Gov’t nears deal with IPPs for restructuring of energy sector debt

The government is close to signing a deal with Independent Power Producers (IPPS) for the restructuring of energy sector debts.

The Ministry of Finance targeted the end of March 2024 for the restructuring of the arrears of over US$1.5 billion.

The IPPs have consistently threatened to cut power supply if the alarming debt levels are not settled.

But at a media engagement on Tuesday, March 27, 2024, Finance Minister, Dr. Mohammed Amin Adam said discussions are far advanced with the power generators to clear the debts.

“Coming to the existing arrears, we are almost through with our negotiation with the IPPs to restructure the arrears over several years and as I speak to you, I believe in the next two to three weeks we’ll be signing those agreements with the IPPs we have concluded negotiation with.

“We have even started showing our good faith to the IPPs by making some payments that we had agreed to do with them and this is why you do not hear the threats that you used to hear and read about from IPPs about threatening to shut down”, he disclosed.

The Minister admitted how the debt is plaguing the energy sector saying he will prioritize the financial situation.

“The energy sector continues to be a bother for us because the arrears are still huge on our books. We’ve seen significant progress in addressing not just the arrears but to prevent the accumulation of arrears going forward”.

Dr. Amin Adam further challenged industry players to effectively use the cash waterfall mechanism to tackle inefficiencies in the system.

“We are very confident that the effective implementation of the cash waterfall will help in preventing the accumulation of new arrears and so we are very confident that the signing of this document will pave the way for spreading the arrears over several years, an average of five years to provide some relief to us to put our house in order to ensure that we do not go back to the days of huge arrears in the energy sector”, the Minister advised.

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