Finance Minister, Dr. Mohammed Amin Adam, addressed the recent shutdown of the Sunon Asogli Power Plant during a press briefing following the conclusion of the IMF/World Bank Annual Meetings.
The shutdown of the power plant, he explained, resulted from a payment dispute between the Ministry of Finance and Sunon Asogli after the government declined to make an additional $30 million payment, beyond an agreed $30 million part-payment towards its outstanding debt.
Dr. Amin Adam speaking at the press briefing detailed the negotiations that went on between the Ministry, the Electricity Company of Ghana (ECG) and Sunon Asogli, noting that an initial agreement had been reached to settle the debt with a $30 million payment, contingent upon Sunon Asogli signing a formal settlement agreement.
However, Asogli subsequently demanded an additional $30 million, bringing the total to $60 million, and refused to sign until payment was made, ultimately leading to the plant’s shutdown.
In his remarks, Dr. Amin Adam criticized Sunon Asogli’s approach, describing it as a negotiation tactic ahead of Ghana’s election period, stating that Asogli acted in “bad faith” by leveraging the shutdown as pressure for payment from the Government.
Despite the plant’s closure, the Minister assured Ghanaians that the country’s electricity supply remains unaffected due to surplus generation capacity.
“In spite of the shutdown, we continue to have surplus generation capacity,” he stated, emphasizing that other power plants continue to operate and meet the nation’s energy demands.
He, however, noted that talks with Sunon Asogli have resumed.
The Minister therefore expressed optimism for a resolution, stating that steps are being taken to normalize the relationship with Sunon Asogli through the finalized settlement agreement.
Sunon Asogli Power Ltd, a key player in Ghana’s energy sector, has halted operations due to a $259 million debt owed by the state-owned Electricity Company of Ghana (ECG), the company announced on October 16.
The power producer shut down its facilities on October 8 after prolonged efforts to resolve the debt proved futile.
In a strongly worded statement, Sunon Asogli said it had “no alternative” but to cease operations, citing ECG’s persistent failure to meet payment obligations.
The company noted that it had not invoiced for idle capacity charges—a practice followed by other independent power producers—demonstrating what it described as a “high level of consideration” towards ECG and the government.
However, despite these concessions, ECG’s debt to Sunon Asogli grew by 23% in the first nine months of 2024. Only 22.6% of invoices for that period have been settled, mostly through the country’s Cash Waterfall Mechanism.
The decision by Sunon Asogli to halt operations underscores the growing strain on the country’s electricity grid amid concerns over ECG’s liquidity and broader financial health.
According to the African Centre for Energy Policy (ACEP), data from the Public Utilities Regulatory Commission (PURC) shows that ECG experienced under-recoveries of GHS 13.6 billion between August 2023 and July 2024, with an alarming revenue collection rate of just 43% over this period.
Furthermore, ACEP cites the Energy Sector Recovery Program, which estimates that power sector shortfalls between 2019 and 2023 amounted to approximately $8.25 billion, a figure ACEP described as an unsustainable drain on public resources.
Currently, the total energy sector debt stands at some $1.74bn with over $1.2bn owed in legacy IPP debts; $450m owed for gas payments to operators of the OCTP oil