The Minister for Energy and Green Transition, John Jinapor, has said Ghana urgently needs about US$1.1 billion to procure liquid fuel to keep power plants running, warning that the country risks a shutdown if immediate funding is not secured.
According to him, over $1.7 billion is owed to Independent Power Producers (IPPs), and an urgent $1.1 billion is needed to procure liquid fuel for power generation.
Speaking at a meeting with the Parliamentary Committee on Energy, Mr Jinapor stated that the financial strain is so severe.
“We require about $1.1 billion to procure liquid fuel alone,” he disclosed.
“Unfortunately, the liquid fuel is not part of the tariff structure, and so we will be buying close to $15 billion of liquid fuel, and that has to be paid by the central government.”
He further warned that Karpower, one of the country’s major power producers, has threatened to shut down its plant if the government fails to settle an outstanding debt.
"Karpower has just sent us a letter that by 18th, they will shut down the plant because we owe them more than $400 million. IPPs alone, we owe them $1.7 billion, and so it’s serious,” the Minister stressed.
Mr Jinapor outlined several factors exacerbating the financial shortfall, including the lack of a reserve margin in the tariff structure and persistent shortfalls in collections by the Electricity Company of Ghana (ECG).
“ECG is unable to collect all the monies, and so you are having a deficit of about 2 billion cedis every month when it comes to ECG’s collections. When you add that deficit and you add the fuel, which is not part of the pass-through, you are looking at over 30 billion," he said.
On his part, the Ranking Member on the Energy Committee, George Kwame Aboagye, criticised large companies for failing to pay their electricity bills.
He also highlighted Ghana’s high transmission losses, currently around 29 to 30 per cent, compared to 8 to 9 per cent in OECD countries.
“Most of our companies in this country don’t pay electricity bills, a lot don’t pay, and transmission losses are also another factor which the minister has to look at," Mr Aboagye said.
Frequently Asked Questions
Q: Why does Ghana need $1.1 billion for liquid fuel?
A: According to Energy Minister John Jinapor, Ghana urgently requires about $1.1 billion solely to procure liquid fuel for power generation, as this cost is not currently covered under the country’s electricity tariff structure.
Q: What could happen if the $1.1 billion is not secured?
A: The Minister warned that power plants risk shutting down if immediate funding is not secured. Notably, Karpower has threatened to halt operations by the 18th due to over $400 million in unpaid debt.
Q: How much does Ghana owe Independent Power Producers (IPPs)?
A: The government currently owes Independent Power Producers (IPPs) more than $1.7 billion.
Q: What financial challenges is ECG facing?
A: The Electricity Company of Ghana (ECG) is reportedly facing monthly revenue collection deficits of about 2 billion cedis, mainly due to its inability to collect full payments from consumers.
Q: What role do transmission losses play in the crisis?
A: Ghana’s power transmission losses are extremely high at 29–30%, compared to about 8–9% in OECD countries. These inefficiencies, along with non-payment by large companies, worsen the sector’s financial state.
-Graphic-