(Bloomberg) — Ghana will invest $1 billion this year to refinance loans contracted by private power producers, as it seeks to cut costs and curb ballooning debt in its energy sector.
The West African nation and some of the contractors agreed on the plan during the renegotiation of power deals that began in November 2019, a finance ministry spokesman said in an emailed response to questions. The investment will be done through the Ghana Infrastructure Investment Fund using proceeds from last year’s Eurobond sale, the ministry said.
Two of the 12 independent power producers have agreed to switch to gas, from heavy fuel oil, while another agreed to change its plant to a tolling structure. Together, those changes will save the government $5 billion in tariffs over the remaining life of the power contracts.
None of the companies has yet agreed to stop charging the government for energy it does not consume. Those obligations, under so-called take-or-pay clauses, have cost the government $500 million a year since 2017.
“Refinancing expensive debt on the books of the independent power producers will reduce the cost of power even further,” the spokesperson said. “In the coming months we can expect to see the money raised in last year’s Eurobond issuance being deployed to reduce the energy sector cost profile.”
Lenders usually charge a high risk premium to borrowers from Ghana’s energy sector because of a legacy debt problem, caused primarily by the inability of the state-owned power distribution company to collect all the revenue for the energy it sells. The annual revenue loss is estimated at $580 million. The national gas company cannot cover its costs because it reduced prices to power producers by 18% since March 2018 in a bid to lower consumer tariffs.
The government owes private power firms $750 million, after payments in December through February to clear half of the outstanding balance. Taking into account unpaid bills to fuel suppliers and legacy components, the sector debt could reach $12.5 billion by 2023 from $1.5 billion currently without measures to curb it, Matthew Opoku Prempeh, the nominee for the position of Minister for Energy, told lawmakers last month.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
