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Ghana to sell stakes in three thermal power plants to cut debt

  • 1 year, 10 months ago (2018-04-04)
  • David Flin
Africa 212 Gas 155

Ghana will sell stakes in three thermal power plants as it seeks to cut the debts of state-owned companies, and boost electricity production. The three plants have a combined output of 501 MW, about one-third of the country’s total thermal power generating capacity. The facilities being offered are the 125 MW thermal power plant in Tema, belonging to the state pension fund, and VRA plants in Kpone and Tema with installed capacities of 250 MW and 125 MW respectively.

James Demitrus, Head of Revenue Monitoring at the Ghana Energy Ministry, said that he expected investors to fund upgrades that would boost the output of the three facilities by a third. PricewaterhouseCoopers and Fieldstone Private Capital Group have been advising on the privatisations. According to the Volta River Authority, the state power producer, state-run thermal power plants are operating at 50-65 per cent of capacity, with 80 per cent the target.

The World Bank said that Ghana’s economy will probably expand 8.3 per cent this year, which will boost demand for electricity. The International Monetary Fund said that structural reforms in the country’s energy sector, including improving the management of state-owned enterprises, are crucial to sustain growth.

Demitrus said that state power companies had accumulated loans of a combined value of $2.3 billion by the end of 2016. The Government started selling bonds last year to pay off some of these loans. It is reorganising VRA and will create a holding company with subsidiaries, one of which will be for thermal power operations. He said: “After those debts are cleared, the Government does not want the cycle to be repeated. Those plants are not very efficient. They’ve been lying idle for almost a year.”