Ghana Risks Power Crisis as Government Struggles to Raise $1.1bn for Fuel Procurement
Ghana’s Minister for Energy and Green Transition, John Jinapor, has raised alarm over the country’s worsening power sector crisis, warning that the government urgently requires over $1.1 billion to procure liquid fuel to keep thermal power plants operational.
Addressing the Parliamentary Committee on Energy, Mr Jinapor disclosed that the country risks a nationwide power shutdown if immediate funding is not secured to address liquidity constraints in the energy sector.
“We require about $1.1 billion to procure liquid fuel alone,” the Minister said. “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 revealed that Ghana currently owes Independent Power Producers (IPPs) over $1.7 billion, a situation that has triggered threats of shutdown from key power suppliers. He singled out Karpower, one of the country’s major thermal energy providers, which has issued a notice to shut down operations by May 18 if its $400 million debt remains unpaid.
“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,” Mr Jinapor stated.
He further attributed the crisis to structural issues in the power sector, including the exclusion of reserve margins and fuel procurement costs from the electricity tariff structure, and the persistent revenue shortfalls 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 explained.
Also speaking at the committee hearing, Ranking Member on the Energy Committee, George Kwame Aboagye, criticised the growing trend of non-payment by large power consumers, noting that this worsens ECG’s revenue situation.
“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,” he said.
He noted that Ghana’s current transmission losses hover around 29 to 30 per cent, far above the 8 to 9 per cent average in OECD countries, adding to the inefficiencies in the power sector.
The revelations come at a time when Ghana is grappling with intermittent power outages, raising concerns among industry stakeholders and consumers about the sustainability of electricity supply.
