The Finance Minister, Dr Mohammed Amin Adam, has stated that the government is in negotiations with Independent Power Producers (IPPs) to resolve energy sector arrears.
According to him, the government has begun to demonstrate good faith by negotiating a five-year repayment plan for its debt.
Speaking at a press conference to offer updates on the Ghanaian economy, Dr Adam stated that the energy sector has been a “bother” for the government due to the enormous payment backlog that has to be cleared.
However, he noted that there has been significant progress in addressing not just the arrears but also in preventing the accumulation of arrears going forward.
“Most of you may know that we have a re-modelled or revised Cash Waterfall Mechanism that guarantees payment to IPPs and also to our state-owned enterprises and the Ministry of Finance is also supporting where there are shortfalls.”
“Therefore, we are very confident that the effective implementation of the cash waterfall mechanism will help in preventing accumulation of new arrears. But coming to the existing arrears, we are almost through with our negotiations with the IPPs to restructure the arrears over several years. As I speak to you, I believe in the next two to three weeks we’ll be signing those agreements with the IPPs we’ve concluded negotiation with.”
He noted that “we have even started showing good faith to the IPPs by making some payments that we had agreed to do with them. And this is why you do not hear the threats that you used to hear and read about from IPPs; threatening to shut down.”
“And so we are very confident that the signing of these agreements will pave way for spreading arrears over several years. An average of five years to provide some relief to us to put our house in order to ensure that we do not go back to the days of huge arrears in the energy sector.”
Source: Energy Ghana