Akufo-Addo gov’t blew Karpowership’s Bank Guarantee, company proposes plan for US$379 million debt

It has been revealed that Karpowership Ghana Company Limited (KGCL) operates in the country without a Bank Guarantee.

The Herald’s findings are that, the earlier Bank Guarantee established for its smooth operations was exhausted under the Akufo-Addo government after failure to settle mounting debts.

The Turkish company has been forced to submit a proposal to the Ministry of Energy and Green Transition to address the outstanding debt owed by the Electricity Company of Ghana (ECG), which has accumulated to US$379,004,860.05, amid demand for an Extension of the Power Purchase Agreement (PPA) beyond September 29, 2027.

In a letter dated February 10, 2024, KGCL acknowledged discussions with the Energy and Green Transition Minister, John Abdulai Jinapor, earlier that day and outlined conditions under which it would continue supplying power to the national grid without requiring a Bank Guarantee.

This includes, ECG making an immediate lump sum payment of US$100 million and paying the remaining debt within 18 months.

It wants a 13% delay fee applied to the restructured debt payments, a promise that ECG will remain current on all future invoices, and an Extension of the Power Purchase Agreement (PPA) beyond September 29, 2027.

KGCL reaffirmed its commitment to supplying reliable electricity to Ghana but emphasised the need for ECG to honour its financial obligations under the amended 450MW Power Purchase Agreement.

The company expressed confidence that the government would carefully consider the proposal and reiterated its readiness to provide any additional information required for further deliberations.

The Ministry of Energy and ECG have yet to respond publicly to the proposal, but the matter is expected to be a key focus of ongoing discussions on Ghana’s energy sector challenges.

It said “Owing to ECG’s accrued total outstanding debt of $379,004,860.05, we hereby submit the below proposal for your kind attention. KGCL will continue to supply reliable electricity to the national grid without a Bank Guarantee conditional to the below terms; KGCL receives $100M lump sum payment, the remaining debt be paid within 18 months”.

“A delay fee of 13% to be applied to the restructured debt payment, ECG must remain current on all incoming invoices going forward, and Extension of the Power Purchase Agreement beyond 29 September 2027

“We thank you in advance for your kind consideration to the proposed terms, and we remain at your disposal for any additional information you may require from us”.

Meanwhile, Karpowership Ghana said it is currently in discussions with the government to address accumulated debt, emphasizing that the non-payment of invoices is affecting its operations.

The company has engaged the Ministry of Energy regarding outstanding financial obligations.

“We had a meeting with the Minister of Energy to bring to his attention the accumulated debt and engage in negotiations,” a company representative stated.

It was noted that discussions are ongoing, and Karpowership Ghana remains committed to finding a sustainable solution in collaboration with the government.

“While we continue to operate, the non-payment of invoices is having an impact on our operations,” the representative emphasized.

Karpowership Ghana reiterated its commitment to its partnership with Ghana, highlighting the importance of resolving the issue to ensure a stable and mutually beneficial relationship.

These developments come amid concerns about Ghana’s energy sector and the financial commitments required to sustain power supply agreements.

Sometime last week, the country was said to be on the verge of a major power crisis as Karpowership, the operator of the Aboadze floating power plant, has warned it may shut down operations over an outstanding $379 million debt owed by ECG.

The warning was issued during a February 10, 2025, meeting between Energy and Green Transition Minister John Abdulai Jinapor and Karpowership officials.

The ballooning energy sector debt, which has now surpassed $3 billion, continues to threaten the country’s power supply and economic stability.

Acknowledging the urgency of the situation, Minister Jinapor urged Karpowership to delay any drastic action while the new administration seeks payment solutions.

“We acknowledge the severity of the situation and are committed to finding a sustainable solution to address the financial obligations. We appeal to our partners to bear with us as we navigate these challenges,” Jinapor stated.

However, analysts warn that if Karpowership follows through with its shutdown threat, Ghana could experience prolonged power outages—disrupting industries, businesses, and households nationwide.

Meanwhile, the International Monetary Fund (IMF) has repeatedly flagged Ghana’s energy sector debt as a critical risk to economic stability.

The organization has urged the government to implement urgent reforms, including Cost-cutting measures to reduce operational inefficiencies, Improved revenue collection to ensure financial sustainability and Restructuring power agreements to prevent further debt accumulation.

Without these interventions, the IMF warns that Ghana’s energy sector could collapse under financial strain, leading to widespread power shortages.

If Karpowership suspends electricity supply, Ghana could return to an era of “dumsor”—the persistent power outages that previously crippled businesses and households.

Source:theheraldghana.com