IPPs consider shutting down power plants due to government’s failure to settle $2bn debt

In an event the government fails to pay their debt, which is now over $2 billion, the Independent Power Producers (IPPs) in Ghana will have to consider shutting down their power plants in the coming days, as they say they are facing imminent crisis.

After talks with the Electricity Company of Ghana (ECG) to try and resolve the debt issue, the IPPs initially decided against shutting down their plants.

Nevertheless, despite the promises made during these discussions, it appears that the agreements have been broken, leaving the IPPs dissatisfied and unsure of their future.

Following a meeting on Thursday, the IPPs made the decision to carry on with power production for the time being in response to the situation.

However, they expressed worries that maintaining the plants for a longer period without debt settlement would become more difficult.

According to some sources, as a result of unpaid bills from the government, the Ghana National Petroleum Corporation (GNPC) is unable to pay for gas transportation services.

This has brought the severity of the situation to a critical point.

The source also said that if the government does not act quickly to pay the company’s debt, the West Africa Gas Pipeline Company could shut down its valves.

Concerns have been expressed by energy sector stakeholders about a potential power crisis that might occur if IPPs decide to reduce their supply as a result of mounting debt.

The IPPs, who control about 50% of it, have a sizable impact on the country’s energy generation mix.

The debt load has, however, negatively impacted their access to working capital, making it difficult for them to finance necessary inputs like chemicals for water treatment in thermal generators, many of which are priced in foreign currencies, particularly the US dollar.

To prevent a power crisis and maintain the stability of the energy sector, the IPPs must be settle their debt.