The Electricity Company of Ghana (ECG) has settled $30 million of its $60 million debt to Sunon Asogli Power Limited, as confirmed by ECG's Managing Director, Samuel Dubik Mahama.
The payment, made on Thursday, December 7, follows the temporary shutdown of Sunon Asogli on December 4, citing the government's delayed financial commitments.
Mr Mahama expressed ECG's commitment to bolstering relationships with independent power producers and assured that provisions are in place for a second $30 million tranche to be paid to Sunon Asogli.
He emphasised the collaborative efforts to restructure outstanding Power Purchase Agreements (PPAs) for increased efficiency and cost-effectiveness.
Sunon Asogli Power (Ghana) Limited shut down its plant on Monday but later turned it back on citing intervention and assurances from the Minister of Finance.
In a statement, the company revealed an interim payment agreement, anticipating $60 million in two tranches.
The first tranche of $30 million is expected this week, followed by the second tranche in the week of December 11, 2023.
“Kindly confirm our understanding that we shall be paid an interim sum of $60 million in two tranches. The first tranche $30 million to be paid this week and the second tranche in the week of 11th December 2023.”
The independent power producer had initially announced an indefinite shutdown of its 560MW plant, effective immediately, due to the government's delayed financial commitments.
The company expressed regret over the decision, attributing it to the avoidable delays in payment from the Government of Ghana (GoG) and the Electricity Company of Ghana (ECG) for supplied power.
In a letter addressed to ECG, Sunon Asogli Power (Ghana) Limited highlighted the accumulating unpaid bills impacting its operational capacity, making it unsustainable to continue without addressing these financial challenges.
“Sunon Asogli Power (Ghana) Limited Company announces with regret an indefinite suspension of operations at the Sunon Asogli Power Plant, effective Monday, 4th December 2023 at 6 PM. This difficult decision became necessary due to avoidable delays in payment from the GoG/Electricity Company of Ghana for power supplied, as well as, the unproductive engagements to find an amicable solution” to the indebtedness, it anniunced earlier.
This move by independent power producers reflects longstanding concerns about the government's indebtedness to them, with reports as of July 2023 indicating a debt of approximately $1.6 billion.
The IPPs had previously criticised a 1.52 per cent reduction in electricity tariffs, deeming it unacceptable and expressing concerns about its impact on ECG's debt restructuring efforts.
Dr. Elikplim Apetorgbor, the President of the IPPs, warned about the challenges faced by IPPs, stating, "We are on life support and cannot guarantee continuity. If you give us a haircut, say a 30% or 40% reduction, who is going to pay our debts for us?"