Ghana to Use $1 Billion of Bond Proceeds for Energy Debt, Google Abandons Plans

LAGOS (Capital Markets in Africa)- Ghana plans to use as much as $1 billion of the Eurobonds it sold last week to help restructure the country’s obligations to independent power producers, said Finance Minister Ken Ofori-Atta.

The West African country is in talks to re-negotiate supply deals with the power companies known as IPPs. The current take-or-pay agreements mean the government is billed even for unused electricity.

“We are going to put about $1 billion aside from the proceeds of the Eurobond to look at how we resolve those IPP issues,” Ofori-Atta said in a broadcast on Joy FM. “We are in the middle of negotiating this take-or-pay which is just egregious to the country and we came out boldly to say that we are not going to continue with this type of unbalanced contracts for our country anymore.”

Ghana sold sub-Saharan Africa’s longest-ever Eurobond as part of a $3 billion deal that was almost five times oversubscribed last week. With power capacity that’s almost double the country’s peak demand needs, Ghana’s electricity utility has to pay independent producers about $450 million every year for energy that it doesn’t consume.

Ghana will spend another $1 billion of the Eurobond proceeds to retire more expensive debts to reduce interest costs, while the rest will go toward infrastructure projects, Ofori-Atta said.

Google Abandons Plans to Buy Stake in Africa’s Biggest Wind Park
Vestas Wind Systems A/S is shopping for a new buyer for its 12.5% stake in Africa’s largest wind farm after Google dropped plans to purchase it following project delays.

The Danish turbine manufacturer blamed the Alphabet Inc. unit’s decision to pull out on “delays relating primarily to the transmission line” for the $679 million Lake Turkana Wind Power project in Kenya. The 310-megawatt farm’s high-voltage link to the grid, scheduled for completion in October 2016, was delayed by two years after contractors were changed.

“As Vestas’ strategy doesn’t include being a long-term wind park owner, we’re currently in commercial dialogue with potential buyers of our shares,” spokesman Anders Riis said in an emailed response to questions.

LTWP would have been Google’s second renewable energy investment on the continent after the Jasper solar project in South Africa’s Northern Cape in 2013. Alphabet did not immediately respond to an email seeking comment.

The Kenyan wind power park cost 620 million euros ($679 million). The Kenyan government was forced to pay 85.6 million euros in compensation to LTWP for the delays.