Sunon Asogli Power (Ghana) Limited has announced the shutdown of its 560MW power plant, citing severe financial constraints caused by the Electricity Company of Ghana’s (ECG) failure to settle its outstanding debt owed to the company.
The plant, a critical component of Ghana’s electricity generation, was forced to suspend operations on Tuesday, October 8, 2024, at 5 PM, leaving the country vulnerable to increased load shedding.
According to a press statement issued by Sunon Asogli Power, the decision to halt operations was inevitable after ECG repeatedly failed to honour its overdue payment obligations, despite making several promises.
The statement further noted that as of September 2024, ECG owes Sunon Asogli Power (Ghana) Limited a staggering $259 million in unpaid receivables, excluding fuel costs.
“Sunon Asogli Power (Ghana) has over the years been very considerate in its dealings with ECG and the government, and, unlike other independent power producers, has not even invoiced ECG for accrued idle capacity charges.
“Despite this, ECG owes Sunon Asogli a net (excluding fuel) receivable amount of $259 million as of the end of September 2024”.
Qun Yang, Chairman, Sunon Asogli Power (Ghana) Limited Company
The statement signed by Chairman Qun Yang noted that the situation has reached an unsustainable point, with the company’s debt growing by 23% between January and September 2024.
According to the statement, only 22.6% of the invoices for the year’s operations have been paid under the Cash Waterfall Mechanism, a system designed to ensure equitable distribution of funds to power producers.
The statement pointed out that despite the well-designed mechanism, Sunon Asogli’s financial position has continued to deteriorate, making it impossible to maintain operations at the plant.
National Power Supply Impact and Appeal for Government Intervention
Moreover, Sunon Asogli expressed deep regret over the impact of the plant’s shutdown on the national power grid, acknowledging that the suspension would exacerbate ongoing electricity supply challenges in Ghana.
The company thus called on the Ministry of Finance to urgently intervene and facilitate the payment of ECG’s debts to ensure the swift resumption of operations. “We expect the Ministry of Finance to step in so that we can return to full operations as soon as possible,” Qun Yang stated.
The shutdown of the 560MW facility is likely to increase the frequency and intensity of load shedding across the country, further straining the power sector and affecting businesses, industries, and households.
John Jinapor Responds: Deception in Power Sector Beyond Comprehension
The announcement of Sunon Asogli’s shutdown sparked sharp reactions from key figures in Ghana’s energy sector, particularly the National Democratic Congress Minority Caucus in Parliament.
Hon. John Abdulai Jinapor, MP for Yapei-Kusawgu Constituency and Ranking Member of the Mines and Energy Committee of Parliament condemned the situation, pointing to it as one of the key reasons behind the current load shedding affecting the country.
Hon. Jinapor expressed frustration over the persistent financial mismanagement and failures within the power sector, particularly ECG’s inability to settle debts owed to independent power producers.
He also accused the government of deception, stating that the gravity of the situation was beyond comprehension.
“The deception in the power sector is beyond comprehension. This is one of the reasons for the ongoing load shedding,” Hon. Jinapor remarked, calling for immediate and transparent measures to resolve the crisis.
The shutdown of one of Ghana’s largest power plants amplifies the growing financial strain on the nation’s power sector, which has been plagued by inefficiencies in payment systems and unresolved debts.
Independent power producers have increasingly voiced concerns over delayed payments, with many warning of further disruptions if immediate action is not taken.
ECG’s mounting debt obligations, combined with its inability to consistently pay IPPs under the Cash Waterfall Mechanism, have resulted in a fragile and unsustainable energy supply system.
The government, through the Ministry of Finance, now faces increased pressure to address these issues and prevent further shutdowns in the sector.
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