Ghana Government and WAPCo Agree on Debt Resolution to Avert Power Cuts

The Government of Ghana (GoG) has reportedly reached a tentative agreement with the West African Gas Pipeline Company (WAPCo) to settle a substantial debt of US$20 million.

This development follows a recent disruption in gas supply from WAPCo, which led to widespread power outages in the country.

The Ghana Grid Company (GRIDCo) issued a statement explaining that the power cuts experienced on October 26 were a consequence of a significant gas supply shortfall of 550MW during peak demand hours. The situation had raised concerns about the recurring power outages, locally known as “dumsor.”

While the GoG and WAPCo have made progress in addressing the outstanding debt, Accra-based Joy News reports that the agreement does not guarantee an immediate resumption of gas supply from Takoradi to Tema. Consequently, some power outages are expected to persist in the near term.

Edward Bawa, a member of the Mines and Energy Committee of Parliament, stressed the urgency of resolving the debt issue to prevent further disruptions in the power supply. Bawa emphasized that the government should work diligently to ensure WAPCo receives payment, as the interruption in gas supply had a direct impact on the ability of power plants to function.

The core issue stems from WAPCo not having received payment from the Ghana Government since January 2023. Bawa explained that the liability for the debt lies with the Electricity Company of Ghana (ECG). However, ECG, lacking a reliable financial mechanism for settling its obligations, has struggled to make payments to WAPCo.

The situation is further complicated by the absence of a functioning cash waterfall mechanism for ECG, which typically collects revenues from power sales and allocates these funds to utility providers. Due to these financial challenges, ECG has been unable to meet its financial obligations to WAPCo, ultimately leading to the disruption in gas supply and the subsequent power cuts.

As negotiations continue between the GoG and WAPCo, the hope is that a resolution will be reached swiftly to stabilize Ghana’s power supply and prevent any further instances of “dumsor” that could impact the daily lives of its citizens.