Invoices on debt owed IPPs to reach $450m by end of year

The cumulative invoice on debts owed Independent Power Producers (IPPs) is projected to hit $450 million by the end of the year should talks between the IPPs and the government for the restructuring of energy sector debts fail to progress.

Currently, the government is in talks with IPPs to restructure the debts which stand at $1.46 billion.

What Citi Business News has gathered is that although the government has neared a deal with the IPPs, the power producers are insisting on a bulk down payment of the legacy debts before agreeing to the final terms of the restructuring.

Despite win-win terms have been reached, the deal has not been signed due to preconditions yet to be met by the government.

The major outstanding precondition is the demand by the IPPs for a bulk down payment of the legacy debts.

The delay in finalising the deal is concerning because although the ECG has been paying 70% of the invoices, the remaining 30%, which has not been paid since July 2023, continues to accumulate as additional debt.

While some IPPs are suggesting a 15% down payment, others are proposing different terms.

This accumulation according to Citi Business News sources within the producers, could reach $450 million by the end of the year if the negotiation drags on.

Should the debts continue to pile up, it could prompt the IPPs to cut power supply to recoup their losses.

The government had earlier set March as the deadline to conclude discussions with the IPPs for the restructuring of the $1.46 billion debt.

It is, however, now eyeing the end of May to conclude the negotiations.