Power crisis looms as Karpowership threatens shutdown over $1.7bn debt

Ghana is on the verge of a major power crisis as Karpowership, a key energy supplier, has issued a seven-day ultimatum to shut down operations over unpaid debts, according to the Minister for Energy and Green Transition, John Jinapor.

Speaking in an interview, the Minister revealed that the government inherited $1.7 billion in energy sector debt, with $371 million owed to Karpowership alone.

Other outstanding amounts include $297 million to Asogli Power, $423 million to SEND Power, and $220 million to SNIT.

“Yesterday, I received a letter from Karpowership threatening to shut down their plant in seven days due to unpaid bills.

“We’ve been in talks, but they’ve made it clear—they will not budge,” Mr. Jinapor disclosed.

The total energy sector debt has now surpassed GH₵80 billion, placing immense pressure on the already fragile power system.

The Minister warned that failure to address the crisis could lead to a total sector collapse.

In response, the government has initiated emergency talks with the Ministry of Finance and made partial payments, including $30 million to Karpowership and other suppliers such as WAPCo.

Yet, the financial strain has forced Ghana to deplete international guarantees and divert oil reserves to service debts.

The World Bank’s $500 million energy guarantee has dropped to just $50 million, and a $170 million guarantee with Litasco has been drawn down.

“They take the oil, sell it, and use the proceeds to pay down the debt,” the Minister confirmed.

Looking ahead, Mr Jinapor highlighted the urgent need for a new $700 million gas processing plant, which he says is critical to energy sector stability.

“We need this plant like yesterday,” he stated, adding that the project will be funded through domestic resources.

He also noted plans to clear the energy infrastructure backlog within two years, despite the significant challenges.

“We’ve assessed the full picture and are working to fix it. Settling these debts requires using what we have, our oil,” he concluded.