Ghana’s recent strides in restructuring its external debt are overshadowed by ongoing disputes with two of its electricity suppliers over arrears.

Finance Minister Mohammed Amin Adam disclosed earlier this month that the nation owes its power producers $1 billion, with restructuring deals in place for much of this debt. However, the head of the Independent Power Generators, Ghana, contends the actual figure is $2.2 billion.

Elikplim Apetorgbor, CEO of the Independent Power Generators, Ghana, emphasized that the government’s calculations do not fully account for interest on delayed payments, exchange rate losses, and idle capacity charges.

“We don’t simply count our monthly invoices and deduct what payments have been made,” Apetorgbor remarked, insisting that these factors must be included in any debt deal.

While the government has secured agreements with five out of seven independent power producers, deals with Chinese-owned Sunon Asogli Power Ghana Ltd. and a unit of Istanbul-based Karpowership remain unresolved. The debt to Sunon-Asogli alone exceeds $800 million, according to Apetorgbor.

Minister Adam, in a July 1 press conference, dismissed Apetorgbor’s claims, asserting, “The CEO may be doing his own thing. We have seven IPPs and we’ve reached agreement with five of them. That is very positive for our country. It tells us that the threat of shutting down power plants will be a thing of the past.”

The Finance Ministry declined to comment further.

The unresolved disputes have contributed to power cuts this year, disrupting economic activity despite Ghana’s progress in debt restructuring following its 2022 default and subsequent request for International Monetary Fund support.

Ghana’s installed capacity at the end of last year was 5,639 megawatts, yet the country struggles to generate enough to meet peak demand of 3,618 megawatts. Continued power cuts could hinder economic growth and influence the December presidential elections.

A survey by the Accra-based Institute of Economic Affairs revealed that over half of small and medium-sized enterprises (SMEs) found the power cuts severely impacted their businesses. SMEs, which account for about 85% of manufacturing employment and contribute 70% to national economic output, are particularly vulnerable.

Godfred Bokpin, a finance professor at the University of Ghana, noted that Ghana’s economic growth in the first quarter increased to 4.7% from 3.8% in the previous quarter. However, growth could have been higher without the power cuts. “It’s taking long for economic growth to rebound to its historical trend of around 6%,” Bokpin said.

The debt crisis complicates the government’s ability to pay power suppliers, exacerbated by the state-owned Electricity Company of Ghana Ltd.’s (ECG) inability to fully recover its monthly bills. Kodzo Yaotse of the Africa Centre for Energy Policy pointed out, “When power is given to ECG for sale, they’re only able to recover 45%. That’s not healthy because it’s out of this revenue that the entire value chain is paid.”

Ghana secured a $3 billion IMF bailout in 2023, pledging to reduce its debt burden to 55% of GDP from around 90%, necessitating the restructuring of its arrears with power producers along with other obligations.