In 2024, the Electricity Company of Ghana (ECG) failed to pay approximately GHS 3.9 billion to key energy sector stakeholders, including Independent Power Producers (IPPs), the Volta River Authority (VRA), and the Ghana Grid Company (GRIDCo).
This shortfall has significantly impacted the financial stability of these entities, potentially affecting their operations and the broader energy sector.
The ECG's inability to meet its financial obligations underscores the urgent need for reforms to ensure the sustainability and reliability of Ghana's energy infrastructure.
In response to the escalating financial pressures within the power sector, the Government undertook significant debt restructuring efforts as part of the Energy Sector Recovery Programme (ESRP). Since the second half of 2023 through the date of the Invitation Memorandum, the Government made payments totaling US$389.3 million to IPPs to demonstrate its commitment to resolving this issue, with the payment of the balance of arrears to be spread over three to seven years. Such payments are interest-free and result in additional savings for the Government in present-value terms. In April 2024, the Government announced that it had reached agreements with five major IPPs—Amandi Energy Limited, Cenpower Generation Company Limited, Early Power Limited, CENIT Energy Limited, and AKSA Energy Company—to address over US$1 billion in legacy debt.
These restructuring efforts are expected to result in estimated nominal savings of US$6,697.9 million over the life of the Power Purchase Agreements (PPAs) (US$4,991.9 million in present value terms as at August 2024). Parliamentary approval is pending for these agreements.
The ECG's financial challenges highlight the need for comprehensive reforms to ensure the sustainability and reliability of Ghana's energy infrastructure.