The Electricity Company of Ghana (ECG) is grappling with significant financial challenges, owing millions of dollars to nine Independent Power Producers (IPPs) that supplement the state-owned energy sector.
One of the major IPPs, Sunon Asogli, completely shut down operations in October due to an outstanding debt of $259 million. The remaining eight IPPs have also raised concerns about the government’s inability to pay for the electricity they generate and distribute.
Forex Instability Worsens Debt Crisis
Speaking on Joy News’ Newsfile on Saturday, November 23, 2024, the acting Managing Director of ECG, Ing. Asamoah David, attributed the mounting debt to the volatility of the forex market.
“The truth is that the majority of these debts are a result of a forex shortfall. Each month, just from forex, we lose about $37 million,” he revealed.
He further explained the challenges with dollar-denominated payments:
“If it were in cedis, I would pay. But now, when I pay the money, the banks have to get the dollars and convert them before they pay the IPPs. By the time they pay, if the dollar increases, it means we still have a shortfall.”
New Payment Agreement in Place
To address the issue, ECG has reached an agreement with the IPPs to manage the debt repayment. The plan involves ECG covering part of the payments while the Ministry of Finance steps in to support the rest.
“Just yesterday [Friday], they sent me a message saying they have agreed,” said Ing. Asamoah.
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As part of the agreement, Sunon Asogli is expected to resume operations in the coming weeks, and other IPPs that had reduced their power supply will increase output.
Impact on Power Supply
The IPPs play a crucial role in Ghana’s energy landscape by supplementing power from the Akosombo Dam, a state-owned plant. The financial strain on the ECG has raised concerns about the reliability of electricity supply in the country, with the debt crisis threatening the stability of the energy sector.
The situation underscores the importance of resolving forex-related payment challenges to sustain the partnership between the government and private energy firms.
