IPPs contemplate shutting down plants as govt fails to settle $2bn debt

The Independent Power Producers (IPPs) in Ghana are facing an imminent crisis as they contemplate shutting down their power plants in the coming days if the government fails to settle their debt, which now stands at over $2 billion.

The IPPs had initially decided against shutting down their plants following discussions with the Electricity Company of Ghana (ECG) aimed at resolving the debt issue.

However, despite the assurances made during these discussions, the agreements seem to have been breached, leaving the IPPs disappointed and uncertain about their future.

In response to the situation, the IPPs held a meeting on Thursday and decided to continue power production for the time being.

However, they expressed concerns that sustaining the plants over a longer period without debt settlement would become increasingly challenging.

A source at the meeting disclosed to Citi News that the severity of the situation has reached a critical point, with the Ghana National Petroleum Corporation (GNPC) unable to pay for gas transportation services due to outstanding payments from the government.

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.