How to resolve AdBlock issue? ECG's Debt to Independent Power Producers Worsens Amid Currency Instability
Sunday, 24 November 2024 | Ghana
The Electricity Company of Ghana (ECG) is facing a significant debt crisis, with millions of US dollars owed to the nine Independent Power Producers (IPPs) that supply the country’s energy sector. Among these, Sunon Asogli, one of the key plants, shut down operations entirely in October due to a staggering debt of $259 million. The situation is further compounded by complaints from the remaining eight IPPs about the government's failure to pay for the power they generate and supply to the nation.
During an interview on Joy News’ Newsfile on Saturday, November 23, the acting Managing Director (MD) of ECG, Ing. Asamoah David, spoke candidly about the worsening debt crisis and its underlying causes. He revealed that a major factor contributing to the debt is the instability in the foreign exchange market, particularly the rising value of the dollar. “The truth is that the majority of these debts are a result of a forex shortfall,” he stated. According to Ing. Asamoah, the company loses about $37 million monthly due to forex issues, a problem that exacerbates the debt owed to the IPPs.
He went on to explain the complexities of paying the IPPs. While ECG can make payments, the process is delayed because the company has to convert local currency (cedis) into foreign currency (dollars) before transferring the funds to the IPPs. This delay, compounded by fluctuations in the exchange rate, often leads to further shortfalls. "If it were in cedis, I would pay. But now, when I pay the money, the banks have to get the dollars and convert them before they pay the IPPs, and by the time they pay, if the dollar increases, it means we still have a shortfall," Ing. Asamoah explained.
Despite these challenges, the ECG is working tirelessly to resolve the situation. According to the MD, the company has entered into new agreements with the IPPs to ensure payments are made. "We are doing our best to pay," he said, emphasizing that ECG had reached an understanding with the Ministry of Finance on how the payments would be made. He also confirmed that the IPPs had agreed to continue operations as planned. "Sunon Asogli will resume operations in the coming weeks, and other IPPs who had reduced their power supply will also increase their output," he added.
The issue of outstanding payments to the IPPs has been a long-standing one, dating back to previous financial challenges faced by the energy sector. IPPs are crucial to the country's power supply as they provide additional energy to complement the Akosombo plant, the largest hydroelectric facility in Ghana, which is state-owned.
As ECG and the Ministry of Finance continue to work on resolving the debt situation, the future of the energy sector remains uncertain. The country’s energy needs are crucial for economic development, and disruptions in power supply, such as those caused by the IPPs’ reduced output, could have a far-reaching impact on industries and the general public.
This ongoing issue highlights the need for long-term solutions in addressing the financial stability of the energy sector. While progress has been made in reaching new agreements with the IPPs, the need for further reforms in the management of foreign currency and debt remains critical to ensuring a steady and reliable energy supply for the nation.
During an interview on Joy News’ Newsfile on Saturday, November 23, the acting Managing Director (MD) of ECG, Ing. Asamoah David, spoke candidly about the worsening debt crisis and its underlying causes. He revealed that a major factor contributing to the debt is the instability in the foreign exchange market, particularly the rising value of the dollar. “The truth is that the majority of these debts are a result of a forex shortfall,” he stated. According to Ing. Asamoah, the company loses about $37 million monthly due to forex issues, a problem that exacerbates the debt owed to the IPPs.
He went on to explain the complexities of paying the IPPs. While ECG can make payments, the process is delayed because the company has to convert local currency (cedis) into foreign currency (dollars) before transferring the funds to the IPPs. This delay, compounded by fluctuations in the exchange rate, often leads to further shortfalls. "If it were in cedis, I would pay. But now, when I pay the money, the banks have to get the dollars and convert them before they pay the IPPs, and by the time they pay, if the dollar increases, it means we still have a shortfall," Ing. Asamoah explained.
Despite these challenges, the ECG is working tirelessly to resolve the situation. According to the MD, the company has entered into new agreements with the IPPs to ensure payments are made. "We are doing our best to pay," he said, emphasizing that ECG had reached an understanding with the Ministry of Finance on how the payments would be made. He also confirmed that the IPPs had agreed to continue operations as planned. "Sunon Asogli will resume operations in the coming weeks, and other IPPs who had reduced their power supply will also increase their output," he added.
The issue of outstanding payments to the IPPs has been a long-standing one, dating back to previous financial challenges faced by the energy sector. IPPs are crucial to the country's power supply as they provide additional energy to complement the Akosombo plant, the largest hydroelectric facility in Ghana, which is state-owned.
As ECG and the Ministry of Finance continue to work on resolving the debt situation, the future of the energy sector remains uncertain. The country’s energy needs are crucial for economic development, and disruptions in power supply, such as those caused by the IPPs’ reduced output, could have a far-reaching impact on industries and the general public.
This ongoing issue highlights the need for long-term solutions in addressing the financial stability of the energy sector. While progress has been made in reaching new agreements with the IPPs, the need for further reforms in the management of foreign currency and debt remains critical to ensuring a steady and reliable energy supply for the nation.