Ghana’s power sector and other important projects may be in some danger due to the country’s current debt status.
The Vice President of IMANI Africa, Bright Simons, has stated that the government has informed power suppliers of its decision to restructure over the $1.5 billion it owes.
According to Bright Simons, while the power producers assume this may be an extension of the time for payment, some analysts believe there may be a haircut.
In a tweet on March 2, 2023, he said “Govt of Ghana has finally informed the main power producers & fuel suppliers that the ~$1.5bn it owes them will also be restructured. The companies of course assume that this means stretching out the payments over time. But some analysts say they should also prepare for HAIRCUTS.”
A corresponding note in his tweet added that “The power sector is in a particularly concerning state given the government’s significant and rising debt in this sector. The Government of Ghana has engaged the independent power producers in talks regarding the take-out of existing multi-sourced senior loans by the government-owned Ghana.”
“Infrastructure Investment Fund (GIIF) in a bid to reduce the overall cost of power. This process began as far back as the end of 2019 when the government announced that it would use part of the proceeds of its 2020 Eurobond sale to refinance the loans.
“To date, none of the loans have been refinanced and government debt to independent power producers continues to rise. It has been estimated that debt in the energy sector is at risk of growing to US$12.5 billion by 2023 without significant reform. However, the government has recently reiterated that the completion of these take-outs is expected to save the economy an estimated US$13.2 billion over the term of the renegotiated power purchase agreements,” it stated.
“Separate from the debt issue in the energy sector is the growing demand for electricity in Ghana and the need for improved gas supply reliability. The 2022 Electricity Supply Plan for the Ghana Power System highlights that existing generating capacity will be inadequate to serve the projected demand for electricity in Ghana and as such, there is a need to secure increased gas supply to existing power generation facilities and to initiate procurement of additional generation capacity,” it further said.
Source: Ghana Web
