Independent Power Producers threaten to walk away from debt restructuring talks

Ghana’s private power producers are threatening to walk away from talks to revamp $1.6 billion in arrears, a potential snag in the West African nation’s long-running efforts to restructure its debts.

Elikplim Apetorgbor, chief executive officer of Independent Power Generators Ghana, said the government has not kept its side of the bargain on payments, despite some producers agreeing to haircuts and others cutting energy charges.

Independent power producers “were expecting that by now half of the outstanding would be settled and a payment plan prepared for the remainder,” he said in an interview. “We are compelled to re-evaluate our concessions and may be forced to demand the full settlement of arrears.” The government has paid about $400 million as at the end of December, Apetorgbor said.

Part of the deal with the IPPs was for the state-owned power distributor Electricity Company of Ghana to remain current on its payments to them from June 2023 onward. But it was only paying 70% of the monthly bills and cut that to 21% in the last three months, Apetorgbor said.

A Finance Ministry spokeswoman didn’t immediately respond to requests for comment.

Ghana has been negotiating with the IPPs since last year to rework the arrears as part of its external debt revamp.

The country is restructuring almost all of its $45 billion of debts to make them sustainable under an International Monetary Fund program. This standoff could potentially affect that assessment.

Ghana won an IMF bailout in 2023 after debt ballooned and it missed a eurobond payment. It concluded a domestic debt rework last year and hopes to soon finalize talks to reorganize $5.4 billion of loans and $13 billion of eurobonds.

The nine member-IPGG produces over 60% of Ghana’s peak demand of 3,618 megawatts and 80% of its thermal generation.