$500 million saved through fuel-switching - Dr John Jinapor

Energy and Green Transition Minister, Dr John Abdulai Jinapor, says ongoing reforms in Ghana’s energy sector have helped clear about $1.47 billion in legacy debt and generated significant savings for the country.

He said the government had also saved approximately $500 million by shifting power generation from expensive liquid fuels to natural gas, while renegotiations with Independent Power Producers (IPPs) had resulted in additional savings of about $250 million.

Dr Jinapor disclosed this at a press briefing on Thursday, August 20, as he outlined progress made in efforts to stabilise the energy sector and improve its financial sustainability.

According to him, reforms to the Cash Waterfall Mechanism have significantly improved payments to IPPs, reducing the accumulation of arrears and strengthening confidence in the sector.

He explained that before the current administration assumed office, only about GH¢6 billion was being declared monthly into the Cash Waterfall, with IPPs receiving approximately 42 per cent of their invoices.

“Before we came to office, just about 6 billion was declared monthly into the Cash Waterfall. IPPs were receiving just about 42%. Because of the work we did together and the policy reforms that we implemented, today we declare close to about 15 billion every month into the Cash Waterfall mechanism, and almost all the IPPs receive about 100% of the invoice bills. So we are not billing arrears like it used to be,” he said.

The Minister said the government had also made significant progress in addressing the sector’s accumulated financial obligations.

“When we assumed office, the outstanding bill was about GH¢80 billion. We have also negotiated with the IPPs, and we have saved about $250 million again from them. So clearly we are making significant progress,” he added.

Dr Jinapor said the measures were part of a broader strategy to restore financial stability to the energy sector, reduce the cost of electricity generation and ensure more reliable power supply.

He said the shift towards natural gas, improved payment arrangements and renegotiation of existing agreements were helping to reduce the financial burden on the state while creating a more sustainable energy sector.