Government’s delay in paying our arrears eroding investor confidence – IPPs
Independent Power Producers (IPPs) have stated that government’s failure to pay them their arrears will not boost investor confidence.
This comes as the IPPS have declined government’s proposal to restructure about $1.58 billion in arrears owed them by the state.
Ghana aims to cut $10.5 billion in interest payments on its external debt in three years to be able to fully implement a $3 billion loan deal from the International Monetary Fund (IMF).
According to the IMF Staff Report on Ghana, there will be a renegotiation of contracts with the IPPs that are expected to further reduce costs.
The IMF has blamed shortfalls in Ghana’s energy sector on factors including low tariffs and excess capacity amid take-or-pay contracts, which it said had cost the central government some 2% of GDP per year since 2019.
In an interview with Citi Business News, Chief Executive Officer, of the Independent Power Producers, Distributors and Bulk Consumers, Elikplim Kwabla Apetorgbor, said, “The arrears in question are largely obligations we accrued to our stakeholders, suppliers and lenders. The IPPs have defaulted in their loan repayment schedules and are incurring penalties for non-payment. So, proposing to restructure the debt that is already overdue and not even a proposal has been made on how to help solve the situation. This is difficult, from a private investor point of view. It is not investor friendly,” he said.
IPPs reject government bid to restructure $1.58bn debt
The Independent power producers earlier rejected a government proposal to restructure $1.58 billion in arrears owed them by the state explaining non-payment could lead to a shutdown of their operations.
CEO of the Independent Power Producers (IPP) Chamber, Elikplim Kwabla Apetorgbor, said the restructuring proposal had been “corporately and individually rejected”.
He noted that the IPPs which account for over 65% of available thermal power, were unwilling to make concessions and were also almost on the verge of switching off their plants.
Minister of State at the Finance Ministry, Mohammed Amin Adam, said the decision was unfortunate.
“We will continue with the engagement with the individual IPPs in a transparent and pragmatic manner and threats of shutdown when you are in negotiations cannot be accepted at this stage. We would continue making all efforts to restructure the debt,” he said.
Source: Ghana Business
