Ghana’s energy sector is on the brink of a crisis as Karpower Ghana Limited, the nation’s second-largest independent power producer, has issued a stern warning to suspend power generation if the Electricity Company of Ghana (ECG) fails to settle an outstanding debt of $379 million.
The company, known for its floating powership docked at Aboadze in the Western Region, generates 470 megawatts (MW) of electricity, which plays a crucial role in the country’s energy supply. The looming shutdown could exacerbate Ghana’s power challenges, plunging businesses and households into darkness.
High-Stakes Meeting With Energy Minister
On Monday, officials from Karpower met with Ghana’s newly appointed Minister for Energy and Green Transition, John Abdulai Jinapor, to express their concerns. During the meeting at the ministry, Karpower’s representatives stressed the gravity of the situation, making it clear that operations could not continue unless immediate steps were taken to clear the debt.
Minister Jinapor acknowledged the seriousness of the issue and appealed to Karpower to exercise patience while his administration explored measures to resolve the growing financial burden. However, the company’s position underscores the urgency of the matter, leaving little room for prolonged negotiations.
A Track Record of Action
Karpower’s warning should not be underestimated. The Turkish-based energy company has a history of taking decisive action in similar situations. In January 2024, Karpower suspended power supply to Sierra Leone’s capital, Freetown, over a $30 million debt, a move that triggered a national power crisis and forced the resignation of Sierra Leone’s Energy Minister, Alhaji Kanja Sesay.
With Ghana already grappling with its energy woes, a similar shutdown by Karpower could reignite widespread load-shedding, negatively impacting industries, healthcare facilities, and ordinary citizens.
Ghana’s Growing Energy Sector Debt
The financial woes of Ghana’s energy sector extend beyond Karpower. As of January 12, 2025, the sector’s debt burden has ballooned to over $3 billion. The International Monetary Fund (IMF) has repeatedly raised alarms, urging the government to implement bold and far-reaching reforms to avert a full-scale collapse.
The IMF’s recommendations include restructuring ECG, enhancing revenue collection, and reducing energy subsidies. However, implementing these measures has faced resistance due to political and social concerns.
Potential Consequences
Should Karpower follow through on its threat, the consequences could be dire. Load-shedding would become unavoidable, undermining Ghana’s economic growth and development. Furthermore, it could strain the government’s relationship with international investors and energy partners, casting doubt on Ghana’s ability to manage its energy sector sustainably.
Way Forward
To prevent an imminent crisis, the government must prioritize finding solutions to the debt crisis. This includes negotiating a feasible payment plan with Karpower, strengthening ECG’s financial management, and exploring alternative funding mechanisms to stabilize the sector.
As Ghana navigates these turbulent waters, the resolution of the Karpower impasse will serve as a litmus test for the government’s commitment to ensuring a sustainable and reliable energy supply for the nation.
Story by: Mercy Addai Turkson #ahotoronline.com
