Dumsor: The worst is yet to come – IES warns

The Institute for Energy Securities says Ghana faces renewed threat of power crisis as 560MW Sunon Asogli Power Plant shuts down amid debt dispute.

“In case you are experiencing a low-key dumsor, be prepared to see an extended version of the same, due to the government’s reluctance to act decisively on the root cause,” the Institute said in a statement.

It noted that a new wave of potential extended intermittent power outages reminiscent of the infamous “dumsor” looms over the country following the recent shutdown of the 560 megawatts (MW) Sunon Asogli Power Plant which reliably supplies about 12-15% of the nation’s electricity.

The absence of the plant from the national grid is already evident, the Institute said.

Sunon Asogli, one of Ghana’s largest power producers, suspended operations two weeks ago, citing prolonged delays in payment of US$259 million, for electricity supplied.

According to the owners of the plant, a significant capital injection is required to service its operational debts and resume normal production.

Reports indicate that despite calls from the Ghana Grid Company Limited (GRIDCo) to restore operations and alleviate the growing pressure on the national grid, Sunon Asogli has remained steadfast, pointing at its lack of operational fund.

Read below the rest of IES’ statement:

Why this shutdown matters?

In recent years, Ghana has sought to stabilize its power sector, balancing supply with demand to avoid the protracted outages that characterized the infamous “dumsor” era. However, the current situation with Sunon Asogli threatens this balance, as the power generated from this plant forms a substantial part of the nation’s overall capacity. The sudden removal of 560MW from the system has created a vacuum that other power producers are unlikely to fill promptly, given the constraints of limited generation and ongoing financial stress in the sector.

Data from the Ghana Grid Company (Gridco) shows that since Sunon Asogli Power Plant was shut down, daily power generation at peak hours has been below 3,165MW. Over the past seven (7) days average power generation has fallen below 3,000MW, showing a supply deficit of over 500MW at peak hours. The supply gap exists even though other idle plants like BridgePower and CenPower have been brought online since Asogli was shut down.

This gap in supply threatens to widen if alternative power sources are not found or if the Electricity Company of Ghana (ECG) cannot make any payment to Sunon Asogli. Even if other plants attempt to compensate for this deficit, their generation costs may be higher, potentially driving up tariffs for end-users, an additional burden on citizens and the business sector.

Financial constraints and unresolved debt issues

The shutdown of Sunon Asogli underscores a longstanding issue in Ghana’s power sector— the inability of utility companies and the government to meet payment obligations. The stance by Sunon Asogli demanding an immediate payment of at least US$60 million to meet its debt obligations, reflects broader concerns in the power industry about financial sustainability.

Power producers in Ghana often face delayed payments due to complex debt cycles, poor revenue collection, and cash flow issues within the sector. The sector’s struggles are compounded by high fuel prices, currency depreciation, and rising operational costs; creating an environment where suppliers are unable to absorb financial shortfalls without compromising their ability to produce power.

The report on the financial strain on Sunon Asogli highlights the broader structural weaknesses of the energy sector, where systemic debt has become a near-permanent feature. This cycle places additional pressure on government entities, power producers, and ultimately, the end-users who shoulder the brunt of increased tariffs and unreliable service.

Potential impact on power supply and the economy

With the national power grid stretched thin with generation reserves almost non-existent, GRIDCo’s reported call for Sunon Asogli to return online reflects the urgency of the situation. However, without a meaningful resolution, there is little indication that the company will be able to resume operations. The country risks a scenario where load shedding becomes a necessary measure, particularly if demand continues to exceed supply.

If “dumsor” returns, Ghana’s economy may face significant setbacks, especially as power shortages disrupt productivity, increase operational costs, and dissuade investment. Prolonged outages could also negatively impact sectors like healthcare, education, and small and medium enterprises, which are heavily reliant on consistent power to function effectively.

For Ghana to avert an impending power crisis, it is imperative to find both short-term and long-term solutions. In the short term, government intervention may be required to help alleviate Sunon Asogli’s financial challenges, possibly through bridging loans to facilitate the plant’s return to operation.

Recommendations

The government must consider providing a short-term bridging loan or financial relief package to enable Sunon Asogli to resume operations. This urgent intervention would help mitigate power supply disruptions and stabilize the grid.

The government must initiate an effective debt restructuring program to address longstanding financial issues in the power sector. A scheduled debt payment plan with prioritized payments could address recurring financial issues in the sector.

The government must strengthen revenue collection mechanisms with the Electricity Company of Ghana (ECG) to reduce payment delays and increase cash flow. An enhanced revenue collection would alleviate pressure on the power producers and improve sector-wide financial health.

Government must implement comprehensive reforms aimed at ensuring the power sector’s financial sustainability, including addressing systemic debt cycles, enforcing transparency in financial transactions, and fostering private sector investment in power infrastructure.

Source: ClassFMonline.com