IPPs are being engaged to restructure accrued outstanding balances – Finance Minister

The Finance Minister, Ken Ofori-Atta, says his outfit is engaging with the Independent Power Producers (IPPs) to address the impact of excess capacity payments on the economy.

According to him, government is considering ways to “restructure the accrued outstanding balances.”

Delivering the Mid-year budget review on Monday, July 31, Mr Ofori-Atta noted that the discussion will also be geared towards the “elimination of payment shortfalls and arrears accrual in the energy sector.”

The government’s indebtedness to the Independent Power Producers (IPPs) has increased from $2 billion in June 2023, to a current $2.2 billion.

On the back of the debts owed, IPPs on July 27, 2023, held an emergency meeting to strategise on how to retrieve some of the debt.

Early this month, the IPPs called off a planned shutdown after receiving a payment offer from the Electricity Company of Ghana (ECG).

The ECG in that agreement promised to stay current with payment to the IPPs from July 2023, while it continues to negotiate on how to clear the $2 billion-legacy debt.

Managing Director of ECG, Samuel Dubik Mahama, explained details of the agreement on Joy News’ PM Express three weeks ago.

“The agreement that I gave to them was, from July moving forward, we’re going to try to stay current but in trying to stay current we have to be realistic with some numbers based on what is consumed and the collection rate.”

“So, we looked at that and we made them an offer which in our opinion we felt it was quite a substantial amount because it varied from what they’ve been receiving, more than 100% or 200%.”

“…We’re in July, what we take from the power plant this July we are going to make sure that we pay per the new conversations that we’ve had, even if we’re not going to reach there, we should make sure that a substantial of that amount is paid,” he said.

The IPPs are tight-lipped on the exact reason for the meeting. The ECG and the IPPs were supposed to meet the Finance Ministry to have a conversation on when and how the $2 billion legacy debt will be paid, but it is unclear if that meeting happened.

Again, the CEO of the IPPs, Elikplim Apetorgbor indicated that they were supposed to receive some initial cash payment by close of the week, but that did not happen.

The IPPs earlier indicated in their last statement that they will not hesitate to shut down their plants if the payment offer is not honoured.

Meanwhile, Mr Ofori-Atta has indicated that the Gas Sales Agreement between VRA and N-Gas has been renegotiated to reduce the take or pay commitment and other financial obligations to the state.