John Peter Amewu, Energy Minister
GHANA IS considering buying out the debts of independent power producers as a step toward restructuring contracts and reducing its power bill, according to people familiar with the matter.
West Africa’s second-biggest economy currently pays as much as US$500 million per year for power it doesn’t consume and is in talks to end the practice.
Deals that obliged the government to pay for power regardless of whether or not the supplies were needed have left the country with almost double the generation capacity it required to meet peak demand of 2,700 megawatts.
The government wants to take over the companies’ loans from financial institutions through the state-owned Ghana Infrastructure Investment Fund at less onerous repayment terms, said the people, who asked not to be identified because the matter was private.
The government is also talking with multilateral lenders such as the African Development Bank and International Finance Corp. to join as investors, said the people.
Cheaper finance would lower the producers’ costs and in return, the government would demand that it only paid for power it needed, said the people.
Seriously Consider
While negotiators for the government and power producers remained in talks about the proposal, most of the companies would consider it seriously, said the people. The plan would also allow Ghana to retain its generation capacity and save on future infrastructure expenses, the people added.
A spokesperson at the Finance Ministry, Deputy Minister of Energy, William Aidoo and Reginald Okai, the Chief Financial Officer of the Ghana Infrastructure Investment Fund would not immediately comment when contacted by phone.
Finance Minister Ken Ofori-Atta said earlier this month that the country would use as much as a billion dollars of the proceeds of a recent three billion dollars Eurobond sale to restructure Ghana’s deals with independent power producers.
Power sector liabilities added GH¢5.1 billion (US$954 million) or 1.5% of gross domestic product to Ghana’s debt in 2019.
The yield on Ghana’s 2027 dollar bonds that it issued February 11 rose by six basis points on Tuesday to 6.13% at 3:06 p.m. in London.
– Bloomberg