take or pay contracts have led to excess power generation which costs the state over US$500million annually.

Government has already doled out over GHS21billion over the last three years of servicing the debt with more yet to be cleared and the IPPs yet contracted to produce power that is not used.

Business24 urges consensus in ongoing deliberations between both parties; one that secures the investment of the IPPs and saves cost to national kitty as well.

We cannot allow the piling debt to collapse the energy sector, it is the least thing one could ever think of.