Ghana: Privatisation of the Volta River Authority’s thermal assets

Posted in Blog post Western Africa Infrastructure Power

The government of Ghana has advertised that it is considering the disposal of part or all of its interests in the Volta River Authority’s (VRA) portfolio of thermal generation assets as part of broader plans to restructure the energy sector to improve operational efficiency. The government says it will sell at least a majority stake in specified thermal plants and VRA will retain full ownership and control of its hydropower generation capacity. Its intention is to enable the privatised generating assets to compete effectively with other plants on the system and return VRA to profitability.

Media reports have quoted a price tag of around US$2 billion for VRA’s thermal power assets, predicting strong interest from international buyers. The sale is expected to bundle the debt-burdened plants with the others instead of allowing bidders to cherry-pick the more attractive assets. The transaction structure has yet to be confirmed, however the Minister of Finance has previously outlined to Parliament a plan to create a holding company for the thermal assets currently owned by VRA, a majority of which will then be privatised. In our view, the privatisation process will likely involve some legal restructuring to ensure that commercial arrangements related to the privatised projects are fully documented in line with the electricity sector structure and international practice.

We have prepared a briefing which sets out some insights in relation to the privatisation and relevant issues that may be of interest to prospective bidders, including in relation to the regulation of the electricity sector, structuring of electricity sector tariffs, IPP risk allocation and steps that the government is taking to enhance the creditworthiness of electricity sector participants. Please contact Chris Down or Bayo Odubeko for more details.

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