Ghana Warns of Unaffordable Debt Buildup Over Excess Power
Ghana Warns of Unaffordable Debt Buildup Over Excess Power
Ghana’s energy sector will accumulate losses of more than $12.5 billion by 2023 if the country fails to renegotiate deals with independent power producers and gas suppliers, said Finance Minister Ken Ofori-Atta.
The West African nation is struggling under the financial burden of having almost double the capacity to meet peak demand and commenced talks with power producers and gas companies to stop paying for supplies that the country doesn’t need. The excess contributed to an additional 5.1 billion cedis ($923 million), or 1.5% of gross domestic product, to Ghana’s liabilities this year alone.
The current state “arose out of an uncoordinated approach, plunging Ghana’s energy sector into a financial crisis,” said Ofori-Atta, according to a transcript of a broadcast on Citi News. “The situation, we would all agree, is unsustainable and unfair.”
Adding to the losses are tariffs which don’t fully recover the cost of power and gas, with 2019’s shortfall expected to grow to $1.3 billion, he said. A lobby for independent power producers is estimating that the termination of their contracts will cost around $2 billion.
Ofori-Atta is expected to present his budget for 2020 on Nov. 14.
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To contact the reporter on this story: Andre Janse van Vuuren in Accra at ajansevanvuu@bloomberg.net
To contact the editors responsible for this story: John McCorry at jmccorry@bloomberg.net, Rene Vollgraaff, Moses Mozart Dzawu
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