The payments were used to clear arrears owed to independent power producers and to restore a depleted World Bank guarantee, addressing long-standing liquidity challenges that have plagued the power sector and contributed to periodic electricity outages.
The debt settlement follows a commitment by President John Dramani Mahama to reduce the estimated $2.5 billion owed to independent power producers and gas suppliers. At the start of the new administration, outstanding debts to power producers stood at about $1.82 billion, raising concerns over loan repayments, maintenance backlogs and plant shutdowns.
Speaking to Channel Africa on Tuesday, Dr Elikplim Kwabla Apetorgbor, Chief Executive Officer of Independent Power Producers in Ghana, described the clearance as a major turning point for the sector.
“Our operations were severely affected by insolvency. Some plants were forced to shut down for extended periods in late 2024 due to cash flow constraints,” Apetorgbor said.
“The Government has honoured its commitments, and we are now receiving more regular payments through the cash waterfall mechanism, which allows us to operate reliably and meet national electricity demand.”
He said several producers had previously been compelled to take on additional debt to service loans and suppliers, weakening balance sheets and limiting investment. Maintenance, expansion plans and working capital were all negatively affected during the peak of the crisis.
With arrears now cleared, Apetorgbor said confidence is returning to the sector, although decisions on retiring ageing power plants remain in the hands of the state. He noted that Government plans to restore 1 200 megawatts of capacity could present opportunities for independent producers to participate through joint ventures or other partnership models, helping to limit the fiscal burden on the state.
On regulatory reform, Apetorgbor highlighted the role of the Public Utilities Regulatory Commission in strengthening the cash waterfall mechanism, which prioritises payments across the power value chain.
“The regulator is moving to entrench this framework to prevent the future accumulation of debt,” he said, adding that by the end of December, close to 100% of submitted invoices were being paid under the system.
–ChannelAfrica–
