Ghana pays $1.47 billion to settle energy debts

Ghana's Finance Ministry announced on Monday that the government will pay $1.47 billion to settle legacy energy sector debts in 2025, including restoring a depleted World Bank guarantee, and paying arrears to power producers.

Ghana's?sector of power? has been struggling with unpaid debts, which have caused a dramatic increase in blackouts. Last year, John Dramani Mahama pledged to reduce the $2.5billion owed to independent gas and power suppliers.

The ministry announced that the era of uncontrolled debt accumulation in the energy sector was over. It added that disciplined financial management enabled payments to be made while also ensuring provisions for future obligations.

The Ministry?said that the government had repaid more than $597 million to World Bank. This restored the full risk guarantee on?gas from the Offshore Cape Three Points Field.

The guarantee was established in 2015. Its purpose was to protect private investments in the energy industry worth nearly $8 billion. The government's reputation with international partners was damaged by its depletion.

The ministry reported that an additional $480 millions was paid to Italian energy firm ENI and commodities traders Vitol in respect of outstanding gas bills related to electricity generated through the Sankofa?Gas Project.

According to the ministry, the government has also paid approximately $393 millions in debts to independent power producers. This includes $120 million to Turkey's Karpowership, and $59.4 to Cenpower Generation.

In a separate press release, independent power producers stated that the clearing of long-standing obligations represented a "major milestone" in restoring the financial stability and operational trust?across all sectors in the power industry.

The ministry also said that the government had renegotiated agreements with all independent power producers, and was?working on a payment schedule with Tullow Oil partners and Jubilee Field Partners.

Ghana wants to increase its domestic gas production in order to reduce its dependence on liquid fuels. (Reporting and editing by Anait Miridzhanian; Additional reporting by Christian Akorlie)

(source: Reuters)